September 21, 2011 / 9:30 PM / 8 years ago

US SMALL/MIDCAPS-Coal companies cut outlook; economy fears weigh

NEW YORK, Sept 21 (Reuters) - Coal mining stocks slumped on Wednesday after two prominent coal miners cut their forecasts for the end of the year in another troubling sign for the global demand outlook as world economies weaken.

Alpha Natural Resources Inc ANR.N cut its 2011 shipment forecast, citing reduced demand from the key Asian steel market, sending its shares down 17 percent to $22.30 and dragging on the sector. [ID:nL3E7KL2C7]

The news came as another major coal producer, Walter Energy WLT.N WLT.TO, lowered its sales forecast for the second half of this year, citing weather and problems at some of its mines. The shares fell 11.7 percent to $66.25.

“The movement in the coal stocks and metal stocks today is related to rumors of a deceleration in customer demand globally,” said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors in Rochester, New York.

Arch Coal ACI.N and Patriot Coal PCX.N, both down over 10 percent, were the biggest losers on the S&P mid cap energy index .4GSPE, which fell 4.5 percent.

On Tuesday metals miner Rio Tinto (RIO.L) (RIO.N) said it was seeing softer markets than a few months ago and customers were becoming more cautious. It said it was seeing evidence of destocking in China and slowing growth rates.

Rio’s shares fell 6.3 percent to $51.29 in New York.

The broader market slumped after the Federal Reserve said the economic outlook remains grim, even as it said it would take more action to boost demand. The selloff accelerated into the close as Italy cut its economic growth forecasts through 2013.

The S&P MidCap 400 index .MID fell 3.4 percent and the S&P SmallCap 600 index .SML dropped 3.7 percent. In comparison, the benchmark S&P 500 .SPX fell 2.9 percent.

Transportation companies came under heavy selling pressure. GATX Corp GMT.N, a rail and marine transport company that supplies industrial users, fell 9.3 percent to $31.09.

“Everybody is now talking about recession, double dip, that it’s almost a foregone conclusion,” said Joe Mazzella, a senior trader at Knight Capital in Jersey City, New Jersey. “Cleary what we saw is institutional selling and more short selling.”

Medical device maker Kips Bay Medical Inc KIPS.O fell 34.3 percent to $1.87 a day after it said U.S. health regulators still need more data before allowing it to pursue a study of its device in the United States. [ID:nL3E7KL2PF]

Orexigen Therapeutics Inc OREX.O rose 49 percent to $2.19. The company said it plans to begin a large heart-safety trial of its experimental Contrave obesity drug in 2012, and favorable results could win over regulators who rejected the pill early this year. [ID:nS1E78J1QQ] (Editing by Leslie Adler)

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