Smith & Nephew Leads London Higher

Ivaylo
18 Dec, 2006
New York City

The FTSE 100 was near a six-year high on Monday owing to strong gains for Smith & Nephew shares. Reports suggested that Smith & Nephew is still a contender in the running to buy Biomet, but is confronted by stiff competition from private equity groups. Also, BT dipped as it struggles to resolve its huge pension deficit. The FTSE 100 in London traded unchanged in mid-afternoon down 1.40 points, or 0.02%, at 6,258.60.

[R]9:30AM The FTSE 100 traded unchanged near six-year high on Monday.[/R]
The FTSE 100 in London traded unchanged in mid-afternoon down 1.40 points, or 0.02%, at 6,258.60.

Advancers

Smith & Nephew leads the advancers on a broker upgrade, up 8.8% despite reports it is not the favourite to win the race for US group Biomet, with private equity groups now said to be in ahead. Marketmen are suggesting that Smith & Nephew could be a target once the Biomet auction is dealt with. Merrill Lynch upgraded Smith & Nephew to buy and raised its price target.

Petrofac, the oil services company, announced its profits would be towards the top end of current market expectations. Its shares rose 3.7%.

Drug developer SkyePharma, 6.90% higher, announced the US Food and Drug Administration had approved modifications to its asthma treatment Foradil Certihaler.

National Express reported it is trading ahead of forecasts. The trains division witnesses a better second half with strong passenger growth.

Decliners

BT Group declined as the telecommunications group unveiled plans to reslolve its huge pension deficit. BT is ready to pay 500 million pounds into the fund this month followed by another 280 million pounds per year between 2009 and 2015 in a bid to address its 3.4 billion pounds deficit. Its shares shed 2.1%.

Software group nCipher was lower 10.00%, giving a warning that its recent acquisition Abridean has turned out a disappointment and that it will now take longer than thought before for Abridean to make a profit.

[R]7:30AM Asian markets rose on Monday, helped by gains in Japanese exporters.[/R]
Asian markets advanced on Monday. The Nikkei 225 Index in Japan advanced 0.3% to 16,962.11. Exporter Honda advanced 2.6%, while camera and chip-equipment maker Nikon gained 1.2%. Toyota also added 1.5% after the a newspaper report claimed the auto maker plans to build 9.45 million vehicles world-wide in 2007, a rise of 400,000 over 2006. Toshiba jumped 1.3% after a weekend announcement that its U.S.-based Westinghouse Electric unit cut a deal to build four nuclear power plants in China.

The Hang Seng Index in Hing Kong advanced 0.4% to 1919,2.91. China Mobile gained on speculation that China will soon issue 3G wireless licenses. It finished 1.9% higher. China Life, surged 10.2% after Merrill Lynch lifted its price target. Hutchison Whampoa restricted the market gains, shedding 0.8% as speculation it would sell its 3G wireless operations in Europe faded away.

Australia S&P ASX/200 gained 0.3% to 5,591.50, despite miners being broadly lower, tracking falls in industrial metals prices. Shares of BHP Billiton shed 1.4%, while the other large-cap Rio Tinto declined 1.1%. Share indexes in South Korea gained 0.8%, while New Zealand NZX-50 Index fell 0.01% to 3,991.88. Taiwan Weighted Price Index advanced 1.1% to 7,624.62, and Singapore Straits Times Index advanced 1.1% to 2,963.44. China Shanghai Composite Index also gained 2.6% to 2,332.43.

[R]6:30AM European markets gained on Monday supported by Norsk and Statoil deal.[/R]
European markets were broadly higher on Monday. By mid morning, the FTSE 100 in London was flat at 6,259.3, Frankfurt Xetra Dax gained 0.2 % to 6,599.51 while the CAC 40 in Paris retreated 0.1 % to 5,535.67.

Advancers

Norsk Hydro of Norway gained 24.2% and Statoil gained 3% after the companies agreed to merge their oil and gas activities, creating a national champion with combined production of 1.9 million barrels a day. The merged company would become the largest offshore energy producer in the world.

Italian carmaker and industrial group Fiat advanced 2.2% after official of the company stated that it would pursue international alliances. Volkswagen advanced 1.6% as the battle for control of the German carmaker heated. Press reports revealed the state premier of Lower Saxony is to meet leading institutional investors to gauge whether to oppose a likely decision by Porsche, largest shareholder of VW. Shares in Porsche rose 1%.

Atlas Copco rose 2.5% after Deutsche Bank announced it was resuming coverate of the stock with a buy. Dutch computer services company Getronics gained 4.2% after it was reported that Telefónica, the Spanish telecoms group, was considering a bid approach.

Decliners

BT Group declined 2.1% following its statement that under more conservative valuation standards, its pension scheme deficit at Dec. 31, 2005, was 3.4 billion pounds. Also, Tate & Lyle dipped 3% after it said that sugar pricing is unlikely to recover in Europe in 2007. Irish banks declined as investors took profits after a recent strong trading. Allied Irish shed 1.6%, while Bank of Ireland lost 1.4%.

Oil and gold

Oil prices declined from highs last week but was above $63 a barrel in early Monday trading. Light sweet crude oil for January delivery fell 29 cents to $63.14 as traders cashed in on gains last week. February Brent crude at London ICE Futures exchange retreated 24 cents to trade at $63.25 a barrel.

Gold traded in London at $617.50 per troy ounce, down from $622.83 late Friday. In Zurich, gold traded at $615.60, down from $621.70.

Currencies

The U.S. dollar was broadly down against other major currencies in European trading Monday morning. The euro traded at $1.3089, up from $1.3078 late Friday. The British pound traded at $1.9489, lower from $1.9503. The dollar bought 117.72 Japanese yen, down from 118.16.

[R]5:00AM Gold, silver and copper futures declined Friday on dollar strength.[/R]
Gold for February delivery finished $11.80 lower at $619.10 an ounce on the New York Mercantile Exchange. March copper declined $2.9925 a pound before ending at $3.0165 a pound, 4.1 cents lower for the session and 3.1% lower from last week. Silver futures fell in unison with with gold and copper, with its March contract shedding 97 cents to close at $12.98 an ounce. Other metals also declined with January platinum dipping $8.20 to close at $1,104.50 an ounce while March palladium slipped $6.80 to finish at $324.25 an ounce, 2.9% lower from a week ago. On the London Metals Exchange, cash prices for zinc stood at $4,464 per metric ton on Thursday.

Crude oil futures rose above $63 a barrel on Friday, finishing a week that rekindling the supply concerns on the market with news of U.S. oil inventories dropping and the decision of OPEC to reduce production in February. Crude oil for January delivery on the New York Mercantile Exchange added 92 cents to end at $63.43 a barrel Friday. Heating oil futures gained 0.52 cent to end at $1.7817 a gallon, unleaded gasoline advanced 2.13 cents to close at $1.6863 a gallon, and natural gas futures slipped 14.6 cents to finish at $7.409 per 1,000 cubic feet. At ICE Futures exchange in London, Brent crude for February, the new front month, gained 60 cents to close at $63.49 a barrel.