FTSE Advances on Miners

Ivaylo
01 Nov, 2006
New York City

The FTSE advanced by lunchtime on Wednesday, helped by a strong showing across the mining sector and a positive reaction to the plans of Cairn Energy to float its Indian business. A rebound in gold, copper and silver prices pushed Xstrata higher with Anglo American, Lonmin and BHP Billiton also moving ahead. The FTSE 100 in London extended its early gains to trade 22 points, or 0.4%, higher.

[R]9:30AM The FTSE 100 advances by lunchtine Wednesday on miners.[/R]
The FTSE 100 in London extended its early gains to trade 22 points, or 0.4%, higher at 6,151.2.

Advancers

Cairn Energy unveiled plans to raise about $1.8 billion from the sale of 30.5% of its Indian operations. The proceeds will be used to fund ongoing operations but some will also be returned to shareholders. The oil exploration company rose 1.4%.

Xstrata rose 2.8% while Lonmin added 2.4%. BHP Billiton was 2.1% higher while Rio Tinto rose 1.4% with Vedanta Resources up 0.3%.

St James Place Capital gained 4.3% after the wealth manager said total new business rose 58% in the first nine months of the year compared to the same period last year.

Among the mid-caps, the tour operator MyTravel rose 0.3% after it confirmed its expectations to return to profit this year despite a 9.5% fall in winter holiday bookings.

Decliners

Tate & Lyle fell 1.2% as the sugar and sweetner maker cautioned that profit growth in the second half was likely to be lower than in the first six months of the year due to the impact of EU sugar reform and higher European cereal prices.

International Power announced the acquisition of a portfolio of wind farms in Germany and France with an enterprise value of 379 million pounds from Christofferson Robb & Co. International Power dipped 0.7%.

Morgan Stanley downgraded Smirnoff-owner Diageo to equal-weight as part of a wider note on the drinks sector, arguing that the potential for any upgrades are limited relative to peers in the sector. Diageo lost 0.15%.

Other news

Strong domestic demand helped the UK manufacturing sector deliver its fifteenth successive month of expansion, a trend that has encouraged producers to continue raising prices at the factory gate, a report released on Wednesday showed. The latest survey produced by the Chartered Institute of Purchasing and Supply and the Royal Bank of Scotland showed its index of manufacturing activity at 53.7 in October.

[R]7:30AM Asian stocks advance broadly Wednesday, South Korea, Singapore lead.[/R]
Asian markets ended mostly higher on Wednesday. Nikkei 225 Index in Japan ended 0.2% lower to 16375.26. Gains in the yen weighed down Japanese export-oriented shares, leaving Toyota Motor flat. Honda fell 0.2%. Shares of Nissan Motors bucked the downtrend to finish up 3.4%.

The banking sector in Tokyo closed mixed with Mitsubishi UFJ, largest bank by assets in Japan, up 1.4%, while Softbank, which acquired the Japanese mobile cellular business of Vodafone Group PLC earlier this year, plunged 4.9%.

The Kospi index in South Korea rose 0.7% and Taiwan Weighted Price Index fell 0.1%. Shares listed in Singapore advanced, with the benchmark Straits Times Index advancing 0.9%. Hang Seng Index in Hong Kong ended 0.7% higher at 18,453.65. The China Enterprises Index of shares listed in Hong Kong, added 1.1% to 7,568.19.

Australia S&P/ASX 200 rose 0.6% to close at a record 5416.40, lifted by gains in mining and banking shares. National Australia Bank edged higher 0.9% on upbeat expectations ahead of results due Friday. Shares of BHP Billiton gained 0.9%.

[R]6:30AM Strong metal shares and banking mergers help Europe higher Wednesday.[/R]
European markets were marginally higher in early trading on Wednesday. The FTSE 100 in London gained 0.2% to 6,138.4, Frankfurt Xetra Dax climbed fractionally to 6,270.62, and the CAC 40 in Paris was flat at 5,348.88.

Advancers

Banks were among the best performing stocks after Banco Popolare di Verona e Novara and Banca Popolare Italiana, the two Italian co-operative banks, announced they had signed a memorandum of understanding. This confirms the structure of the new bank, as well as the terms and conditions of the planned merger. Shares in BPVN gained 2.7% and BPI added 2%.

Natexis Banques Populaire, the French mutual lender, gained 2%. It is merging its Natexis investment banking unit with Ixis, the wealth management division of Caisse d’Epargne. Nordic banks were also performing well, with Swedbank up 1.5%, and DnB Nor 1% higher.

Metal stocks were also in demand after zinc prices touched record highs and as gold prices also strengthened. BHP Billiton and Rio Tinto gained more than 1.1%

Telecoms advanced again after TeliaSonera, which reported on Tuesday forecast-beating third-quarter numbers, gained 0.5% following target price upgrades from Morgan Stanley, Deutsche Bank and UBS. Greek mobile group Cosmote gained 1.5%, while Vodafone added 0.6%.

Decliners

Telenor bucked the telecoms trend, retreating from some of its recent gains that followed strong third-quarter results, falling 1.5%.

Tyre makers led the decliners on Wednesday, as Continental, the German tyre and car parts maker, fell 0.8% after it reported a fall in third-quarter core operating profit as raw materials costs mounted and auto industry production in the US stalled. Michelin also fell 1.1%.

Oil and gold

Crude oil for December delivery fell 47 cents, or 0.8%, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for December declined 41 cents to $58.62 a barrel on the ICE Futures exchange in London.

Gold prices rose for a seventh consecutive trading session in London amid concern about a slowdown in the U.S. economy. Gold for immediate delivery in London rose $5.40, or 0.9%, to $612 an ounce.

Currencies

The U.S. dollar was little changed before a U.S. report on manufacturing growth today. The greenback traded at 117.04 yen. in London from 116.98 yen in New York late yesterday. It was at $1.2755 per euro from $1.2762 on Tuesday. The British pound traded at $1.9095 against the dollar from $1.9081 yesterday.

[R]5:00AM Gold futures dropped Tuesday on profit-taking, oil prices.[/R]
The most-active December gold moved 60 cents lower to end at $606.80 a troy ounce. December silver rose 2 cents to finish at $12.27 an ounce. January platinum settled at $1,086.50 an ounce down $6.70. December palladium declined $6.05 to close at $322.70 an ounce. December copper contract lost 1.30 cents to settle at $3.3455 per pound.

December crude oil advanced 37 cents to end at $58.73 a barrel, after falling below $58 a barrel earlier in the day. November heating oil settled down 1.46 cents to $1.5869 a gallon. November gasoline added 0.91 cent to end at $14646 a gallon. December natural gas settled up 11.8 cents at $7.534 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 0.25 cent higher at $1.0825 a pound. March futures on raw sugar in foreign ports egded 0.10 cent higher to finish at 11.55 cents a pound.