FTSE Higher on Lloyds

Ivaylo
16 Oct, 2006
New York City

The bank was in the focus of media attention over the weekend as speculation arose that it had rejected an approach for its Scottish Widows life assurance arm. Miners also supported the benchmark index on Monday afternoon, while upbeat broker comment has helped oil large-caps offset drifting crude prices. The FTSE 100 topped another five-year high, to 6,178.3, its highest level since June 2001.

[R](9:30 AM The FTSE 100 hit a fresh record supported by miners, Lloyds.[/R]
The FTSE 100 topped another five-year high, up 21 points, to 6,178.3, its highest level since June 2001.

M&A

Swiss Re and Axa, of France, are said to have proposed paying 8 billion pounds for Widows, which was bought for 7.3 billion in 2000.Lloyds is yet to comment on the possible sale.

Advancers

ITV led the large-cap advancers, up 2%, after Morgan Stanley raised its rating on the broadcaster from equal-weight to overweight. Lloyds shares rose 1.3%, their highest level for four year.

Decliners

Cadbury Schweppes fell 1.5% as Merrill Lynch reduced its recommendation on the chocolate maker from buy to neutral.

In the mid-caps, a profit warning from Benfield pulled its shares 7.6 % lower, due to costly legal dispute, the reinsurance group said it expected profit for the year to be around £10m below the level previously anticipated. PartyGaming slumped 7.2% to a fresh all-time low of 32p after UBS cut its price target for the online gaming group to just 26p.

EMI slipped 0.2% after the music group said it expected a decline in total revenues of about 3% for the six months to September 30.

Corporate news

A US federal agency concluded on Sunday that BP could have prevented a damaging fire at its Texas refinery, four months after a unit there suffered a fatal explosion, had it spent more money on its piping system.

[R]7:30AM Asian markets end higher, Japan and Korea lead shares higher.[/R]
Asian markets closed broadly higher. The Nikkei 225 index in Japan advanced to a fresh five-month high, increasing 0.94% to end at 16692.76. Sony rose 2.52% as it neglected new worries over increasing costs for its battery recall after reports that a number of Japanese companies were considering seeking compensation related to the problem.

The Korea Composite Stock Price Index rose 0.6% to 1356.72. Shares of South Korea Samsung Electronics edged higher 0.9% after the group posted better-than-expected quarterly net profit. The Hang Seng index in Hong Kong advanced 0.12%, to close at 18010.20, in the wake gains on U.S. markets on Friday, despite a sell-off of Chinese banking stocks to make room for Industrial & Commercial Bank of China initial public offering.

In Taiwan, a surge in the tech sector helped boost the Weighted Price Index 1.1% to 7151.42. The upward momentum was kept mainly because foreign investors anticipated good third-quarter results as the earnings season begins. Australia leading share index was up 0.5%.

[R]6:30AM European markets rise on Monday on oil, technology and bank stocks.[/R]
European markets were marginally higher on Monday. By mid morning, the FTSE 100 in London climbed 0.2% to 6,169.1, Frankfurt Xetra Dax was flat at 6,174.84, and the CAC 40 in Paris was little changed at 5,351.5.

Advancers

Banca Popolare Italiana surged 5.7% after accepting a takeover bid from rival Banca Popolare di Verona e Novara in a share swap worth over 8 billion euros. BPVN will offer 0.43% of its shares for each BPI share, while BPI shareholders will also obtain an extraordinary dividend of around 2 euros a share.

Oil shares also gained ahead of OPEC meeting later this week. Norsk Hydro gained 3.5%, while Statoil rose 3.1% and Neste Oil climbed 1.6%.

Scania, the Swedish target of MAN of Germany announced it could pay an extra dividend a share this year in a move to defend itself. Scania A shares, which carry the voting rights, added 1.6%.

Decliners

Philips, the Dutch electronics group, fell 1.1% after missing forecasts with its third-quarter core profit and shares in BPVN fell 4.6%. Shares of MAN, bidding fro Scania, fell 1.8%. Hennes & Mauritz, the Swedish clothing retailer, lost 1% after it said that same-store sales did not make any progress at all in September. Total sales, excluding currency rate changes, rose 9%, the company said.

Oil and gold

Crude oil advanced for a third day on speculation that OPEC members will formally agree at a meeting this week to cut production to counter a 21% decline in prices over the past three months. Crude oil for November delivery gained 69 cents, or 1.2%, to $59.26 a barrel in after-hours trading on the NYME.

It traded at $59.19 at 10:22 a.m. London time. Brent crude oil for November settlement advanced 56 cents to $60.08 a barrel on the London-based ICE Futures exchange.

Gold opened Monday at a bid price of $591.50 a troy ounce, up from $586.70 late Friday.

Currencies

The euro was lower against the U.S. dollar on Monday, at the beginning of a week that will see the release of closely watched U.S. inflation data. The euro bought $1.2493 in morning European trading, down from $1.2514 in New York late Friday. The British pound bought $1.8569, barely changed from its Friday level of $1.8568. The dollar slipped to 119.36 Japanese yen from 119.63 yen.

[R]5:00 AM Gold and silver futures hit highest level in more than a week.[/R]
December gold went $12.40 higher to close at $592.70 a troy ounce on the NYME, while December silver climbed 30 cents to $11.68. January platinum rose $8.70 to $1,083.30 an ounce and December palladium advanced $8.05 to $315.95. The most-active December copper contract settled 2.7 cents higher at $3.4135 per pound.

November crude oil moved higher 71 cents to finish at $58.57 a barrel. November heating oil settled up 3.01 cents at $1.7178 a gallon. November gasoline rose 1.75 cents to end at $1.4684 a gallon. October natural gas settled down 12.3 cents at $5.659 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed up 0.75 cent at $1.0405 a pound. March futures on raw sugar in foreign ports settled unchanged at 11.13 cents a pound, with May futures up 0.2 cent at 11.32 cents.