Sector movers: Resource stocks hold firm despite metal price dips

Resource stocks rose on Thursday despite a decline in metal prices, with headline London indices ending the session in negative territory.

The FTSE 100 ended 0.98% or 58.59 points lower at 5,931.78, while the FTSE 250 fell 0.52% or 84.43 points to 16,196.55. Oil futures continued to inch higher amid conflicting market chatter of possible production cuts, while precious metals saw lacklustre trading following the US Federal Reserve’s decision to maintain status quo.

At 1645 GMT, Brent front-month oil futures contract was up 2.54% or 84 cents to $33.94 per barrel, while WTI rose 2.54% or 82 cents to $33.12 per barrel. Earlier Interfax reported Russian energy minister Alexander Novak had said that Saudi Arabia had been suggesting output cuts of 5% at previous OPEC meetings, with the size of the reductions currently under discussion.

However, Bloomberg reported that four delegates to OPEC had told the newswire they had not heard yet of any plans for talks.

Elsewhere, headline base metal futures were largely in negative territory on the London Metal Exchange. During late afternoon trading, three-month futures contracts of copper (down 0.9%), lead (down 0.5%), nickel (down 1.1%), tin (down 1.9%) and zinc (down 1.5%) headed lower.

Precious metals also slipped into negative territory as the US Federal Reserve kept the range for the Fed funds rate unchanged at between 0.25% and 0.50% at the conclusion of its meeting on Wednesday.

It also noted it was "loosely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook."

On the COMEX, the front-month gold futures contract was broadly flat $1,115.80 an ounce, while spot gold was 0.90% or $10.15 lower at $1,114.82 an ounce. COMEX silver fell 1.58% or 23 cents to $14.23 an ounce, and spot platinum was down by 1.88% or $16.57 to $865.38 an ounce.

FTSE 100 oil producers gained on the pick-up in crude prices, including Royal Dutch Shell (‘a’ shares up 2.19% / ‘b’ shares up 2.33%), BG Group and BP.

BG Group and Shell were also given a boost by news that shareholders from both sides have approved their proposed merger. Shell’s £35bn takeover offer will create the world's largest liquefied natural gas trader.

Anglo American (up 8.73%) surged as investors welcomed its fourth quarter production report. Output for the three months rose 3% from the end of 2014 and the third quarter, while output for the year as a whole was up 5%. Rival Antofagasta (up 2.29%) also posted an uptick despite copper prices ending lower on the day.

Continuing with the energy sector Centrica’s (4.71%) shares slid after Societe Generale downgraded the stock to ‘sell’ from ‘hold’.

Notable FTSE 250 resource stocks to rise were Vedanta Resources (up 10.50%) and Tullow Oil (up 6.93%). Elsewhere, FirstGroup (down 11.97%) tumbled after the transport operator lowered its operating profit guidance for the current financial year amid a challenging trading environment.

However, dubious distinction of the biggest faller of the session went to Melrose Industries (down 84.92%) which plunged after it returned around £2.4bn in cash back to shareholders. The company gave 240p for each share held after the £3.3bn disposal of its Elster business to Honeywell International in December.