Market Report: Violence at mine hits Lonmin shares

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The Independent Online

Following violent clashes at its major mine in South Africa, Lonmin was among the worst fallers in the Square Mile yesterday. The platinum group finished at the bottom of the FTSE 250 as fighting between unions that has claimed a number of lives left production at its Marikana site at a virtual standstill.

Ten people, including a number of workers, have been killed and the group said yesterday operations had been "severely disrupted" since Friday.

Bosses declined to give figures on how much output will be affected.

"Until the place is safe we don't want to talk about production," the executive vice president Barnard Mokwena told reporters.

By the bell, the company's share price had dropped by 32.5p to 708.5p, meaning its share price has already shed nearly 6 per cent this week.

At the same time, traders were noting that the platinum sector has hardly been a favourite of investors of late – even before the violence Lonmin had dropped a third in less than five months, while Aquarius Platinum (0.77p weaker at 36.53p) has lost a huge 80 per cent since January.

The FTSE 100 set a new, four-month high by charging up 32.9 points to 5,864.78, with the latest GDP data from both Germany and France proving somewhat better than expected.

CRH, however, was left behind, ending the session as the worst blue-chip performer. The Irish building materials group dived 59p to 1,160p after releasing its first-half results, with traders worried by comments regarding the US.

Although chief executive Myles Lee said CRH had enjoyed "good early momentum" in the country following favourable weather conditions, he conceded that "the pace of economic growth has tempered over recent months" and warned like-for-like sales growth in the Americas for the rest of the year "will be well below" what it managed during the first six months.

On the leaderboard, expectation-busting results from Standard Life saw the insurer shoot up 20.7p to 277.4p. While many in the City were expecting the company to announce its profits over the first six months had dropped compared with the same period a year earlier, instead it revealed a huge 15 per cent increase.

Also ahead was United Utilities, which moved as high as 816p during trading in the wake of vague bid speculation being revived late on Monday.

Credit Suisse's Guy MacKenzie was unimpressed by the chatter, saying he viewed "a large-scale takeover in the UK water sector as unlikely", and by the close United Utilities had moved back to 722.5p, a rise of 33.5p. Rivals Pennon and Severn Trent were not too far behind, climbing 31p to 766.5p and 58p to 1,766p.

ITV, which is reportedly considering a possible move for Golden Globes-producer Dick Clark Productions, was lifted 1.6p to 84.63p after Nomura's William Mairs upgraded his advice on The Only Way is Essex-broadcaster to "buy". Praising the progress of the group towards diversifying away from advertising, he also said the possibility of a share buy-back was "a credible option".

Analyst comments were proving less favourable for Pearson. Noting the group was trading "at a premium to its publishing peers", the scribblers at Morgan Stanley cut their advice on Penguin-owner to "equal-weight", claiming "the room for outperformance appears limited".

Meanwhile, AstraZeneca crept up 19p to 3,012.5p in the wake of striking a deal, which was revealed late on Monday, to sell the global rights of a version of its heartburn drug Nexium to rival pharma group Pfizer in return for $250m (£159m) as well as a number of future payments.

The Square Mile was clearly cheered by Healthcare Locums' decision to refuse to respond to a lawsuit filed in New York alleging it misled investors. The Aim-listed medical recruitment group was bumped up 0.26p to 2.09p, with the tiddler also repeating its belief that the claims were "wholly without merit".

Meanwhile, Juridica was enjoying success in the courts. The group provides funds for commercial legal claims, and yesterday announced partial settlements in a number of its cases had resulted in winnings of £23m. The company promised "a significant part" of this will be returned as dividends as it was pushed up 6.75p to 84p.