London Weak Midday

Ivaylo
30 Oct, 2006
New York City

Pearson declined despite reporting nine-month total sales up 11% and operating profit up 26%. News that Cadbury Schweppes will maintain its current revenue growth target from 2007 but will drop a specific target for operating margins, took its toll. BHP Billiton, Vedanta Resources and Lonmin also retreated. Oil large-caps BP and Royal Dutch Shell are down as crude prices slipped more than a dollar this morning. At mid-day, the FTSE 100 index was 39.1 points lower to 6,121.8.

[R]9:30AM The FTSE 100 falls Monday morning on miners, weak US stocks[/R]
The FTSE 100 index in was 39.1 points lower to 6,121.8 close to the morning low of 6,117.5, having been weak all morning.

Advancers

UK insurer Standard Life led the advancers though after reports emerged over the weekend that French insurer AXA is considering a takeover approach for the group. Standard Life advanced 2.12%.

British Energy, Drax and Centrica extended their gains from last week on the back of news that Morgan Stanley is planning to invest $3bn in the carbon trading market. Drax is 1.49% higher, while Centrica is 0.83% up. British Energy is currently trading flat.

Autonomy improved slightly 0.05% after the infrastructure software house said it has entered into a multi-million pound contract with the UK government to deploy Autonomy IDOL Server software.

Decliners

Pearson fell 1.66% despite reporting nine-month total sales up 11% and operating profit up 26%. It said the fourth quarter is a key selling season in higher education and consumer publishing, but added it was confident that 2006 will be another good year.

Cadbury Schweppes sank 1.96%. The company will maintain its current revenue growth target from 2007 but will abandon a specific target for operating margins, took its toll. The chocolate group will look to grow annual revenues between 3 and 5% per annum and grow operating margins over time.

Kazakh-based miner Kazakhmys dipped 1.07%. The company announced a rise in production in copper for the third quarter but said the level of other metals mined fell in the period. Copper cathode production advanced 9% compared with the second quarter.

Argos-owner Home Retail Group was hit hard after JP Morgan started coverage on the retailer with an underweight recommendation.

Other news

The number of mortgage approvals in September were at their highest in more than two years, the Bank of England said on Monday, reinforcing expectations its monetary policy committee will increase interest rates to 5 per cent next month.

Britain has called for rapid action to combat global warming, with the publication on Monday of an alarming report that warns of an economic and environmental catastrophe.

[R]7:30AM Asian markets declined due to weak American economic growth.[/R]
Asian markets ended mostly lower on Monday. The Nikkei 225 Index shed 1.9% to end at 16351.85. Honda lost 3.3%, Kyocera fell 2% and Canon declined 3.4%. Banks and real-estate stocks also declined, with Mitsubishi UFJ slipping 2% and Mitsubishi Estate losing 1.2%. Softbank advanced 0.8% on news that a flood of customers wanted to switch their mobile phone service to the company.

In South Korea, the Kospi Index shed 1% to close at 1356.11. Tech shares and brokerage stocks led the decline. Samsung Electronics fell 1.8% and Samsung Securities was down 1.4%. In Sydney, the S&P/ASX 200 gained 0.8% to close at 5399.40. Stocks were buoyed by building-materials company Rinker Group, whose shares soared 26% among expectations that Cemex of Mexico will need to improved its $11.7 billion takeover offer.

In New Zealand, the NZSX-50 Index ended up 0.94% to 3754.83. Taiwan Weighted Price Index dropped 1.3% to 6995.20, while Singapore Straits Times Index shed 1.4% to 2691.60. Markets in Hong Kong were closed for a public holiday.

[R]6:30AM European shares declinedon Monday on weak auto stocks.[/R]
European markets were lower, by mid morning on Monday. The FTSE 100 in London lost 0.6% to 6,124.5, Frankfurt Xetra Dax fell 0.7% to 6,218.24, and the CAC 40 in Paris shed 0.9% to 5,349.35.

Advancers

Italian bank Capitalia led the few advancers, up 1.1 %, on rumours that Santander of Spain as considering a bid. Santander denied the report.

Hennes & Mauritz, the Swedish fashion group, gained 1 % after Morgan Stanley raised its price target. The move reflected the new initiatives of the company of international expansion, home shopping, shoes and a new higher-priced former.

Decliners

Eiffage, the French construction and concessions group, was the worst performing stock on the Eurofirst 300. It fell 4.5% after Spanish constructor OHL denied speculation that the two companies were in talks to form an alliance.

Carmakers were weaker as Volkswagen of Germany attracted differing broker views following its forecast-beating results released on Friday. Other stocks in the sector also fell. BMW shed 2.1%, while Renault lost 1.1% and Porsche lost 1.9%.

Erste Bank in Austria fell 3.3% after it reported a 16% rise in third-quarter net profit that fell shy of expectations. Raiffeisen International, the main competitor of Erste Bank in eastern Europe, fell 2.4%. ABN Amro, the Dutch bank, fell 1.6% after announcing a 5.6% fall in third-quarter net profit.

Oil and gold

Oil prices edged up Monday tracking a terror alert in the petroleum-rich Gulf region last week and as traders watched for signs that OPEC nations were following through on announced production cuts. Light, sweet crude oil for December rose 7 cents to $60.82 a barrel on the NYME.

Gold opened Monday at a bid price of $602.30 a troy ounce, up from $596.80 late Friday.

Currencies

The European currency was in trading against the U.S. dollar on Monday, dipping nominally as investors pondered whether the European Central Bank would keep interest rates unchanged when it meets this week. In morning trading, the euro bought $1.2727 compared with $1.2736 in late New York trading on Friday. The British pound fell to $1.8985 from $1.8963 on Friday and the dollar dipped to 117.36 yen from 117.59 yen on Friday.

[R]5:00AM Gold futures rose slightly Friday on dollar weakness.[/R]
The most-active December gold moved higher $1.20 to close at $601 a troy ounce on the NYME, staying below last week high of $606. The most-active December silver settled 16 cents lower at $12.08 an ounce. January platinum declined $3.60 to end at $1,079.70 an ounce. December palladium slipped $3.50 to finish at $323 an ounce and the most-active December copper was up 0.50 cent to close at $3.4050 per pound.

December light sweet crude oil settled up 39 cents at $60.75 a barrel. November heating oil lost 0.56 cents to close at $1.6944 a gallon and november gasoline fell 0.38 cents to end at $1.5599 a gallon. November natural gas settled down 34.4 cents at $7.153 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures ended up 0.40 cent at $1.08 a pound. March futures for raw sugar in foreign ports lost 0.03 cent to finish at 11.79 cents a pound.