March 16, 2011 / 7:50 PM / 8 years ago

UPDATE 1-Uranium producers battered by Japan crisis, China

* Cameco down 7.36 pct at C$29.71

* Uranium One reviews Mantra deal, shrs down 5.9 pct

* Spot uranium prices seen under pressure

* China orders safety crackdown on new reactors

TORONTO, March 16 (Reuters) - Shares of uranium producers turned lower on Wednesday afternoon after early gains were hit by China’s plan to tighten safety approvals for new reactors and as the nuclear crisis intensified in Japan.

Top Canadian producer Cameco (CCO.TO), which had rebounded late on Tuesday, fell over 11 percent to C$28.41 on the Toronto Stock Exchange before rebounding to C$29.71 for a loss of 7.36 percent by late afternoon.

Uranium One UUU.TO was down 5.9 percent at C$3.51, after it announced that it was reconsidering a deal to buy Australia’s Mantra Resources MRU.AXMRL.TO for A$1.2 billion ($1.18 billion) in light of the Japanese crisis. Mantra’s Toronto-listed shares slipped 31 percent to C$4.80.

Shares of Denison Mines (DML.TO) fell 1.7 percent to C$2.30, while Paladin Energy PDN.TO (PDN.AX) was down 6.61 percent at C$3.25.

Investors also remained cautious on Uranium Participation Corp (U.TO), an investment fund that holds physical stocks of enriched uranium. It was down 8 percent at C$6.29.

Earlier on Wednesday, the Chinese government said it was tightening it approvals and safety procedures for new reactors as Japanese authorities scrambled to bring a quake-damaged nuclear power plant back from the brink of disaster. [ID:nTOE72F088]

“We will temporarily suspend approval of nuclear power projects, including those in the preliminary stages of development, before nuclear safety regulations are approved,” China’s State Council said in a statement.

The announcement came as Japan struggled to cool down a nuclear power plant north of Tokyo that was severely damaged by the 9.0 magnitude quake and tsunami.

China has announced plans to boost nuclear power output to at least 80 gigawatts from a current 11 gigawatts.

BMO Capital Markets analyst Edward Sterck noted that China could also be looking to curb the bullish uranium market that sent spot uranium prices up more than 76 percent in under six months.

“I think China is trying to dampen expectations,” said Sterck. “I think they will continue to expand their nuclear power, though it could be that it is at a slower rate.”

Spot uranium fell 9.8 percent on Monday to $60 a pound.

On Wednesday, analysts said that spot prices had had fallen below $60 and that uranium, which is used to fuel nuclear reactors, could touch year lows in the mid-$40 range.

“It could easily go back, easily,” said GMP Securities analyst David Wargo. “Will it stay down there? Probably not for long, but it could easily move back down to that level.”

$1=$0.98 Canadian Reporting by Julie Gordon; editing by Peter Galloway

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