London Gains on M&A

Ivaylo
13 Nov, 2006
New York City

Bid developments pushed life insurer Resolution higher after it confirmed it was in discussions with various parties concerning a wide range of possible transactions, including a possible offer for the group. Scottish Power was also strong as the market awaits developments following the approach by Iberdrola last week. On the downside, copper futures fell to a five month low, sending all the miners into the red. In late morning, the FTSE 100 was up 7.6 points, or 0.1%, at 6,216.3.

[R]9:30AM FTSE 100 advances on Monday on merger and acquisition talks.[/R]
In late morning, the FTSE 100 in London gained 7.6 points, or 0.1%, at 6,216.3.

Advancers

Resolution, the closed life assurance fund consolidator, was a leading gainer, up 3.9%. Talk in the market was of a possible merger with life assurer Prudential, up 2.4%, while others suggested Resolution could tie-up with Scottish Widows, the life assurance arm of Lloyds TSB, up 0.8 %.

ITV gained 2.9% amid reports that NTL was planning to meet with the shareholders of the broadcaster to explain a takeover approach.

Rumours of a counterbid from the US pushed Scottish Power up 1.3%. Iberdrola, the Spanish energy company, has confirmed an interest in buying the Scottish power company.

Decliners

The falling price of copper sent miners south. Mining group Rio Tinto fell 4.1% while Antofagasta dropped 3.4% and Xstrata was 2.3% lower.

Biofuels lost 8.9% as Numis Securities reiterated its price target on the biodiesel producer. Biofuels said on Friday that the lower oil price and a recent rise in feedstock prices had led to tighter profit margins.

Other news

The Office for National Statistics announced that output prices climbed by 1.7% in the year to October, down from the increase of 1.8% seen the previous month and the lowest reading since March 2004.

[R]7:30AM Asian markets end mostly lower Monday, Japan leading the decline.[/R]
Asian markets declined on Monday. The Nikkei 225 Index shed 0.6% to finish at 16022.49. Traders were also cautious ahead of July-September GDP data due Tuesday. Commodity and domestic demand issues fell in early trading. Mizuho Financial Group posted a 2.1% fall and Shinsei Bank lost 2.6%. Nippon Oil shed 0.98% and trading company Itochu sank 3.2%. Major machinery maker Fanuc fell 0.9%.

The Hang Seng Index in Hong Kong fell 0.1% to 18868.54. Henderson Land fell 6.3% after it raised $710 million through a share placement over the weekend. Shares of other developers fell as concern grew that they may follow suit. Sun Hung Kai fell 1.27% and Cheung Kong Holdings declined 1.29%.

South Korean shares finished flat, with strong gains in technology shares offsetting losses in shipbuilders. The Korea Composite Stock Price Index, or Kospi, ended up 0.1% at 1396.69. Technology shares rose on bargain-hunting, with Samsung Electronics advancing 1.6% and Hynix Semiconductor gaining 2.6%. Hyundai Heavy Industries dropped 5.7%, Daewoo Shipbuilding & Marine Engineering lost 2.8% and Samsung Heavy Industries lost 5%.

In Taiwan, shares end down 0.5% at 7136.06, with technology stocks leading the decline. TSMC fell 1.3%, UMC declined 1.1% and MediaTek lost 1.9%. Gains in paper and property-related stock countered losses. Chung Hwa Pulp rose 5.8%, while Goldsun Development & Construction rose 5.4%. Australia S&P/ASX 200 Index fell 0.3% to 5418.4, as plunging metal prices pressured the market and sent miners Rio Tinto and BHP Billiton sharply lower.

[R]6:30AM European stocks move higher Monday on upbeat earnings.[/R]
European markets were higher on Monday. In early trade, the FTSE 100 in London climbed 0.2% to 6,218.0, Frankfurt Xetra Dax gained 0.1% to 6,365.67, and the CAC 40 in Paris added 0.3% to 5,459.83.

Advancers

Alstom It reported a 27% rise in first-half operating profit, together with an operating margin of 6.32%. The outlook was also positive, targeting an operating margin of 7% for 2007 and full-year sales growth of more than 10%. Alstom shares rose 5.1%.

Spanish Sacyr Vallehermoso, rose 4.1% ahead of its nine-month results. Deutsche Telekom rose 2.6% after the company announced on Sunday the resignation of Kai-Uwe Ricke.

Decliners

Miners declined the most on fears that a slowdown in the global economy would hurt demand for metals. Rio Tinto fell 2.4%, while BHP Billiton lost 1.7%.

Shares in Swiss drugmaker Novartis fell 1.6% after asking the US Food and Drug Administration to extend its review period on Galvus, its diabetes treatment, to consider new data showing that skin problems in animal tests were not seen in trials on patients.

Iberdrola, the Spanish utility, fell 1.8% after ratings downgrades followed announcement on Friday that it was in merger talks with Scottish Power.

Oil and gold

Crude oil fell as mild weather in the U.S., the world''s largest energy consumer, reduced demand for heating oil. Crude oil for December delivery fell 27 cents to $59.32 a barrel in electronic trading on the NYME. Brent crude oil was down 7 cents to $59.64 a barrel on the London-based ICE Futures exchange.

Gold for immediate delivery gained as much as $4.15, or 0.7 %, to $632.70 an ounce. Gold futures for December delivery rose $3.50, or 0.6 %, to $633.60 an ounce.

Currencies

In morning trading, the euro bought $1.2857, up from $1.2847 late Friday in New York. Among other currencies, the British pound rose to $1.9122 from $1.9113 while the dollar was down slightly to purchase 117.41 Japanese yen from 117.62 yen.

[R]5:00AM Copper and gold futures declined Friday on profit-taking[/R]
The benchmark December copper contract was down 22.05 cents to end at $3.0885 per pound on theNYME. Profit-taking left December gold $6.70 lower at its settlement price of $630.10 a troy ounce. December silver finished 6.5 cents stronger at $13.115 an ounce. January platinum futures were helped by influences including technical buying and finished $8.60 higher at $1,209.60 an ounce while December palladium settled $8.20 lower at $330.70 an ounce.

December crude oil futures ended $1.57 lower at $59.59 a barrel. December heating oil slid 4.90 cents to finish at $1.6966 a gallon, and December unleaded gasoline declined 3.83 cents to close at $1.5627 a gallon. December natural gas futures closed 16.1 cents lower at $7.794 a million British thermal units.

December Arabica coffee futures closed 3.35 cents lower at $1.1585 a pound. March raw sugar futures settled 0.33 cents lower at 11.85 cents a pound.