London Lower at Mid-day

Ivaylo
28 Nov, 2006
New York City

London markets opened to a volatile session on Tuesday due to continued concern about the weak dollar and the effect on the US economy. ITV is the best performer following the shock arrival of Michael Grade as its new executive chairman. The appointment is seen as a major coup for the commercial broadcaster. Scottish Power was flat despite agreeing a deal with Iberdrola of Spain. By late morning, the FTSE 100 was down 14 points, or 0.2%, to 6,036.1.

[R]9:30AM London was lower in early trading Tuesday on US markets close.[/R]
By late morning, the FTSE 100 was down 14 points, or 0.2%, to 6,036.1.

Advancers

ITV led the gainers, up 1.3%. The commercial broadcaster has pulled off a coup by luring Michael Grade, chairman of the BBC, to become its new executive chairman. Grade is very well-known and has a strong broadcasting CV at the BBC, LWT, Channel 4 etc. Given the management vacuum at ITV, this should be taken well by the market.

Still with media, EMI Group jumped 6.5% on reports that the company was in talks with private equity groups about a possible bid worth 2.5 billion pounds or more.

Telecoms firm Kingston Communications posted a three-fold increase in half year pre-tax profit and is confident about trading in the second half. Kingston Communications rose 1.12%.

Tobacco group Gallaher was a leading advancer, up 1.6%. Yell Group firmed 1.3% as Goldman Sachs upgraded the directories company from neutral to buy.

Decliners

Scottish Power was flat despite it agreeing a deal with Iberdrola of Spain, which will buy the company for 11.6 billion pounds in cash and shares.

Old Mutual lost 3.8% as the life assurer said the market and exchange rate factors that had affected third-quarter results were likely to continue into the fourth quarter. Barclays bank dropped 1.7% as bad debts at its Barclaycard credit card unit continued to rise.

British Energy fell 1.5%, Drax Group slid 1.3% and Scottish & Southern Energy was lower by 1.3%. Kelda Group was also lower, down 1%, despite announcing plans to return 750 million pounds to shareholders following the completion of its Aquarion disposal.

BAE Systems lost 1.3% after Saudi Arabia suspended negotiations over the 10 billion pounds purchase of a new fleet of Eurofighter Typhoon jets.

[R]7:30AM Asian markets decline sharply Tuesday following US markets fall.[/R]
Asian markets finished sharply lower on Tuesday. Tokyo''s Nikkei 225 Index pared sharp losses to end 0.19% lower at 15,855.26, as export shares such as Honda Motor and Matsushita Electric Industrial retreated on concerns that a stronger Japanese yen will have an impact on earnings derived from overseas. Honda Motor third largest automaker by sales in Japan, fell 1.7%, while Matsushita Electric Industrial Co. maker of the Panasonic brand of consumer electronics, fell 0.9%.

Australian S&P ASX/200 slipped 1.3% to 5,384.30, led lower by weakness in BHP Billiton and other natural-resources shares. Shares of BHP Billiton fell 1.6%, while fellow Australian miner Rio Tinto shed 2.2%. The Kospi in South Korea sank 1%. In Seoul, Samsung Electronics skidded 1.9% and Hynix Semiconductor fell 1.7%.

The Hang Seng Index plunged 564.48 points, or 2.9%, to 18,639.53. Hong Kong-listed Li & Fung Ltd fell 4.1%. Shares of China Shipping Container Lines Ltd plunged 8.6%. The China Enterprises Index, a gauge of China-incorporated stocks listed in Hong Kong, dipped 4.5%. Malaysia KLSE Composite was lower by 1%. Indonesia Jakarta Composite fell 2.2% and Thailand SET Index ended down 1%. Singapore Straits Times Index fell 1.9%.

[R]6:30AM European markets fell in early trading Tuesday on dollar-sensitive sectors.[/R]
European markets were lower in early trading on Tuesday. The U.K. FTSE 100 index lost 0.48% to 6,020.80, the German DAX Xetra 30 index declined 0.43% to 6,270.60, while the French CAC-40 index lost 0.64% to 5,274.64.

Decliners

The FTSE 100 traded lower weighed down by financials such as Barclays, down 1.5%, after a recent strong performance. Insurance group Old Mutual was losing 4.1% after its adjusted embedded value per share, a measure of the company asset value and the present value of future profits, eased 1.7% from the second quarter.

Scottish Power shares lost 0.9% after it agreed to a $22.5 billion cash-and-shares takeover bid from Iberdrola of Spain. Akzo Nobel shares dropped 1% in Amsterdam after its Organon unit and Pfizer ended their joint effort to develop asenapine, a new-drug candidate to treat schizophrenia and acute mania associated with bipolar I disorder.

DaimlerChrysler fell 2.8%, Peugeot shed 2.5% and Volkswagen closed 1.6% lower. Michelin, the tyremaker, fell 4% and Continental slipped 3.5%. Among other big dollar earners, Siemens fell 2.9%. Chip maker Infineon Technologies lost 0.7% in Germany.

Advancers

Music company EMI Group rose 7.4% in London after the Financial Times reported that the company is in talks with private-equity groups about a possible bid for the company. Pharmaceutical company Bayer rose 2% after it reported a forecast-beating rise in third-quarter operating profits, largely due to a strong showing from its healthcare division.

Oil and gold

Oil was steady above $60 a barrel on Tuesday after rising more than $1 the previous session, partly on forecasts of a cold spell in the U.S. Northeast. U.S. crude was down three cents at $60.29 a barrel by 0929. London Brent crude was up seven cents to $60.51.

Gold declined for the first day in eight in London after a rally earlier this month deterred jewelry buyers, the biggest consumers of the precious metal. Gold for immediate delivery in London fell $3.40, or 0.5%, to $637.20 an ounce at 9:45 a.m. local time.

Currencies

The euro held steady against the U.S. dollar on Tuesday ahead of U.S. economic data that could offer new direction to markets. The euro bought $1.3131 in morning European trading, marginally above the $1.3128 it bought in New York late Monday. The British pound rose to $1.9432 from $1.9371. The dollar rose to 116.30 Japanese yen from 116.08 yen.

[R]5:00AM Gold and silver futures advanced on Monday due to weakness in dollar.[/R]
December gold advanced to close at $640.60 a troy ounce on the NYME, up $11.60 from Wednesday, ahead of the long Thanksgiving weekend. December silver settled at $13.49 an ounce, up 45 cents from the close on Wednesday. January platinum slipped $6.60 to $1,147.40 an ounce while December palladium lost $1.00 to end at $325 an ounce. Most-active March copper settled 7.95 cents higher at $3.2155 per pound

The January crude oil contract gained $1.08 to $60.32 a barrel after rallying to $60.44. December unleaded gasoline added 0.47 cents to $1.5937 a gallon. December heating oil settled up 3.87 cents at $1.7052 a gallon and December natural gas moved 28.0 cents higher at $7.998 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 2.45 cents higher at $1.18 a pound, with most-active March up 2.50 cents at $1.2265. March futures for raw sugar in foreign ports put 0.34 cent up to finish at 11.81 cents a pound.