Wednesday, October 13, 2010

As Miners Soar, Dollar Slides


As trapped Chilean miners were rising one by one to safety in a dramatic rescue attempt on Wednesday, shares of large mining companies were also on the ascent in London. But while people around the world marvelled at the celebrations that greeted the miners in South America, investors in Europe picked up the likes of Xstrata and Fresnillo for the more sobering reasons of strong production figures, higher commodity prices and (indirectly) actions by the U.S. Federal Reserve.

The Mexican miner Fresnillo was up by 3.2% or 40 pence to £12.81 in early afternoon trading after it reported a record output of silver and gold in the third quarter and said it was on track to meet its production targets.

Xstrata gained 3.9% to trade at £12.93 while Anglo American 3.6% to £28.35. Xstrata said it planned to restart its Falcondo ferro-nickel facility in the Dominican Republic, and was targeting 50% of capacity by March 2011.

Gold futures were higher, with spot gold trading hands at $1,358 per troy ounce, up $7.80 from its close on Tuesday in New York, amid rising expectations that the Federal Reserve would restart its quantitative easing program to boost the American economy.

The dollar fell against the euro, with the European single currency buying $1.396, up from $1.393 late Tuesday in New York. The dollar has weakened in response to expectations of a bigger Fed balance sheet, which has in turn made commodities like gold and oil more attractive.

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