U.S. Stocks Rise; ECB Refinancing

Arthi Gupta, Mayank Mehta and Sanjay Barot
30 Jun, 2010
New York City

U.S. stocks advance after ECB announces lending of $161 billion to banks. ADP report noted private sectors added 13,000 jobs in June. Celgene agrees to buy Abraxis BioScience for $2.9 billion. Sanofi-Aventis SA agrees to acquire U.S.-based TargeGen Inc. for $560 million.

[R]9:35 AM New York – U.S. stocks advance after ECB announces lending of $161 billion to banks. ADP report noted private sectors added 13,000 jobs in June. Celgene agrees to buy Abraxis BioScience for $2.9 billion. Sanofi-Aventis SA agrees to acquire U.S.-based TargeGen Inc. for $560 million.[/R]

Asian markets traded sideways amid concerns about global economic recovery and European markets rose on ECB’s proposal to lend cash to banks.

Hurricane Alex disrupts BP Plc oil clean-up in Gulf of Mexico.

The European Central Bank will lend €131.9 billion or $161 billion to banks for three months as the twelve-month loan expires. The ECB said 171 institutions subscribed to the three-month refinancing operation at a flat rate of 1%.

Automatic Data Processing, Inc. released a report today showing that private sector employment increased by much less than expected in the month of June.

ADP said that non-farm private employment increased by 13,000 jobs in June following an upwardly revised increase of 57,000 jobs in May.

The increase in private employment in June marked the fifth consecutive monthly increase, although ADP noted that the increases in the five months have averaged a modest 34,000.

The advent of Hurricane Alex, the first of the Atlantic season affected oil giant BP''s clean-up efforts in the Gulf of Mexico.

The U.S. National Weather Service said the tropical storm, moving north-west through the Gulf of Mexico has strengthened to a category 1 hurricane, and is expected to make landfall in northern Mexico late Wednesday.

Strong winds and high waves forced the BP response mission to suspend activities such as skimming, dispersant flights and controlled burning.

However, two systems continue to collect oil and gas flowing from the Deepwater Horizon''s failed blow-out preventer and pump them to vessels on the surface, despite the bad weather.

Celgene Corp. agreed to buy Abraxis BioScience Inc.. According to the terms of the merger agreement, each share of Abraxis BioScience common stock will be converted into the right to receive an upfront payment of $58.00 in cash and 0.2617 shares of Celgene common stock.

The upfront payment values Abraxis BioScience at about $2.9 billion, net of cash. Each share will also receive one tradeable Contingent Value Right, which entitles its holder to receive payments for future regulatory milestones and commercial royalties.

The acquisition of Abraxis BioScience is expected to close in the fourth quarter of 2010.

Sanofi-aventis announced an agreement for the acquisition of TargeGen Inc., a privately held U.S. biopharmaceutical company developing small molecule kinase inhibitors for the treatment of certain forms of leukemia, lymphoma and other hematological malignancies and blood disorders.

Under the terms of the agreement, Sanofi-Aventis will make an upfront payment of $75 million upon closing of the transaction. The total amount of all payments, including the upfront payment, could reach $560 million. The closing of the transaction is expected to occur in the third quarter of 2010 and is subject to customary consent conditions.

""The acquisition of TargeGen represents a further significant step to increase our engagement in the field of hematological malignancies"", declared Marc Cluzel, Executive Vice-President, Research & Development, Sanofi-Aventis.

Commodities, Currencies and Yields

Dollar decreased against euro to $1.2284 and decreased against the Japanese yen to 88.58.

Crude oil increased $0.60 to $76.54 a barrel for a front month contract, natural gas edged lower $0.06 cent to $4.48 per mBtu and gasoline increased 1.250 cents to 208.45 cents.

Gold increased $2.70 in New York trading to close at $1,245.10 per ounce, silver closed higher $0.120 to $18.75 per ounce and copper for the front month delivery increased 3.450 cents to $2.96 per pound.

Yields on 10-year U.S. bonds increased to 2.96% and on 30-year U.S. bonds traded at 3.94%.

Stock Movers

Enterprise Products Partners L.P rose 0.4% after the natural gas company today announced several new construction projects that will further extend and expand its natural gas and natural gas liquids (NGL) infrastructure in South Texas and Mont Belvieu, Texas to accommodate growing production volumes from the Eagle Ford Shale play.

Medtronic, Inc. fell 1.7% after the medical device maker said it received a warning letter from the U.S. Food and Drug Administration about reporting requirements and handling of complaints at its Louisville, Colorado plant, according to Bloomberg report.

Peabody Energy Corporation rose 0.4% after the coal mining company was upgraded to “buy” from “hold” by Deutsche Bank AG.

Zimmer Holdings, Inc. rose 0.3% after the surgical products manufacturer was upgraded “positive” in new coverage at Susquehanna Bancshares Inc.

Earnings Review

EXFO Inc. ((EXFO)), the telecommunications industry said third quarter sales rose 45% to $63.2 million from $43.6 million a year ago. Net income in the quarter was $169,000 or breakeven per diluted share compared to net loss of $23.3 million or 39 cents per share a year ago.

General Mills, Inc. ((GIS)), the maker of cheerios cereal, yoplait yogurts said fourth quarter sales fell 2% to $3.57 billion from $3.65 billion a year ago. Net income in the quarter fell 41% to $211.9 million or 31 cents per diluted share compared to net income of $358.8 million or 53 cents per share a year ago.

Omnova Solutions Inc. ((OMN)), the chemical maker said second quarter sales rose 40.4% to $226.4 million from $161.3 million a year ago. Net income in the quarter rose 196% to $15.1 million or 33 cents per diluted share compared to net income of $5.1 million or 12 cents per share a year ago.

Sealy Corporation ((ZZ)), the mattress and bedding company said second quarter sales rose 6% to $316.5 million from $298.5 million a year ago. Net income in the quarter was $849,000 or 1 cents per diluted share compared to net loss of $5.4 million or 6 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 188.03 or 1.96% to 9,382.64, Hang Seng index in Hong Kong decreased 119.91 or 0.59% to 20,128.99 and CSI 300 index in China lower 28.95 or 1.12% to 2,563.07. ASX 200 index in Australia decreased 44.20 or 1.02% to 4,301.50. The FTSE Bursa KL Composite index in Malaysia closed lower 5.82 or 0.44% to 1,314.02.

The Kospi Index in South Korea decreased 9.47 or 0.55% to close at 1,698.29. SET index in Thailand closed lower 1.78 or 0.22% to 797.31 and JSE Index in Indonesia increased 20.31 or 0.70% to 2,913.68. The Sensex index in India increased 166.81 or 0.95% to 17,700.90.

Europe Markets Review

In London FTSE 100 Index closed higher 35.34 or 0.72% to 4,949.56, in Paris CAC 40 Index increased 26.54 or 0.77% to 3,459.53 and in Frankfurt DAX index traded higher 35.87 or 0.60% to 5,987.90. In Zurich trading SMI increased 14.46 or 0.24% to 6,158.91.