Japan Retreats on Profit-Taking

Ivaylo
06 Oct, 2006
New York City

The Nikkei 225 in Japan slipped on profit-taking in blue-chip Canon Inc. while market heavy HSBC Holdings extended its record-setting run on bullish sentiment following another record close for the U.S. market. The urge to book profits offset a revival among commodity stocks and a strong performance from blue-chip financial stocks. In Hong Kong, property companies outperformed the stock market on easing interest-rate concerns.

[R]7:30AM Japanese stocks edged lower on Friday on profit-taking.[/R]
Asian markets closed mixed. The Nikkei 225 Average clsoed 0.08% lower at 16436.06. Tech names were lower after a three-week winning streak, as Canon fell 1.2%. Nippon Steel advanced 1.2% as news that Tata Steel was considering a $10 billion bid for Corus Group gave a boost to prospects of more consolidation in the steel sector and lifted steel shares higher. Inpex Holdings added 1.8%, despite worries it may lose part of its stake in Azadegan oil field in Iran. Large financial stocks were notable advancers, as Mizuho Financial Group gained 2% while Nomura Holdings rose 3.3%.

The Hang Seng Index in Hong Kong slipped 0.02% to close at 17903.39. New World Development, which gained 2.6%, was one of the biggest blue-chip advancers. China-related firms fell following big rises recently. China Mobile fell 1.2% after hitting an all-time closing high Wednesday.

Australia S&P/ASX 200 closed 0.03% higher at 5220.70. Minara Resources surged 5.8% after reporting record nickel production for the third quarter. Queensland Gas jumped 4% on hopes of counter offers to the bid launched Thursday by Santos.

[R]6:30AM Airline gains counter telecom sector weakness in Europe.[/R]
European markets were slightly higher by mid-morning on Friday. The FTSE 100 in London reached 6,006.6, Frankfurt Xetra Dax was up 0.1% at 6,083.12, and the CAC 40 in Paris was fractionally higher at 5,289.52.

M&A

Ryanair late on Thursday launched a surprise bid for Aer Lingus, valuing the company at 1.48 billion euros. The board of Aer Lingus rejected the offer saying it undervalued the long-term growth potential of the company.

Advancers

Shares in Ryanair added 1.5%, while Aer Lingus gained 1.7%. EasyJet''s shares rose 2.2% after lifting its profit forecast following a September passenger traffic rise of 9.8%.

European banks enjoyed another session of M&A rumour-driven gains as Banesto in Spain jumped 6.4% on talk of a bid from domestic rival Santander.

Decliners

Mobile and fixed-line telecom stocks were on the wane after Deutsche Bank made downgrades in each sector. Telecom Italia fell 1.1% after it was cut from buy to hold and had its target price lowered. Meanwhile, Vodafone, the UK mobile operator, fell 1.4% after Deutsche lowered its rating from buy to hold and its target price.

French aerospace group EADS is still struggling as it continued to emerge as Rolls Royce, supplier of engines for the ill-fated Airbus A380, said it had suspended work on the project for 12 months. Although Rolls said the suspension would not affect its financial guidance for the year, the shares fell 1.1%, while EADS slid 3.1%.

Oil and gold

U.S. crude oil fell 22 cents to $59.81 a barrel by mid-morning inEurope, after dipping to a low of $59.60 in early trade. London Brent fell 20 cents to $59.80. Gold opened Friday at a bid price of $570.50 a troy ounce, up from $568.55 late Thursday.

Currencies

The euro slipped against the U.S. dollar Friday ahead of new jobs data from the United States. The euro bought $1.2680 in morning European trading, slightly below its level of $1.2690 in New York late Thursday. The British pound dropped to $1.8744 from $1.8786. The dollar rose to 118.07 Japanese yen from 117.61 yen

[R]5:00AM Gold and silver futures firmed up supported by oil prices.[/R]
December gold gained $8.80 to finish at $575.50 a troy ounce on the NTME. December silver added 27.5 cents to close at $11.07 an ounce. January platinum advanced $3.80 to settle at $1,086.20 an ounce. December palladium moved up $4.50 to end at $301.15 an ounce. December copper rose 9.45 cents to settle at $3.30 per pound.

The front-month November light, sweet crude oil contract settled 62 cents, or 1%, higher at $60.03 a barrel. November heating oil added 1.5 cents to close at $1.692 a gallon. Front-month November unleaded gasoline finished 1.87 cents stronger at $1.5165 a gallon. Natural gas for November delivery added 30.3 cents to finish at $6.298 per million British thermal units.

Arabica coffee ended slightly firmer, with the December contracts closing 0.05 cents higher at $1.0450 a pound. Futures on raw sugar in foreign ports closed mixed, with the March contracts settling 0.02 cents lower at 11.14 cents a pound. Cotton futures slipped amid speculative sales, and the most-active December contract finished 0.47 cents lower at 49.69 cents per pound. On the Chicago Board of Trade, soybean futures closed higher with help from speculative buying. November soybeans finished 10.25 cents higher at $5.6550 a bushel.