Indian miner gives City gripes

THERE is plenty of blame to go around on this one. Six months ago, investment banks HSBC and JP Morgan hustled the £1.1bn flotation of Indian mining group

Brian Gilbertson, the former boss of established Aussie giant BHP Billiton, accepted £7m worth of shares to jump on board as chairman and led chief executive Anil Agarwal on a roadshow of institutions.

Fund managers duly piled in - with your money - and the offer was oversubscribed at 390p. The group raised a thumping £507m.

Yesterday the City was clutching its middle as if it had just eaten an unusually spicy vindaloo. Vedanta tumbled another 9p to 290p and briefly touched 281p after it warned that tariff changes in India will wipe £16m off trading profits over nine months. Morgan Stanley cut earnings forecasts 9%.

Some in the City say the reaction is overdone. But the unwelcome news followed this week's surprise announcement that Gilbertson had quit. He said he had been approached by another metals firm and wanted to avoid any conflict of interest.

The fall came in a rising market for mining stocks, helped by continued buoyancy in metal prices. Rio Tinto jumped 28p to 1360p, Anglo American 7p to 1104p and BHP Billiton 6p to 488 1/4p. Oil jumped another 49 cents to $37.1 and neared $40 again in New York.

Major oil producers also fared well. Giant BP rose 6p to 487p as it used its rising windfall to buy back another 5.3m shares. Even Shell battered by this year's reserves scandal, firmed 1 1/2p to 398 1/2p.

But elsewhere it was a weak day on the market. Sterling surged against the US dollar, rising another 24 cents to $1.86. The Footsie eked out a thin gain of 22.7 to 4381.1, helped by the Bank of England's decision to hold rates at 4.5%.

Housebuilders were nonetheless in weak demand. Many investors concluded that governor Mervyn King's apocalyptic pronouncements on house prices may be doing the trick. Leader Persimmon fell another 10p to 615p, Bovis Homes 11p to 514p, Wilson Bowden 14p to 1013p.

Overseas markets looked pretty sickly. Hong Kong and Tokyo had tumbled overnight. Wall Street barely managed to keep its head above water.

Continental bourses were not helped by news from the European Central Bank which warned that inflation there is likely to remain above its target 2% if oil prices stay high. This raises the chance of an early interest rate rise despite sluggish growth. Eurozone inflation was 2.4% last month.

But it was not all gloom. Artificial knee and hip group Smith & Nephew had a spring in its step, rising 25p to 614p - a record high - as presentations at an industry show added to vague bid rumours.

Bus operator FirstGroup firmed 3 1/2p to 282 1/2p after saying the new financial year has started well.

There was, as always, some penny share action. Telecom Plus, whose self-employed agents resell telecoms and utility services, leapt 13p to 260 1/2p as chief executive Charles Wigoder took advantage of the recent slump to snap up £245,000 worth. Market makers say a large overhang of stock cleared as a major investor sold out.

Green energy tiddler ITM Power firmed 1p to 46 1/2p after US fund management giant Fidelity revealed a 3% stake. This group, which makes fuel cells and electrolysers for renewable hydrogen-based energy, has drifted since it was floated by Durlacher - of dotcom bubble infamy - at 50p last month. Enthusiasts describe it as the next big thing and some in the City hope for more US investor interest.

Energy Techniques jumped another 1p to 7 1/4p following this week's announcement of a US contract for its air filtering system which kills the MRSA 'superbug' in hospitals.

Controversial plastics minnow 3DM Worldwide rose 4 1/2p to 60 1/2p as chief executive William Widger invested another £66,000.

PREPARED salads to pizzas group Geest was back on the menu as some concluded that the recent slump was overdone. It jumped 22p to 537p, 13 times likely earnings, yielding 4.1%. It has been under pressure after warning that its supermarket customers - including Stuart Rose at Marks - are squeezing prices, while food costs are rising. Investment bank Smith Barney believes Icelandic investor Bakkavor, which last month raised its stake to 20%, could launch a bid at 650p.