Banking Shares Help Europe

Elena
08 Dec, 2006
New York City

European stocks closed modestly higher Friday, as gains in the banking sector managed to offset weakness among mining stocks. Barclays climbed 3.3% in London on speculations Bank of America is interested in making a bid for $117.6 billion, offering a premium of 25% to 30%. The U.K. FTSE 100 rose 0.3%, followed by the German DAX 30, up 0.2%, and the French CAC 40, up 0.1%.

[R]1:30PM European markets finished higher, supported by banking stocks.[/R]
European stocks closed modestly higher Friday, as gains in the banking sector managed to offset weakness among mining stocks. European markets were particularly volatile in afternoon trading as traders digested better-than-expected U.S. jobs data. Barclays climbed 3.3% in London on speculations Bank of America is interested in making a bid for $117.6 billion, offering a premium of 25% to 30%. Other U.K. banking stocks, including Lloyds TSB and Royal Bank of Scotland, also advanced. Other European banking stocks were broadly lower, with Societe Generale, down 0.2% and BNP Paribas down 0.7% in Paris after Citigroup downgraded the European banking sector to neutral from overweight. Weakness in metals shares limited gains. Shares in BHP Billiton lost 2.8%, shares of Rio Tinto dropped 1.9% and shares of AntoFagasta closed down 4.2% after Merrill Lynch downgraded the mining sector to neutral, citing concerns over a slowing global economy next year and manipulation of metal prices by hedge funds and other investors. The U.K. FTSE 100 rose 0.3%, followed by the German DAX 30, up 0.2%, and the French CAC 40, up 0.1%.


Crude oil prices surpassed $63 on concerns over oil production cuts and violence in Nigeria. Crude oil January contract jumped $1.01 to $63.50 a barrel. Heating oil added to $1.7970 a gallon, while gasoline added to $1.6385. Natural gas rose 5 cents to $7.772 per 1,000 cubic feet. London Brent rose 93 cents to $63.50. The U.S. dollar was mixed against its major currency rivals. The euro was quoted at $1.3321, up from $1.3280. The dollar bought 115.40 yen, up from 115.29. The British pound was quoted at $1.9673, up from $1.9620. European gold prices advanced. In London, gold traded at $636 per troy ounce, up from $626.35. In Zurich, the precious metal traded at $632.85 per ounce, up from $625. Silver closed at $13.90, up from $13.50.


[R]11:30AM Stocks turned higher, shrugging off disappointing consumer confidence data.[/R]
Stocks turned higher as market shrugged off a lower-than-expected consumer confidence reading and focused on better-than-expected employment report. The University of Michigan''s preliminary consumer confidence reading for December came in at 90.2, lower than the reading of 92 and the 92.1 seen in November. In another report, the Labor Department reported that the U.S. economy added 132,000 jobs last month, greater than the expected increase of 105,000.

Small-cap firms Heelys and Allegiant Travel rallied 60% and 40%, respectively, in their stock market debuts Friday. Heelys ((HLYS)), a maker of children''s sneakers, jumped over its price range of $16 to $18 to set its IPO at $21 a share. The stock opened at $30.30 and rose to $34.70 for a gain of about 65%. Allegaint ((ALGT)) priced its IPO at $18, above its $15-$17 range. The IPO opened at $24 a share and rose to $25.23 for a gain of 41%.

Airline stocks declined amid rising oil prices, with Frontier Airlines ((FRNT)), down 4.4% and Alaska Air ((ALK)), down 1.1%. In other corporate news, Xilinx Inc. ((XLNX)) fell 5.8% after the chip maker lowered its Q3 forecast, pointing to unexpected weakness in its business. Dow component 3M Corp. ((MMM)) fell 1.4% after Prudential Equity Group cut his rating on the diversified manufacturer. Yum Brands Inc. ((YUM)) fell 3.4% on brokerage downgrade. In late morning trading, the Dow Jones industrial average was up 39.33, or 0.32%, at 12,317.74. The Standard & Poor''s 500 index was up 4.93, or 0.35%, at 1,412.22, and the Nasdaq composite index was up 13.52, or 0.56%, at 2,441.21. Bonds were little changed with the yield on the benchmark 10-year Treasury note flat at 4.49% from late Thursday.


[R]10:30AM The Sensex fell Friday due to profit-booking and consolidating positions.[/R]
The Sensex on BSE lost 172.54 points, or 1.23% to end at 13,799.49. It opened higher, at 14,007.67 but finished off the intra-day high due to profit-taking. The market-breadth was weak, with over 3 decliners for every 2 advancers. As 1,606 shares declined, 967 advanced. and 57 shares were unchanged. From the Sensex stocks, 27 declined, while the remaining 3 advanced. The turnover on BSE was Rs 4,061 crore, higher than Rs 3,819 crore on Thursday. The turnover on NSE was Rs 7,556.04 crore, higher than Rs crore 7,480.37 on Thursday.

Economic news

The wholesale price index of India advanced 5.30% in the 12 months to 25 November, slipping from the previous week annual increase of 5.45% as food and energy prices declined.

Delivering a speech at the first Indo-Arab World CEO Summit in Dubai, Indian Commerce Minister stated that India with an infrastructure investment requirement of about $400 billion in the next 5 years and a favorable investor policy environment, would surely be an excellent investment opportunity over the long term.

Most-active stocks

Reliance Communications was the most-active stock with a turnover of Rs 160.35 crore followed by HDFC, Reliance Industries, i-flex and Parsvnath.

Advancers

Reliance Energy led the advancers, gaining 1.96% to Rs 552.65, on 3.02 lakh shares. The stock traded in a broad range of Rs 567.90 - Rs 541. Grasim also added 0.06% to Rs 2,750 and Dr Reddy’s advanced 1.50% to Rs 769 in a session of declines.

i-flex solutions zoomed 16.90% to Rs 2,047, after Oracle Corp sweetened the open offer price for i-flex to Rs 2,100 per share. Oracles wants to have a 90% stake in i-flex, a much larger one than the previously thought 75% stake.

Oracles move triggered a rally in some IT stocks. Polaris Software jumped on the bandwagon, 8.22% higher to Rs 146.75, Geometric Software surged 5.26% to Rs 119, Nucleus Software gained 4.66% to Rs 529.45 and Subex Azure soaring 5.14% to Rs 665.35.

Sugar stocks continued their upward trend on beliefs that the sugar export ban may be lifted soon. Bajaj Hindusthan gained 1.80% to Rs 254, Simbhaoli Sugars was 2.10% higher to Rs 69.50), Rajshree Sugars moved up 1.67% to Rs 88.40 and Balrampur Chini added 1.42% to Rs 89.25.

Decliners

It was a tough session for Tata Motors, off 3.44% to Rs 861.50, as 3 lakh shares were traded on the market. Other major decliners from the Sensex stocks included ACC declining 2.95% to Rs 1,100, Hindalco losing 2.86% to Rs 178.15 and Hindustan Lever shedding 2.75% to Rs 233.75.

Reliance Communication slipped 2.30% to Rs 445.85, while Index heavy Reliance Industries shed 2.68% to Rs 1,265.90, on a volume of 11.20 lakh shares. State Bank of India dipped 0.31% to Rs 1,342. stating that it plans to start operations in Israel by March 2007 and also is keen to enter Pakistan. NTPC lost 0.46% to Rs 151, following Merrill Lynch improving the price target on the stock.

Metal shares continued their downward trend on BSE. Tata Steel slipped 2.54% to Rs 479, Sterlite Industries lost 3.13% to Rs 553, Maharashta Seamless slid 2.76% to Rs 448.90, Jindal Steel & Power declined 3.57% to Rs 2,130, JSW Steel was off 2.13% to Rs 329.25. UTV Software dipped 5.32% to Rs 262.60, although it bought two gaming companies, one in India and another in the UK.

Indian Oil Corporation, the largest refiner in India, declined 2.42% to Rs 435.05. The are reports that the company acquired a 12.5% stake in the trans-Anatolian Pipeline Company, which is constructing a pipeline from Turkish Black Sea port of Samsun to Ceyhan.

Mahindra & Mahindra shed 2.23% to Rs 828, following its statement on Friday that group company Mahindra Engineering & Chemical Company had sold its cable accessories division to 3M Electro & Communication India.


[R]9:45AM Stocks opened modestly higher, boosted by employment report.[/R]
Stocks opened modestly higher Friday amid easing concerns about the health of the U.S. economy. The long awaited employment report brought some relief to the market as the Labor Department said 132,000 jobs were created in November, greater than the expected increase of 105,000. Unemployment ticked up to 4.5%. However, sharply higher oil prices and weaker dollar limited gains.

In corporate news, Xilinx ((XLNX)) dropped 5.9% after the chip maker lowered its Q3 earnings forecast, pointing to unexpected weakness in its business. Yum Brands Inc. ((YUM)) fell 2.6% amid growing concern about an outbreak of E. coli in some of its restaurants. Wachovia cut its rating on the company to Market Perform from Outperform. 3M Co. ((MMM)) weighed, falling 2% after Prudential downgraded the stock to neutral from overweight, citing valuation. Hewlett-Packard Co. ((HPQ)) fell 0.5% after it agreed to pay $14.5 million to settle charges related to the spy scandal. At the same time, shares in Oracle Corp ((ORCL)) gained 0.7% after late Thursday the company raised by 42% its bid for India''s i-Flex Solutions shares. In the first hour of trading, the Dow Jones industrial average was up 13.05, or 0.11%, at 12,291.46. The Standard & Poor''s 500 index was up 2.40, or 0.17%, at 1,409.69, and the Nasdaq composite index was up 4.97, or 0.20%, at 2,432.66.


[R]9:30AM The FTSE 100 was lower on Friday due to weak mining stocks.[/R]
The FTSE 100 in London was fractionally lower 0.07% at 6,128 in afternoon trading.

Advancers

The newspaper and education publisher, Pearson, made steady gains on the back of reports that private equity bidders are circling the group. There was also some talk of interest in its French daily, Les Echos. Pearson was up 1.33%.

Imperial Chemical Industries was also higher 2.04% on reports of a possible tie-up with Holland''s Akzo Nobel following the sale of its Quest business.

Shares in Yoomedia surged 40% following news that it had agreed to provide some of its most popular games for BT new next-generation TV service, BT Vision.

UK high street bank Barclays was up, 1.49% for a second day as reports of a possible bid from Bank of America refuse to go away. Royal Bank of Scotland and Lloyds TSB were also higher, 0.31% and 1.00% respectively.

Swedish healthcare equipment firm Getinge has agreed to purchase Huntleigh Technology Getinge offer helped shares in Huntleigh zoom 26.93%.

Decliners

The mining sector was in the red after Merrill Lynch lowered the sector to neutral on worries about a slowdown in the global economy. The broker downgraded Antofagasta and Kazakhmys to sell and lowered BHP Billiton, Rio Tinto and Xstrata to neutral. Antofagasta dipped 5.14%, Kazakhmys slipped 3.93%, BHP Billiton was off 2.98%, Rio Tinto declined 2.17% and Xstrata declined 2.61%.

Benson & Hedges producer Gallaher also lost despite Citigroup upgrading the shares to hold” from sell in the wake of news of the takeover approach. Gallaher shed 2.52%.


[R]9:00AM Stocks futures rose on upbeat payrolls data.[/R]
Wall Street sentiment turned positive after a long awaited government report showed that jobs created in November were more than expected, easing worries about the economy''s health. The report showed that non-farm payrolls rose by 132,000 jobs, following a downwardly revised increase of 79,000 in October. Economists had expected an increase of about 105,000 jobs. The data also showed that the unemployment rate edged up to 4.5% in November from 4.4% in October.

The Nasdaq is expected to come under pressure amid disappointing news from two chipmakers after the bell. National Semiconductor Corp. ((NSM)) posted a lower quarterly profit, while Xilinx Inc. ((XLNX)) cut its outlook for the current quarter. Xilinx Inc. fell 4.6% after the bell, while National Semiconductor declined 1.8%. Standard & Poor''s 500 futures were up 3 points, above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were up 23 points, and Nasdaq 100 futures were up 3.75 points.


[R]U.S. economy added more jobs than it was expected.[/R]
The Department of Labor released its report on the employment situation in the month of November on Friday, showing that the U.S. economy added more jobs than economists had been expecting. The report showed that non-farm payrolls rose by 132,000 jobs in November following a downwardly revised increase of 79,000 in October. Economists had expected an increase of about 105,000 jobs compared to the increase of 92,000 originally reported for the previous month. At the same time, the job growth in September was revised up significantly to 203,000 from the previously reported 148,000. The Labor Department said that the job growth in November came as job gains in service-providing industries such as professional and business services, food services, and health care more than offset declines in construction and manufacturing. The report also showed that the unemployment rate edged up to 4.5 percent in November from 4.4 percent in October. The modest increase in the unemployment rate was anticipated by economists. Average hourly earnings also moved modestly higher, edging up $0.03 to $16.94 in November. With the increase, average hourly earnings were up 4.1 percent year-over-year.


[R]8:30AM Oracle Corp. boosted its bid offer for Indian i-flex to $1.3 B.[/R]
Oracle Corp. ((ORCL)), the world''s biggest maker of database software, improved its offer for Indian banking software provider i-flex Solutions Ltd. to $1.3 billion. The new offer means Oracle is bidding for nearly 28.4 million i-flex shares worth 59.5 billion rupees, or $1.3 billion. Oracle said it wanted to take its stake in i-flex to 90% and raised the price it is willing to pay to 2,100 rupees per share, up 42% from 1,475 rupees previously offered. The revised offer represented a 20% premium to i-flex''s closing price on Thursday. It values i-flex at 49 times forecast earnings, versus a sector average of Indian application software makers of 24. Oracle already owns 55% of i-flex. In September it offered to pay up to $531 million to boost its stake to 75%.

The news sent i-flex shares to record highs. Before retreating to 16.5%, they hit a record of 2,055 rupees, up 17.4%.


[R]7:30AM Asian markets ended mostly lower on Friday with Japan, HK down.[/R]
Asian markets mostly declined on Friday. The Nikkei Average of 225 companies ended down 55 points, or 0.3% , to 16,417.80. October core machinery index advanced 2.8% from the previous month, but failed to match expected 5.7% growth.

NTT DoCoMo declined 1.7% after the cellular provider posted its first-ever net decline in mobile subscribers in November. Sanyo Electric Co. shed 3.1% after NTT DoCoMo said Thursday it would withdraw 1.3 million cellphone batteries made by a Sanyo unit on safety concerns. Japan Tobacco gained 4%, continuing its winning streak from the previous session.

Hang Seng Index in Hong Kong closed 0.6% lower to 18,739.99. The China Enterprises Index of stocks listed in Hong Kong, declined 0.9%. Power tool and vacuum-cleaner maker Techtronic Industries Co advanced 0.8% as the group announced it had bought Whirlpool Corp.''s. China Mobile shed 1.8%, continuing its 2.6% slip in the previous session due to reports of a large share sale by an institutional holder.

Share indexes in Malaysia dipped 0.4% while Taiwan Weighted Price Index slipped 0.7%. Kospi in South Korea also declined 1.4% and Australia S&P/ASX 200 was off 0.7% as well as Singapore Strait Times Index down 0.6%. New Zealand NZX-50 bucked the trend and gained 0.9%.


[R]6:30AM European markets were lower Friday as markets await US job report.[/R]
European markets were trading lower Friday. By mid morning, FTSE 100 in London slipped 0.2% to 6,118.3, Frankfurt Xetra Dax shed 0.3% to 6,394.01, and the CAC 40 in Paris declined 0.5% to 5,353.59.

Advancers

Banks bucked the overall downtrend and advanced. Barclays added 1.1% in the light of recent bid talks, while KBC in Belgium gained 1.9% after sturdy results this week. Capitalia in Italy advanced 2.2%.

Deutsche Börse gained 1% after Citigroup hiked its price target on the German stock exchange operator.

Decliners

Miners listed in London influenced the negative trend on the markets the most after Merrill Lynch reduced its rating on the sector and lowered some indivdual stocks. Xstrata, which was lowered to neutral, shed 3.1%, while Antofagasta and Kazakhmys, both reduced to sell shed 2.8% and 3.1% respectively.

German truckmaker Man, declined 1% on worries it may sweeten its unfriendly bid for Swedish rival Scania after it said on Thursday it was prolonging its offer period. Scania was off 0.3%.

Oil and gold

Crude oil for January delivery advanced 31 cents to $62.80 a barrel in electronic trading on the NYME, up from $62.49 a barrel on Thursday. January Brent crude at London ICE Futures exchange gained 33 cents to $62.90 a barrel.

Currencies

In early European trading, the euro traded at $1.3284, up from $1.3280 in New York late Thursday. In England, the Bank of England abstained from hiking its rate and held it firm at 5 percent Thursday. The British pound traded on Friday at $1.9674, up from $1.9620 on Thursday. The dollar gained slightly to 115.32 Japanese yen from 115.29 yen.