London Erases Early Profits

Ivaylo
11 Dec, 2001
New York City

Profit taking and a weak oil sector erased gains at Corus and bid excitement elsewhere, leaving London little changed despite signs that Wall Street will start wih an early lead. Oil large-caps dragged the leading index from early highs as crude prices slipped. The energy sector was in the doldrums. BP, Cairn Energy, Royal Dutch Shell and BG are all in the red, while the tobacco sector was also lower on profit taking. In afternoon trade, the FTSE 100 was little changed, at 6,153.

[R]9:30AM The FTSE 100 is little changed with gains on Corus erased by weak oil.[/R]
In afternoon trade, the FTSE 100 in London was flat, at 6,153.

Advancers

The Anglo-Dutch steel manufacturer Corus is the most sought after company after Brazilian group CSN launched a revised bid. The company shares are currently trading at a premium to CSN’s offer in the belief that this battle is not over. Corus advanced 5.30%.

Prudential has re-stated its commitment to its loss-making internet bank, Egg, after rebuffing a rumoured offer for the online bank from Citigroup. Prudential gained 0.95%.

Pearson, up 1.51% has sold its Pearson Government Solutions, its government services business, to private equity firm Veritas Capital and 10% of the equity of the business.

Decliners

BP declined 0.34%, Cairn Energy was 1.09% lower and BG declining 0.73% led the enegry sector down, while Royal Dutch Shell, also in the red 1.03%, has made new proposals to give up control of the huge Sakhalin-2 energy project to Russian Gazprom.

Life insurer Resolution is one of the biggest decliners though JP Morgan started coverage with underweight advice. Computer company Filtronic expects a flat performance in the second half, with both Compound Semiconductors and the Point to Point activity not expecting to show revenue growth. Filtronic plunged 4.36%.

The tobacco sector was also badly hit on profit taking following last week bid for Gallaher, down 0.43%. Imperial Tobacco and BAT traded to the same result, lower 1.51% and 0.89%, respectively.

[R]7:30AM Asian markets advanced on Monday buoyed by Japanese stocks.[/R]
Asian markets finished higher on Monday, led by a surge in Japanese export-oriented stocks. In Japan, the Nikkei 225 Index ended at 16,560.80, up 0.87%. Stocks were boosted by advances in auto and other exporters stocks as the yen plunged against the dollar. Toyota gained 1.4%, while Nissan added 0.6% after the the company announced it would launch a fuel cell vehicle in the early 2010s in Japan and North America as part of its mid-term environmental strategy. Other advancers included Nippon Steel, which rose 4%, and Nintendo, which jumped 3.6%.

In Hong Kong, the Hang Seng Index gained 1% to 18,924.66. Hutchison Whampoa advanced 2.3% on talk the Hong Kong-listed conglomerate will sell its loss-making 3G mobile operation in the United Kingdom. China Mobile rose 1.7%, bouncing back after shedding 4.3% Thursday and Friday after an institutional investor sold shares in the firm.

The Korea Composite Stock Price Index, or Kospi, finished up 0.02% at 1,390.73, bucking the downtrend after five sessions in a row of declines last week. Shares of Woori Finance surged 4% on foreign buying after losing 7.4%. Posco gained 1.2%, although it said it will jointly buy iron ore with Nippon Steel next year as part of an expanded strategic alliance.

Other indexes around the region also gained. The Shanghai Composite Index added 2.47% to 2,145.30 and Australia S&P/ASX Index 200 ended up 0.81% to 5,469.70, while New Zealand NZSX-50 Index rebounded as it strayed from the overall trend and closed down 0.03% at 3,887. Taiwan Taipei Weighted Price Index fell 0.32% to 7,612.12 and Singapore Straits Time Index gained 0.8% to 2,887.23.

[R]6:30AM European markets gained in early trading Monday on strong steel shares.[/R]
European markets were higher on Monday. By mid morning, London FTSE 100 rose 0.4%, Frankfurt Xetra Dax gained 0.5% to 6,462.11, and the CAC 40 was 0.7 % higher at 5,422.5.

Advancers

Continental shares gained 2.3%. Corus, the Anglo-Dutch group, was 4.6% higher on the prospect of a bidding war as Tata Steel of India said it was reconsidering its position after CSN, the Brazilian steel company agreed to buy Corus for 4.9 billion pounds. Mittal Steel, gained 2.3% and ThyssenKrupp gained 0.6%.

Deutsche Börse advanced 2.9% as weak hopes surfaced that Euronext proposed merger with NYSE Group might not yet be a cut deal, leaving the German exchange operator with a chance of an alternative offer.

Decliners

Autostrade, the Italian road builder and operator, declined 3.4% as hopes of a takeover by Spanish peer Abertis evaporated. Shares in Abertis were 2% higher. Oil groups were lower as crude prices declined. Royal Dutch Shell was off 0.5% as it entered talks with Russian Gazprom over control of the Sakhalin-2 liquefied natural gas project off the Russian far-east coast.

Oil and gold

Crude oil was little changed due to speculation that global stockpiles will limit the effect if OPEC cuts production later this week. Crude oil for January delivery was trading for $61.87 a barrel, down 16 cents, in electronic trading on the NYME in early trading in London. The Brent contract for January settlement on the London-based ICE Futures Exchange gained 37 cents to $62.57.

Gold traded in London at $625.50 per troy ounce, down from $636.00 late Friday.

Currencies

The U.S. dollar was mostly up against other major currencies in European trading Monday morning. The euro traded at $1.3193, down from $1.3200 late Friday.The dollar bought 116.89 Japanese yen, up from 116.47. The British pound traded at $1.9503, down from $1.9525.

[R]5:00AM Gold and silver stocks dropped on Friday on stronger dollar.[/R]
February gold lost $6 a troy ounce to end at $631 on the New York Mercantile Exchange. March silver dropped 14 cents to finish at $13.895 and January platinum dipped $17.10 to $1,107.80 an ounce. March palladium advanced $2.95 to $333.95 an ounce. The top-traded March copper contract advanced 1-cent to end at $3.1120 per pound.

The January crude oil declined 46 cents to $62.03 a barrel after reaching $63.65 but failing to rise above $64. January heating oil lost 2.15 cents to end at $1.7573 a gallon after advancing to $1.8190 a gallon. January unleaded gasoline slipped 0.62 cent to $1.6213 a gallon while January natural gas moved 11.0 cents lower to finish at $7.561 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 0.05 cent down at $1.2185 a pound. March futures of raw sugar in foreign ports gained 0.15 cent to close at 11.37 cents a pound.