London Gains on Corus

Ivaylo
05 Oct, 2006
New York City

Though small, Tata Steel is considering an offer as it has the financial muscle, being a unit of one of the largest conglomerates in India. With other steel groups such as Severstal also likely to enter the running, Corus shares led the advancers in London. The FTSE 100 was up 31.2 points at 5,997,7 at mid-day after breaching the 6,000 level early on, helped as well by the Bank of England decision to leave interest rates unchanged at 4.75% today.

[R]9:30AM The FTSE 100 advanced by mid-day on likely merger deal.[/R]
The FTSE 100 in London advanced 31.2 points at 5,997,7 at mid-day after breaching the 6,000 level early in the trading. The performance of the benchmark index was also helped by sharp gains on U.S. markets overnight, where the Dow Jones Industrial Average struck a fresh all-time high.

Advancers

Corus shares led the gainers in London, up 15% on news that Tata Steel is considering a bid offer.

Oil stocks rallied, as OPEC announced a reduction in production of 1m barrel a day. BG Group rose 1.7% and BP advanced 1.4%.

Mining stocks were also in demand. BHP Billiton rose 2.3%, Rio Tinto put on 2.2% and Anglo American gained 1.7%.

Some minor stocks surged. Spirent Communications jumped 10.6% after the telecommunications group said its third quarter trading matched expectations. Viridian, the Irish water group, was up 6.5% on talk that an imminent bid was coming..Grainger Trust rose 3.6% on expectations that Vincent Tchenguiz, the property entrepreneur, could enter the running to buy the company.

Decliners

British Airways, a heavy fuel user, fell 1.9%. Xstrata lost 8.3%, as it went ex-rights following a recent share issue. Stanelco slipped a further 20.4% despite the packaging group statement that plans for a fund raising were still on track.

Other news

The Bank of England left interest rates unchanged at 4.75% on Thursday, but the investors expect another quarter point rise before the year is out.

The European Central Bank on Thursday increased eurozone interest rates by another quarter percentage point to 3.25% to combat worries over inflation.

[R]7:30AM Record close for the Nikkei in Japan boosts Asian markets.[/R]
Asian markets finished higher on Thursday. The Nikkei Average of 225 companies closed with a gain of 2.3% to 16,449.3. Shares of office-equipment and digital-camera maker Canon rose 4.4% after the Nihon Keizai business daily reported the group will lift its 2008 production goal for digital-camera shipments by 13% to 26 million units.

Shares of Toyota advanced 1.7%, while Sony Corp fell 0.3% as investors struggled to digest a recent spate of bad news regarding its electronics division. Toshiba Corp plunged 5.2% on concerns related to its financial burden in the acquisition of U.S. nuclear-utility manufacturer Westinghouse Electric Co.

Hang Seng Index in Hong Kong was up 1.3% to 17,854.5. HSBC rose 1.8% to HK$144.30, while Bank of China advanced 0.6% after earlier touching a fresh all-time high. Blue-chip property developer Hang Lung Properties rose 2.5%.

Taiwan leading share index climbed 1.8% to 6,997.2. Australia S&P/ASX 200 was up 1.3%. Singapore Straits Times Index advanced as much as 1%. Malaysia leading share index edged higher 0.3%, while New Zealand traded flat.

Advances in oil prices supported energy-related shares, with Woodside Petroleum of Australia advancing 3.6%. The largest crude-oil producer in China, PetroChina rose 1.1%.

[R]6:30AM European markets buoyed by M&A, oil, and mining stocks on Thursday.[/R]
European markets were higher by mid-morning on Thursday. London FTSE 100 climbed 0.6% to 6,002.8, Frankfurt Xetra Dax gained 0.6% to 6,083.73 and the CAC 40 in Paris added 0.6% to 5,289.72.

In focus

Steelmakers are among the stocks riding high on merger speculation after rumours that Tata Steel of India was approaching Corus, the Anglo-Dutch group with an offer.

Advancers

Oil companies were higher. OMV, the Austrian oil group, rose 3%, while Finnish refiner Neste Oil gained 2.7%. Total in France gained 1.2% and Britain’s BP added 1.4%.

Commodities were also on the increase. Corus shares jumped 10.4% in Amsterdam, while Thyssenkrupp in Germany added 3.1% and Salzgitter added 1.6%.

Decliners

British Airways shares were flat after Citigroup downgraded the carrier to hold from buy, citing lighter-than-expected September traffic and the firm reduced fiscal 2007 revenue guidance.

Oil and gold

Oil leapt more than 1 percent to above $60 a barrel on Thursday. U.S. crude oil jumped 67 cents to $60.08 a barrel. London Brent rose 56 cents to $59.78, having recovered from a low of $57.70, its weakest this year. Gold was trading at $567.20 an ounce, down $9.40 an ounce from Wednesday close of $576.60.

Currencies

The euro was barely changed against the U.S. dollar Thursday ahead of a meeting at which the European Central Bank was widely expected to raise its key interest rate. The euro bought $1.2711 in morning European trading, compared with $1.2713 in New York late Wednesday.

With the Bank of England also meeting Thursday, the British pound bought $1.8861, barely below Wednesday''s level of $1.8864. The dollar slipped to 117.66 Japanese yen from 117.89 yen.

[R]5:00AM Gold retreats Wednesday on speculative selling.[/R]
December gold fell $14.80 to settle at $566.70 a troy ounce on the NYME. December silver sank 25 cents at $10.795 an ounce. October platinum closed at $1,082.40 an ounce, down $47.50. December palladium finished at $296.65 an ounce, down $9.80. December copper lost 7.70 cents to close at $3.2055 per pound.

The November crude oil contract ended 73 cents higher at $59.41 a barrel after falling as low as $57.70 a barrel, the lowest level for a front-month contract since Feb. 16. November gasoline moved up 4.11 cents to $1.4978 a gallon. November heating oil rose 2.31 cents to stop at $1.6770 a gallon. October natural gas settled up 23.6 cents at $5.995 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed up 0.20 cent at $1.0445 a pound and March gained 0.25 cent at $1.0835. Futures on raw sugar in foreign ports for March advanced 0.27 cent at 11.16 cents a pound.