After yesterday's powerful performance, markets have paused for breath, with a dip in mining shares weighing on the leading index.
Anglo American, unsurprisingly, is the biggest faller in the FTSE 100, down 45p at £22.66 after Xstrata, off 8p at £10.23, decided to call off merger plans. But Lonmin was lifted 6p to £17.50 on suggestions that Xstrata may now turn its attention in that direction, a year after it dropped a bid for the platinum producer. Manoj Ladwa, senior trader at ETX Capital, said:
With the Takeover Panel deadline looming Xstrata has decided to keep its powder dry rather than come in with an increased offer for Anglo American. Though there was considerable shareholder interest in the deal, the decision to go public by Anglo in its immediate dismissal of the offer made it hard to get a merger through. However, the compelling strategic logic behind consolidation in such a capital intensive industry remains. Expect Xstrata to look elsewhere – potentially Lonmin.
But Anglo is not the only mining tale in town. Rio Tinto is down 8p at £29.90 after adjusting its controversial iron ore joint venture with BHP Billiton, down 13.5p at £18.28. The two have decided to scrap plans to co-market some of the ore from the joint venture, which has aroused concerns about competition and could yet fall foul of regulators.
Overall, the FTSE 100 is currently down 8.16 points at 5247.94, ahead of more widely anticipated results from US banks, this time Goldman Sachs and Citigroup. John Murphy at ODL Securities said:
The banking sector will once again provide direction for the market, with more US heavyweights reporting earnings this afternoon. With the Dow closing over the 10,000 level, it will be interesting to see if investors see this as a sign of the recovery, or a tentative opportunity to take profits and look for opportunities to sell in to strength.
