London Surrenders Positions

Ivaylo
17 Oct, 2001
New York City

London is near its lowest level of the day as financial stocks suffer and ahead of what futures markets are suggesting will be early losses on U.S. market. The banking sector weighed heavily with Barclays among the biggest decliners. Investors were also disappointed at the approach of Tata Steel for Anglo-Dutch steel manufacturer Corus. The FTSE 100 was down 19.8 points to 6,152.4 by mid-day.

[R]9:30AM London gives up record highs on weakness in banking sector.[/R]
The FTSE 100 in London was down 19.8 points to 6,152.4 by mid-day.

Economic news

The Office for National Statistics said the consumer price index annual rate dropped to 2.4% in September, from 2.5% the month before. The largest downward effect came in transport, reflecting a record 6.4p per litre drop in the cost of low sulphur petrol.

Advancers

As crude prices traded closer to $60 a barrel, BP was 1.3% and Royal Dutch Shell rose 0.7% Clinton Cards sales are up by 1.8% in the new financial year to date even though the trading environment remains difficult. It gained 4.51%. Marketing services group Media Square rejected an offer for several of its businesses. The company surged 30%.

Decliners

Lloyds TSB fell 1.5% to 570½p as long-running takeover talk linking it to a US bidder failed to materialise. news that Naguib Kheraj, its highly-respected finance director, would leave the company next year dragged Barclays 1.5% lower.

In the same sector, Royal Bank of Scotland lost 1.2% lower and Northern Rock eased 0.7%. Rolls-Royce lost 1.3% as JP Morgan initiated coverage with an underweight rating. Kingfisher fell 1.4% after Morgan Stanley also cut its rating from equal-weight to underweight. Isoft slipped 0.9% after it warned of a 10-15% decline in interim and full-year profits after problems with NHS contracts.

Bellway fell 1.7% , coming off a strong run-up to forecast-beating interim numbers, as investors booked profits from the stock. And in the small caps, Chariot UK, the lottery operator that floated on Aim this year slumped a further 86%.

Other news

Macquarie, the Australian bank, on Monday night won the hotly contested auction for Thames Water, the biggest water company in the UK, which is being sold by RWE, the German utility group, in a deal valued at 8 billion pounds.

[R]7:30AM Asian markets close mostly lower as recent gains were erased.[/R]
Asian markets ended lower on Tuesday. Japan Nikkei 225 index lost 0.49% to finish at 16,611.59. All Nippon Airways fell 1.89%, while tire maker Bridgestone dropped 1.38%. Sony, which earlier Tuesday said that it may lower its fiscal-year earnings forecast due to battery recall problems, plunged 1.84%. Nissan Motor Co shares fell 1.9% after Deutsche Securities lowered its rating, citing a slower-than-expected turnaround in operations.

The Korea Composite Stock Price Index, or Kospi, fell 0.4% to 1,351.30. LG Electronics, South Korea largest home appliance manufacturer by revenue, which initially advanced slightly on better-than-expected third-quarter earnings, closed 0.2% lower.

Hong Kong Hang Seng Index closed flat, adding 0.03% at 1,8014.84. In Taiwan, shares shed on profit-taking after they hit in the previous session a five-month high. The Weighted Price Index of the Taiwan Stock Exchange sank 1% to close at 7,075.13.

Australia S&P ASX/200 closed down 0.6%, easing back from a five-month high Monday. Shares traded in New Zealand rose 0.3%. Singapore Straits Times Index fell 0.9%. Australian-listed Woodside Petroleum shares advanced 1.3%.

Japanese government officials stated Tuesday they welcomed the decision by the central bank of Russia to begin holding some of its foreign exchange reserves in yen.

[R]6:30AM European markets end winning streak due to emerging profit-taking.[/R]
European markets were lower on Tuesday. By mid morning, the FTSE 100 in London slipped 0.2% to 6,157.8, Frankfurt Xetra Dax shed 0.8% to 6,137.87, and the CAC 40 in Paris lost 0.7% to 5,324.88.

Advancers

There were only a few advancers on Tuesday. Total of France gained 1% while in the UK BP added 1.7%.

Decliners

Spanish oil company Repsol fell 5.5% in spite of Sacyr Vallehermoso, the construction group, announcing it had built a 9% stake over recent sessions and wanted to extend its holding to 15%.

JP Morgan reduced its rating on the Spanish retail banking sector to underweight, with downgrades for both Banesto and Banco de Sabadell, which fell 1.5% and 1.5%, respectively.

BBVA, which remains the top pick of JP Morgan in the sector, nevertheless fell 1.8% after Deutsche Bank downgraded it from buy to hold. Santander, which was among the top picks of both JPM and Deutsche, shed 2%. Natexis, the securities devision of French mutual lender Banques Populaires, fell 4.1%.

Oil and gold

Oil prices rose above $60 a barrel Tuesday as traders are awaiting an OPEC meeting later in the week for a clearer price direction. Cold weather forecasts in the U.S. also prompted traders to bid up the cost of home-heating fuels. Light, sweet crude for November delivery rose 24 cents to $60.18 a barrel in Asian electronic trading on the New York Mercantile Exchange

Gold traded in London at $594.90 a troy ounce, up from $592.55 late Monday.

Currencies

The U.S. dollar was lower against most other major currencies in European trading Tuesday morning. The euro was quoted at $1.2531, unchanged from late Monday in New York. The British pound was quoted at $1.8666, up from $1.8612. The dollar bought 118.63 Japanese yen, down from 119.11.

[R]5:00AM Gold and silver futures advanced sharply on Monday, on dollar weakness.[/R]
December gold surged $5.80 to close at $598.50 a troy ounce on the NYME, while December silver added 23 cents to $11.91. January platinum rose $8 to $1,091.30 an ounce and December palladium gained $8.60 to $324.55 an ounce. High-grade copper futures finished sharply higher Monday, drawing some support from strength in other metals. The most active December copper contract advanced 16.75 cents to settle at $3.5810 per pound.

November crude oil futures gained $1.37 to end at $59.94 a barrel. The contract expires Friday. The November heating oil contract moved up 3.87 cents to $1.7585 a gallon. The November gasoline contract settled up 2.33 cents at $1.4917 a gallon. November natural gas gained 78.5 cents to close at $6.444 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 2.15 cents lower at $1.0190 a pound, with March down 2.10 cents at $1.0590. The most-active December contract settled down $10 at $1,406 per metric ton. March futures on raw sugar in foreign ports ended 0.58 cent higher at 11.71 cents a pound.