Despite miners recovering ground, silver specialist continues to fall back but Rio Tinto rises
After Thursday's market storm, a slightly calmer mood prevailed in early trading.
But Fresnillo, which slumped along with the silver price, continued its decline, falling another 26p to 934.5p. Commodities came under pressure as fears grew of a slowdown in China, along with the prospect of an end to the US Federal Reserve's bond buying programme and possibly higher interest rates. The subsequent rise in the dollar left gold and silver prices floundering.
But with Societe Generale predicting a short term rally in miners, the base metal businesses regained a little lost ground. Rio Tinto has risen 35p to 2709.5p while BHP Billiton is 8p better at 1736.5p.
Overall the FTSE 100, which dropped 2.98% or 189.31 points on Thursday, has added 26.15 points to 6185.66. Despite a 353 point drop in Wall Street overnight, Asian markets showed more composure, with the Nikkei 225 up 1.66%.
But the UK market is still hovering around levels last seen in January. Apart from the Fed and China, the eurozone crisis has raised its head again with Greece's government torn over the closure of state broadcaster ERT. Mike McCudden, head of derivatives at stockbroker Interactive Investor, said:
There appears to be relative calm as markets open following a calamitous period since the Fed threatened to take away the steroids. In the grand scheme of things, stocks still look relatively cheap when compared to cash and government bonds so investors will be on a bargain hunt following yesterdays battering. With little in the way of economic announcements to deter investors today, equities look set to recover some of their losses as we round off the week. Following around a 10% hit to the FTSE 100 since recent highs there appears to be lots to play for.
The UK's two state controlled banks are having mixed fortunes following news of capital shortfalls. Lloyds Banking Group, which chancellor George Osborne appears to be preparing for privatisation, is up 1.01p at 62.24p. But Royal Bank of Scotland, facing the prospect of a split into a good and bad bank, is down 5p at 298.7p.
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