Stockpile: Euro crisis continues to influence market direction

Last week’s agreement by Europe’s leaders seemingly resolving the region’s fiscal problems, was dealt several blows this week as Greece suffered a leadership crisis and on Friday the G-20 leaders failed to agree on increasing aid to the Eurozone.

Greek Prime Minister, George Papandreou, made a surprise announcement earlier in the week that he would put last week’s bailout proposal to a referendum and was facing a confidence vote on Friday. The referendum proposal has since been abandoned.

The FTSE All Share index was down about 3.2% in the week, with the S&P500 down by a similar amount.

Mining stocks did not fare much better, with only a few of those on London’s main board showing gains in the week.

Diamonds were the flavour of the day on Friday, after Anglo American plc announced the purchase of the Oppenheimer family’s 40% interest in De Beers for US$5.1 billion.

The stake will increase Anglo’s interest up to 85%. The government of Botswana does have the right to up its own stake from 15% to 25%, leaving Anglo with a 75% interest. Anglo shares originally rose by as much as 4%, but had weakened with the broader market later in the day. The company was down 4% in the week.

The news did help support the share prices of the bourse’s other producers with Gem Diamonds Ltd and Petra Diamonds Ltd still holding on to respective gains of about 5% and 8% by Friday afternoon.

Fresnillo plc and Randgold Resources Ltd, the main board’s largest silver and gold producers, respectively, were two of the only three gainers for the week. Fresnillo was up 8.5% for the week and Randgold, which reported better than expected numbers on Wednesday, was up 4%.

The other gainer, with an increase of 4.4% was Bumi plc, after its largest shareholder, the Bakrie Group, announced the sale of half its stake, to resolve a debt burden that had put pressure on the Bumi share price.

On the AIM market, Tertiary Minerals plc showed an 86% gain in the week. The company recently reported the discovery of extension to the known fluorspar mineralisation at its Storuman project in north-central Sweden.