FTSE 250 movers: Miners slump on Barclays downgrade; DCC shines after interims

London’s FTSE 250 index was down 0.5% to 17,027.36 at 1500 GMT as weakness in the mining sector proved a drag.

Kaz Minerals and Vedanta Resources were under the cosh after Barclays downgraded its stance on the stocks and the broader European mining sector. The bank cut Kaz to ‘underweight’ from ‘equalweight', halving the price target to 100p. It said the investment case remains high risk.

Barclays said it continues to carry an extremely leveraged balance sheet with little margin for error, adding that the company will generate no earnings or free cash flow until 2018 before emerging as a more profitable entity once the growth projects ramp up.

The samer broker also cut Vedanta Resources to ‘underweight’ from ‘overweight’ and slashed the price target to 400p from 565p. It said the investment case for Vedanta remains challenging.

“The company’s substantial non-productive invested capital continues to show few signs of being brought into profitable production. If anything it is increasing with capacity closures in aluminium and alumina,” it said.

Shares in power company Drax slid after Deutsche Bank cut the stock to ‘sell’ from ‘hold’ as the “power price crunch” worsen. The investment bank said capacity concerns have been in the spotlight, with National Grid's notice of insufficient system margin (NISM) signalling a tightening UK power market. However the pressure on Drax's earnings and cash flows is likely to rise due to weakening gas prices, and more LNG exports from the US will to the pressure.

On the upside, though, DCC was a high riser after the distribution and logistics group reported an increase in interim pre-tax profit thanks to an improvement in gross margins, although revenue suffered a slight decline. In the six months to the end of September, the group posted a 23.2% year-on-year increase in pre-tax profit to £52.5m, although revenue fell 6.6% to £5.07bn, as the continued decline in oil prices affected the group’s fuel distribution business.

Listed funeral provider Dignity was on the front foot again after saying on Monday that it expects to outperform full year earnings expectations “given the continued high number of deaths relative to 2014”. Dignity said revenue for the 39 weeks to 25 September was £227m, up from £196.4m. The number of deaths in the period rose 9% to 446,000.

Engineering software company Aveva gained ground despite swinging to a pre-tax loss in the first half of the year due to declining oil prices , as it said it hopes to reach definitive terms on the reverse takeover by Schneider Electric in December, with completion by mid-2016.

Aveva, which has agreed to a £1.3bn reverse takeover by Schneider, said the deal will be transformational and the enlarged group will have an unmatched breadth of product offering covering all aspects of the digital asset including process simulation and optimisation, detailed engineering design, operations and asset lifecycle management and supervisory control.

FTSE 250 - Risers

DCC (DCC) 5,590.00p 4.39%
Greencore Group (GNC) 328.70p 2.78%
Daejan Holdings (DJAN) 6,150.00p 2.67%
Dignity (DTY) 2,574.00p 2.55%
Aveva Group (AVV) 2,054.00p 2.39%
NMC Health (NMC) 767.50p 1.66%
Centamin (DI) (CEY) 61.70p 1.56%
UDG Healthcare Public Limited Company (UDG) 491.90p 1.42%
PayPoint (PAY) 1,004.00p 1.41%
CLS Holdings (CLI) 1,814.00p 1.28%