LONDON MARKET OPEN: Stocks Mixed As Miners Limit FTSE 100 Gains

LONDON (Alliance News) - Stocks in the UK were mixed Wednesday morning, continuing to move sideways from Tuesday's flat close, with miners dragging the FTSE 100 index after poor production reports from Anglo American and BHP Billiton.

The blue-chip index was up 0.2%, or 17.92 points, at 6,715.29. The mid-cap FTSE 250 was down 0.1% at 16,896.69, and the AIM All-Share was flat at 730.20.

Anglo American shares were down 4.1%. The miner said that, in the first half of 2016, production of diamonds, copper, coal and iron ore were all lower year-on-year, while the platinum division and some smaller segments reported minor rises in the period.

Diamond production was down 15% to 13.3 million carats in the half-year from 15.6 million carats, with production in the second quarter of the year falling 19% year-on-year. Copper production was 4.0% lower at 290,700 tonnes in the six months from 303,600 tonnes a year before, and production in the second quarter was 8.0% lower than a year earlier.

Anglo American reiterated its full-year guidance across most of its commodity units. However, copper production in 2016 is now expected to be between 570,000 to 600,000 tonnes, rather than the original target of 600,000 to 630,000 tonnes, because of the severe winter weather experienced at Los Bronces, limiting mine extraction.

BHP Billiton was down 0.9%. The Anglo-Australian miner said its total iron ore production for the 2016 financial year to the end of June was 226.96 million tonnes, down 2.0% from the previous year. Total iron ore production is expected to increase to between 228 and 237 million tonnes in the 2017 financial year, excluding production from Samarco.

BHP Billiton Chief Executive Officer, Andrew Mackenzie, said: "Over the next 12 months, we expect volumes and costs across our minerals businesses to benefit from our continued drive to safely improve productivity."

Conversely, Mexican miner Fresnillo said production of gold, silver, lead and zinc all rose in the first half of 2016, leading the miner to significantly raise its production guidance for the year. It reported a 23% rise in gold production in the first half of the year whilst silver production was up 6.0%, with lead production rising 18% and zinc by over 24%.

Following the strong performance, Fresnillo said full-year gold production will now be considerably higher and in the range of 850,000 to 870,000 ounces compared to the previous target to produce 775,000 to 790,000 ounces - between a 9.6% to 12% lift. The stock was down 0.8%.

Insurer Admiral Group was leading the FTSE 100 gainers, up 1.8%, after the stock was raised to Buy from Neutral by Swiss bank UBS.

Drugmaker Hikma Pharmaceuticals was up 1.0%, after saying it has launched generic Xeloda cancer treatment tablets in the US. Hikma said the tablets have been launched through its West-Ward Pharmaceuticals Corp affiliate in the US and have been indicated for patients with Dukes' C colon cancer, as a monotherapy for metastatic colorectal cancer and for metastatic breast cancer.

In the FTSE 250, TalkTalk Telecom Group was the biggest mid-cap gainer, up 4.1%. The company reported a small decline in revenue in the first quarter of its financial year, but said it expects things to pick up in the second half and reiterated its full-year guidance.

Talktalk said revenue was down a slight 0.4% in the three months ended June 30 from a year before, with on-net revenue down by 2.0% as expected due to a smaller average on-net base in the quarter. The group reiterated its guidance for the full year to March 2017, with revenue expected to grow "modestly", driven by a broadly stable broadband base and continued growth in TalkTalk Business. Earnings before interest, tax, depreciation and amortisation is expected to be between GBP320 million and GBP360 million.

The highlight in the economic calendar Wednesday are UK jobs figures, due at 0930 BST, which are expected to show the effects of the uncertainty in the UK economy caused by last month's referendum on European Union membership.

Analysts at French bank Societe Generale expect the UK claimant count to have risen by 5,000 in June, "as uncertainty surrounding the outcome of the Brexit referendum might have hurt job creation". In May, the UK claimant count saw a decline of 400. SocGen believes the unemployment rate will rise to 5.1% from 5.0%.

CMC Markets analyst Jasper Lawler was less pessimistic, expecting the claimant count to rise by 4,100, but leaving unemployment unchanged at 5.0%. However, the CMC analyst expects average earnings including bonus to tick higher 2.3% year-on-year from 2.0% in May.

Elsewhere in the economic calendar Wednesday, eurozone current account data are at 0900 BST, while US mortgage applications are at 1200 BST. Later in the afternoon, the EIA crude oil stocks data are at 1530 BST.

In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both up 0.4%.

In Asia, the Japanese Nikkei 225 index fell 0.3%, as well did the Chinese Shanghai Composite. The Hang Seng index in Hong Kong continues up 0.8%.

By Daniel Ruiz; danielruiz@alliancenews.com

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