1:00PM New York, 6:00PM London - Manufacturers output expectations fall the most in seven years. A rise in metals prices lifted miners including BHP Billiton, Tullow Oil and Rio Tinto. Arcelor Mittal acquires London Mining South America for $810 million.

Stocks in London rose marginally led by commodities stocks on rising crude oil prices in volatile trading. Crude oil prices initially soared to $117 a barrel after U.S. inventories rose more than forecasted to 9.4 million barrels, but eased after gasoline inventories dropped to 6.2 million barrels.

Market Sentiment

In London trading FTSE 100 rose 0.97% or 51.4 to 5,371.80.

Of the 102 FTSE 100 stocks 69 rose, 32 declined, and 1 was unchanged. Rio Tinto led advancers in the index shares with a rise of 7.43% followed by Eurasian Natural gaining 6.98%.

Manufacturers Output Expectations Fall Most in Seven Years

CBI reported on its Web site today that manufacturers output expectations for the next three months are the weakest in seven years, while the balance of firms expecting the price of manufactured goods to rise has remained unchanged from last month’s 18-year high.

The 20% of the surveyed expect volume of output to gain in the coming quarter, 33% expect it to fall and the resulting balance of minus 13 is reportedly the weakest since December 2001. Demand for manufactured goods also weakened for the second month, with a net 13% of manufacturers judging total order book levels to be ‘below normal’.

The report notes that companies’ perception of export orders was less negative. A balance of 31% of manufacturers expects prices will rise in the coming three months, which is lower that the 18-year high recorded in July.

CBI’s Chief Economic Adviser Ian McCafferty commented, “Manufacturers are becoming more downbeat about forthcoming levels of activity but are still having to raise their prices due to the severity of recent cost increases.

Domestic conditions remain sluggish and the recent slowdown in the eurozone economies is starting to make conditions tougher for UK manufacturing exporters, although the weaker pound will offer some relief.”

ArcelorMittal to Acquire London Mining for $810 Million

ArcelorMittal reported on its Web site today that it has agreed to acquire 100% of London Mining for $764 million in a transaction that also includes the assignment of inter-group loans worth $46 million. The total consideration payable to London Mining will be $810 million.

London Mining Brazil’s central, eastern and western claims contain an estimated 1,059 million tons of indicated and inferred iron ore resources. In particular, iron ore from the London Mining Brazil mine has an average iron grade of 38.0% and contained iron of 402.6 million tons under Brazilian Reporting Standards.

ArcelorMittal is mulling investing up to $700 million to increase production in the medium term to in excess of 10Mtpa.

Gainers & Losers

Rio Tinto led advancers in the FTSE 100 index shares with a rise of 7.43% followed by increases in Eurasian Natural of 6.98%, in Tullow Oil of 6.84%, in BHP Billiton of 6.71%, and Kazakhmys of 6.69%.

Commodity stocks rose as crude oil prices soared. Antofagasta edged up 6.38% and Xstrata advanced 4.63% as a result.

BT Group led decliners in the FTSE 100 index shares with a fall of 6.77% followed by losses in Sainsbury of 3.67%, in Cable & Wireless of 3.14%, in Barclays of 2.85% and Thomas Cook Group of 2.81%.

Thomas Cook declined on rebounding crude oil prices. Retailers also shed as well. Tesco slid 2.04% and Marks & Spencer fell 1.47%.