London Higher on Commodities

Ivaylo
09 Oct, 2001
New York City

Oil and mining stocks rose as North Korea claims of a successful nuclear test heightened geopolitical concerns and sent commodity prices sharply higher. By 12.05 pm, the FTSE 100 index was 38.5 points higher, at 6,039.7, its highest level since early May. Evidence that inflationary pressure is fading away behind the scenes in British companies fell away on Monday as factory gate inflation declined to its lowest level since April 2004.

[R]9:30AM The FTSE 100 climbs by mid-day as oil and mining stocks firm up.[/R]
The FTSE 100 was 38.5 points higher, at 6,039.7, by 12.05 pm GMT.

Advancers

Rio Tinto jumped 3.78%, Xstrata gained 3.55%, Antofagasta added 3.27%, Vedanta Resources 4.54%. Oils weren''t far behind on the FTSE 100 risers board, with BP 1.27%, and Royal Dutch Shell 0.62% higher.

Shire stood out with a gain of 10.78% on news that the firm collaborative partner, New River Pharmaceuticals Inc has received an approvable letter from the US FDA for its NRP104 compound for the treatment of paediatric Attention-Deficit/Hyperactivity Disorder.

GlaxoSmithKline was 1.04% after news that the firm will this week file for approval in the EU for a radical new breast cancer drug, Tykerb, which can be taken in tablet form.

Decliners

Online gaming group Partygaming was down 0.67% continuing its plunge after news that the US Congress had passed an anti-internet gaming bill, will be demoted to the mid caps.

British Airways also slipped 2.22% hit by news that its commercial director has resigned over the joint UK OFT/US Department of Justice investigation into alleged cartel activity in relation to long-haul passenger fuel surcharges.

ITV dipped 1.71% knocked by news of a downgrade to neutral from buy by UBS in a cautious review of the UK advertising market.

Other news

Evidence that inflationary pressure is fading away behind the scenes in British companies fell away on Monday as factory gate inflation dropped to its lowest level since April 2004. The Office for National Statistics said that manufacturing output price inflation fell from 2.8% in August to 1.8% in September as companies cut prices aggressively in the month on the back of falling oil prices. The monthly change was - 0.3%.

[R]7:30AM South Korean stocks fell in the wake of N. Korean nuclear test.[/R]
Asain markets finished lower on Monday. The benchmark Korea Composite Stock Price Index, or Kospi, fell as low as 1,303.62, or 3.6%. Markets in South Korea have long been considered vulnerable to potential geopolitical risks coming from the North.

In Hong Kong, the Hang Seng Index ended 1.27% lower at 17,675.24. Straits Times Index in Singapore fell 1.2% to 2,618.05 in afternoon trading. Share prices in Sydney, Jakarta and Manila were lower; Australia S&P/ASX 200 index dropped 0.2% to 5,209.00.

China bucked the downward trend. Banks led the stock market to a five-year high on expectations Industrial & Commercial Bank of China will make a strong debut late this month. The benchmark Shanghai Composite Index ended up 1.9% at 1,785.39, its highest closing level since it settled at 1,793.88 on Sept. 25, 2001.

The Japanese market was closed for a public holiday.

[R]6:30AM European stocks declined Monday morning on geopolitical concerns.[/R]
European markets were broadly lower by mid-morning on Monday. Frankfurt Xetra Dax shed 0.5% to 6,058.62 and the CAC 40 in Paris lost 0.3% to 5,265.38. London FTSE 100, however, added 0.3% to 6,017.8, buoyed by its greater weighting in oil and mining stocks, as crude and metals prices rallied.

Advancers

Shire, the drugs company, gained 9.1% after getting the go-ahead in the US for a new attention deficit drug. Oil companies advanced. Austria OMV gained 2.4%, Italy Eni added 1% and Norway’s Statoil climbed 2%.

TeliaSonera, the Nordic region largest telecoms operator, gained 2.9% after Cevian, the activist fund bought 72 million shares to become the fourth-largest shareholder.

Decliners

Volkswagen fell 1.1% after the Financial Times reported MAN would drop its bid for Scania, its rival truckmaker, so the three companies can enter negotiations to enter a three-way alliance.

Investor, the Swedish fund manager and second-largest shareholder in Scania, fell 2.5%. Renault shares slipped 0.4% as expectations of a tie up with General Motors faded. Peugeot, shed 2% after Morgan Stanley downgraded the stock from overweight to equal weight.

Banking stocks gave back some of their recent, M&A-driven gains. Austria Erste Bank fell 1.9%. It is awaiting judgement today from Romanian lawmakers on its intended acquisition of the country top bank BCR. Raiffeisen, Erste domestic rival, and competitor in high-growth eastern European markets, fell 1.5%.

Oil and gold

Crude oil for November delivery rose 51 cents to $60.27 a barrel in electronic trading on the NYME. In London, November Brent gained 38 cents to trade at $60.21 a barrel on the ICE Futures exchange.

Gold rose after North Korea carried out its first nuclear-weapons test and as higher base metals prices boosted purchases of commodities as a basket. Gold for immediate delivery rose $5.63, or 1%, to $579.72 an ounce.

Currencies

The euro was barely changed Monday against the U.S. dollar, while the Japanese yen was slightly lower after North Korea claimed to have tested a nuclear weapon. The euro bought $1.2601 in morning European trading, compared with $1.2595 late Friday in New York. The British pound slipped to $1.8678 from $1.8705. The dollar rose to 119.12 yen from 118.98 yen.

[R]5:00AM Gold futures rose on North Korea nuclear plans and short covering.[/R]
December gold gained $1.30 to settle at $576.80 a troy ounce on NYME. December silver advanced 10.5 cents to settle at $11.175 an ounce. January platinum dropped $5.40 to close at $1,080.80 an ounce, while December palladium shed 90 cents to finish at $300.25 an ounce. December copper moved up 8.85 cents with help from technical buying to end at $3.3885 per pound.

The November crude oil contract fell 27 cents to finish at $59.76 a barrel. November unleaded gasoline was off 1.23 cents to close at $1.5042 a gallon, but November heating oil gained 0.20 cents to finish at $1.6940 a gallon. November natural gas futures settled 12.9 cents higher at $6.427 per million British thermal units, helped by cold weather forecasts and technical buying.

On the New York Board of Trade, Arabica coffee futures ended lower after an early flurry of speculative sales, with the December contracts closing 0.60 cents weaker at $1.0390 a pound. March futures on raw sugar in foreign ports settled 0.07 cents lower at 11.07 cents a pound, while the May contracts lost 0.03 cents to finish at 11.32 cents a pound.