London Dips

Ivaylo
27 Nov, 2006
New York City

Early gains were quickly swept away this morning as BAE Systems tumbled on talk that a big Saudi order may be scrapped, while weak energy issues cancelled housebuilding M&A gains. On the plus side, Tour operator MyTravel has confirmed that it is in talks to acquire package holiday business of rival First Choice, sending both companies higher. By mid-day, the FTSE 100 was down 26.9 points, or 0.5%, to 6,095.6, its lowest level since early October.

[R]9:30AM FTSE 100 down in early trading as BAE plunge weighs on stocks.[/R]
By mid-day, the FTSE 100 was down 26.9 points, or 0.5%, to 6,095.6, its lowest level since early October.


Decliners

BAE Systems group lost 3.9% following reports that Saudi Arabia could pull out of a 7,6 billion pounds contract to buy 72 Eurofighter aircraft.

In bid news, MyTravel confirmed an approach for First Choice Holidays about the possible acquisition of its tour operating business. MyTravel added that any offer would be funded in cash, through a mixture of new debt and equity, with the deal possibly funded through issuing shares to First Choice shareholders. Large dollar earners also fell. Rolls Royce slipped 1.8% and Hanson eased 1.8%.

Advancers

Wilson Bowden rose 13.1% as it confirmed discussions with a number of parties about a possible offer for the company. THis helped rivals Persimmon gain 1.2 %, George Wimpey advance 1.5% and Bovis Homes firm 1.2%. First Choice shares jumped 14.4% while MyTravel Group gained 8.1%.

Plumbing and heating company BSS added 3.3%. Mitie Group firmed 2.8% as the cleaning and maintenance specialist reported a 28% increase in interim pre-tax profit.

Civil engineering consultant Hyder lifted its half year dividend by over 70% as it reported strong growth in all parts of the business. Hyder rose 4.20%.

[R]7:30AM Asia ends mostly higher on Monday, Japans leads the way.[/R]
Asian markets ended mostly higher on Monday. Japanese stocks closed higher, led by banks, retailers and other shares sensitive to domestic demand. The Nikkei index rose 150.78 points, or about 1%, to finish at 15885.38 points. Mizuho Financial Group rose 1.9%, Mitsubishi Motors increased 1% and supermarket operator Aeon ended up 2.5%.Tosoh Corp. jumped 5.6% after reporting it had developed an alternative low-cost material used in the production of liquid crystal display panels. In the energy sector, Inpex rose 1.8%.

In Hong Kong, shares slipped as traders sold bank stocks. Property issues rose on expectation of strong results from land auctions. The Hang Seng Index fell 56.29 points, or 0.3%, to 19204.01. Cheung Kong, property company, rose 1.3% while its rival Sun Hung Kai rose 1.6% ahead of a Hong Kong government land auction Tuesday that is expected to fetch high prices. Bank of China fell 3.3% while ICBC fell 2.9%. Bank of East Asia dropped 1.6% and airline Cathay Pacific declined 1.5%.

Taiwan shares hit a six-year high as chip stocks gained on news of the likely buyout of the island''s largest chip-packaging firm, Advanced Semiconductor Engineering. The Weighted Price Index of the Taiwan Stock Exchange rose 70.79 points, or 1%, to close at 7498.15.

Australian shares inched down in slow trading, as investors waited for direction from offshore markets after the U.S. Thanksgiving holiday. The benchmark S&P/ASX 200 index declined 1.4 points to 5452.20.

South Korean shares advanced, led by Kookmin Bank, which rebounded from last week losses, while exporters dropped on the South Korean won continued rise. The Korea Composite Stock Price Index, or Kospi, climbed 3.4 points, or 0.2%, to 1425.13.

[R]6:30AM European markets were lower in early trading on Monday on weak dollar.[/R]
European markets were lower in early trading on Monday. The U.K. FTSE 100 index lost 0.04% at 6,119.80, while the German Xetra Dax traded 19 points or 0.2% lower at 6,392.96 and the French CAC 40 lost 15 points or 0.3% at 5,374.4.

Advancers

Pharmaceutical and chemical firm Bayer rose 2.2% after it produced a third-quarter net profit that exceeded analyst forecasts and also raised its fiscal-year guidance for its healthcare operations.

Miners Rio Tinto and BHP Billiton saw their shares rise more than 0.7%, while shares in oil companies BP tacked on around 0.3% each. U.K. home builders were also in the news as consolidation hopes surged in the sector. Shares in Wilson Bowden rose 13.1% in early trading after the company confirmed that its in talks with a number of potential bidders. Dassault shares rose 0.8%, albeit with just 48 shares traded.

Decliners

Automakers were hit as the US dollar plunged against the euro. DaimlerChrysler fell 1.5% while BMW fell 1.7% to and Fiat fell 1%. BAE Systems dropped 2.5% in London after the Telegraph newspaper reported that the Saudi Arabia government may transfer a fighter jet deal from BAE Systems to Dassault Aviation of France. Oil services company Technip was down 3% after Eni of Italy said late Friday that it was not planning to bid for the company.

Oil and gold

Oil prices advanced Monday as the market opened after the long Thanksgiving weekend, but stayed within the range of the last eight weeks with little geopolitical or weather news to drive prices. Light sweet crude oil for January delivery rose 31 cents to $59.55 a barrel in electronic trading on the NYME.

Gold opened higher on Monday at $638.00 an ounce, up $4.20 an ounce from the close of $633.80 on Friday.

Currencies

The euro edged lower against the dollar on Monday following a steep climb last week, but remained above $1.31. The euro bought $1.3112 in morning European trading, down from the $1.3167 it bought over the weekend. The British pound declined to $1.9355 from $1.9463, while the dollar rose to 116.12 Japanese yen from 115.55 yen.

[R]5:00 AM Gold surges on weak dollar and economic fears over US growth.[/R]
Gold for December delivery was up $9.60 at $638.60 an ounce in electronic trading. Silver futures were up 43 cents at $13.47 an ounce. Platinum recovered from a steep sell-off Wednesday to trade up $34 at $1,188 an ounce. Palladium was up $4.95 at $330.95 an ounce. Copper rose 11.3 cents to $3.224 a pound.

Light sweet crude oil for January delivery rose 66 cents to settle at $59.90 a barrel in electronic trading on the NYME. Heating oil ended 3.05 cents higher at $1.6970 per gallon, unleaded gasoline rose 1.02 cent to settle at $1.5990, and natural gas finished 23.8 cents higher at $7.956 per 1,000 cubic feet.

Nickel advanced to its highest in at least 19 years on the London Metal Exchange. Nickel for delivery in three months climbed $250, or 0.8%, to $33,700 a metric ton . Corn futures for March delivery rose as much as 5.5 cents, or 1.4%, to $3.9150 a bushel, the highest since July 1996, in electronic trade on the Chicago Board of Trade.