Shares in Centamin (CEY.L) shot higher on Friday morning, reversing some of Thursday’s sharp fall, while wider European and Asian stock markets were boosted by further signs that the Chinese economy is recovering.
Centamin plunged nearly 50% yesterday, after the FTSE 250 miner announced it had suspended operations at its Sukari mine in Egypt citing an ‘illegal’ claim for fuel costs by Egypt’s state-owned energy supplier and ‘an unforeseen and arbitrary request from customs officials’ that led to its shipments of gold being halted.
This morning though shares were up 25% to 34p after the company announced that it wouldn’t have to pay the bill after all and fuel supply to its mine would be resumed.
Fiscal cliff threat limits China-inspired gains
Wider markets were more subdued, with the protracted negotiations over how to avert the fiscal cliff in the US preventing any major gains.
The news that China's HSBC manufacturing PMI improved for the third month in a row, to 50.9 in December, boosted shares. The figure was slightly better than expected. ‘The HSBC manufacturing PMI, in line with the hard data released since September, confirms that the Chinese economy has bottomed out and has started a moderate recovery,' commented Danske Bank senior analyst Flemming Nielsen.
The FTSE 100 managed gains of 0.2% to 5939. The pound was little moved at $1.6115 after Standard & Poor’s last night threatened to strip the UK of its AAA credit rating while becoming the third major ratings agency to downgrade the UK outlook to ‘negative’.
The euro was also flat at $1.3079, while the Eurofirst 300 moved 0.1% higher to 1136, as Fitch announced that France had held onto its AAA rating, albeit with a negative outlook.
China shares rally
In Asia, markets were helped by the China data, with China's Shanghai Composite Index surging 4.3% higher.
However, counteracting increasing confidence that China has avoided a much-feared 'hard landing' was poor data from Japan, showing that business conditions have got worse in the country.
The Bank of Japan’s Tankan survey showed the worst slump in corporate sentiment since the 2011 Tsunami. But analyst Marco Wagner of Commerzbank was optimistic things would get better in the long-suffering Japanese economy: ‘The economic stimulus package announced by Shinzō Abe plus the ongoing reconstruction work in the wake of the tsunami should revive the economy next year.’
'Slow walking' towards fiscal cliff
Overnight US stocks inched lower, with the Standard & Poor’s 500 Index snapping a six-day advance, as worries over a standoff in Washington's fiscal cliff negotiations overshadowed a decline in jobless claims and a rebound in retail sales. Concerns intensified on the drawn-out budget talks after Republican House Speaker John Boehner accused President Barack Obama of ‘slow walking’ the economy off the fiscal cliff, prompting some selling on Thursday.