Nikkei 225 -0.48% at 9,708.39

HK Hang Seng +0.53% at 23,652.71

China - Figures released later today show that China's manufacturing growth accelerated for the first time in 4 months. The PMI index rose to 53.4 in March from 52.2 in February. Expectations are that the positive figure could well prompt further monetary tightening.

US - Non farm payroll data released at 13.30 today. Expectations are that payrolls increased, suggesting that the labour market has turned the corner.

• Additionally supply management figures released in Arizona are expected to show that the manufacturing sector continued to improve.

Europe - Inflation last month in the Euro zone reached 2.6% an increase from 2.4% in February boosting expectations that the ECB will raise rates imminently.

Germany - Unemployment in Germany fell faster than expected last month. The jobless rate is not 7.1%.

Ireland - The central bank yesterday instructed 4 lenders to raise 24bn euros as the bill to save the nations banks climbs to 100bn euros.

Japan - The Ministry of Finance announced today that US$8.4bn yen were sold last month, as the government intervened after the earthquake to bring the currency back from a high that threatened to impair the country's recovery.

India - Figures released today show that the Manufacturing sector in the country continued to expand for the 24^th month in a row, increasing speculation that more rate rises will follow.

Ivory Coast - Rebel fighters loyal to Alassane Ouattara have entered Abidjan and are preparing to make a final push through the city to remove incumbent President Laurent Gbagbo. Reports are emerging that fierce fighting is breaking out through out the city. Local media reports that Gbagbo's forces have asked the UN for protection to secure their retreat.

Currency - The yen weakened against the dollar on the back of the positive expectations surrounding the US payroll figures.

US$1.415/eur vs $1.418eur yesterday. Yen83.65/$ vs 82.83/$ SAr6.76$ vs 6.78/$ $1.606GBP vs 1.613/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,434/oz vs US$1,427/oz on yesterday - Prices are up today on the back of expectation that the military intervention in Libya will prove to be a prolonged affair coupled with the renewed concerns over the sovereign debt problems in Europe.

• SPDR gold trust holdings falls slightly to 1,211.23 (38.942moz) from 1,211.84 (38.961moz) Current value US$56,017bn

Platinum US$1,777/oz vs US$1,771/oz yesterday - Impala Platinumm remains in negotiations with government over putting 51% of its stake into local hands in its operating assets in Zimbabwe. No doubt management will be curbing future investments.

Palladium US$767/oz vs US$760/oz yesterday -

Silver US$37.66/oz vs US$37.78/oz yesterday -

Rhodium US$2,375/oz vs US$2,375/oz yesterday -

Base metals:

Copper US$9,358/t vs US$9,450/t yesterday - Prices are off this morning as the dollar strengthens and the positive PMI figures emerging from China boost expectations that the Chinese will continue to ramp up tightening measures.

• Output in Mexico rose 42% in January on the back of Grupo Mexico, the largest mining company ramping up production.
• Sumitomo Metal Mining Co, Japan's 2^nd largest copper smelter has announced that it will cut production by 12% in fiscal 2011

Aluminium US$2,630/t vs US$2,647/t yesterday - Prices outperforming copper on the LME this week as higher energy costs lead to concerns of higher prices to come.

Nickel US$25,757/t vs US$26,298/t yesterday - Anglo American has delivered first nickel production from its US$1.9bn Barro Alto project in Brazil's Goia's state on schedule

• The project is scheduled to hit full capacity of 41ktpa by H2 of next year and will double the company's nickel output. It is the first of four major growth projects to start production.

Zinc US$2,352/t vs US$2,359/t yesterday -

Lead US$2,687/t vs US$2,680/t yesterday -

• Power cuts in Japan are said to be driving demand for batteries and subsequently for lead.

Tin US$31,660/t vs US$31,550/t yesterday -

Energy:

Oil US$117.65/bbl vs US$116.10/bbl yesterday - Prices are up today as contagion concerns over unrest in North Africa increase.

Gas US$4.372/MMBTU vs US$4.370/MMBTU yesterday

Coal - Xstrata and Chugoku Electric have closed a thermal coal contract at a record of US$130/t up 32% higher than the 2010-11 contracts as disruption in Australia earlier in the year feeds through to the market.

• Two South African lines linking coal mines with the Richards Bay export terminal have been closed due to a train derailment near Ermelo. The lines are to open tomorrow. This highlights the poor performance of South Africa's rail infrastructure

Uranium US$62.50/lb vs US $60.00/lb last week -

Other:

Rare Earths - China has extended its ban on exploring for REE and opening new mines by another 12 months.

• Additionally China has set its output of rare earths for the years at 93,800t and increase of 5.16% or 4,600t.

COMPANY NEWS

Mwana Africa (MWA LN) 7.4p mkt cap £39.4m - Funding cancelled and gold production update

• Mwana Africa has confirmed that no equity fund raising is being undertaken at this time and is considering other financing options to finance the restart of production from BNC. The government stance on 51% indigenisation of assets means that investors are particularly negative on Zimbabwe exposure at present.
• SRK has completed a CPR on BNC's Trojan mine, and Glencore has agreed an offtake for the operation.
• At Freda Rebecca in the financial year to date the mine has produced 27,211oz with 3,573oz produced in the month of March. Management continues to progress the Phase II expansion to 50,000ozpa which is fully funded.

Conclusion: Zimbabwe exposure makes life difficult for miners as the problems with fund raising demonstrate. We also question the risk of pursuing investment in Freda Rebecca which is a high cost low grade underground gold mine, in such a difficult jurisdiction that threatens the ownership structure of the asset.

Petropavlovsk (POG LN) 992p, mkt cap £1,863m - Results meeting highlights costs and exceptional charges

• Petropavlovsk disappointed investors and analysts yesterday
• Underlying earnings fell to $205m which was broadly in line with expectations but net income crashed to $23m.
• Exceptional items and higher tax charges which were not reduced by the exceptionals hit the bottom line. A number of exceptionals were also not allowable for tax reduction exacerbating the situation.
• We knew from previous production downgrades that cash costs would rise particularly in the fourth quarter and that a significant quantity, around 39,852oz, of gold was still held in inventory pending final processing at the year end. This material was booked at its cost of production and its re-booking in Q1 this year will see a $500-600/oz rise in valuation adding around $30m to the gross profit for the quarter depending on what exact cost the material was booked at and what price was realised on its sale.
• Much was made of the very substantial resource increase announced on 22^nd March which sees the overall gold resource rise by 96% to 23.1moz and reserves rise by 36% to 9.1m.
• The villain of the results is the Iron Ore division which is now known as IRC. IRC reported a net loss of $73m.
• A net charge of $35m was also recorded on the Titanium Sponge plant while a further $20m was from the cost of listing IRC in HK.
• Corporate G&A charges hit $64m highlighting the cost of running the business.
• Lower grades cost $275m
• Royalties and taxes cost $24m.
• These increased charges were partially offset by $37m of cost improvements from raising throughput at Pioneer and elsewhere.
• Pokrovskiy mine costs were broadly in line with company expectations.
• Pioneer costs rose markedly due to the late arrival of larger scale equipment, lower grades and the delay in getting into the higher grade ores in December. Pioneer costs should fall on a per tonne basis but may remain higher than previous forecasts on a per ounce produced basis. Management commented that Pioneer costs could remain at around $540/oz.

Conclusion: The company will benefit from additional gold production in Q1 but are suffering from rising costs. Charges from IRC are difficult to forecast but may continue to hit the bottom line and corporate, taxation and other costs are holding profits back. Investors may feel aggrieved by the writedowns and the increase in dividend must feel like small recompense.

Mining this week:

Sable Mining (SBLM LN) 23.5p mkt cap £217m - Results from Lubu indicate coking coal potential

Triple Plate Junction (TPJ LN) 6.5p, mkt cap £19m - Long gold intersection in PNG

European Nickel (ENK LN) 15.38p mkt cap £40.28m - Operational update

Fortescue Metals (FMG AX) - considering listing in Hong Kong

Mount Burgess Mining (MTB AX) - 15.5c, mkt cap A$6m - Copper cobalt anomaly defined at Tsumkwe, Namibia

Rio Tinto (RIO LN) 4,279p mkt cap £87,802m - Bid for Riversdale declared unconditional

Baobab Resources* (BAO LN) 39p mkt cap £64.8m - 3.5km magnetic anomaly may add substantially to resources

Horizonte Minerals (HZM LN) 20.5p mkt cap £57.3m - Drilling update from Araguaia returns high grades

Firestone Diamonds (FDI LN) 30.5p mkt cap £98m - Operational progress

Hambledon Mining* (HMB LN) 4.13p mkt cap £21.35m - Drilling update from underground programme

Central Rand Gold (CRND LN) 1.36p mkt cap £22m - Survival steps facing acid mine drainage

Perseus Mining (PRU AU) AUS$3.10 Mkt Cap, AUS$1313 -

African Aura (AAAM LN) 290p mkt cap £250m - Institutions and directors over 40% supportive of restructure

Petropavlovsk (POG LN) 1035p, mkt cap £1953m - Results show impact of higher costs on lower grade prod'n

BUY - Target 1368p

Solomon Gold (SOLG LN) 28p, mkt cap £75m - Newmont takes Guadalcanal jv forward on high grade results

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