London Edges Lower on Bid Competition

Ivaylo
28 Dec, 2006
New York City

Vodafone dipped on reports that it may have to compete for bid target Hutchison-Essar, the Indian mobile phone operator. HSBC Holdings followed an advance in financial companies and in metal stocks, BHP Billiton and Anglo American Plc, increased as prices rose. Imperial Chemicals Industries Plc, the U.K.''s largest specialty chemical maker, also climbed on takeover speculation. The benchmark FTSE 100 Index lost 9.7, or 0.2%, to 6,235.50 in early trade.

[R]9:30 AM The FTSE 100 slips on Thursday as decline in Vodafone weighs.[/R]
The benchmark FTSE 100 Index lost 9.7, or 0.2%, to 6,235.50 in early trade in London, as 51 stocks declined and 44 advanced.

Decliners

Vodafone, the largest mobile-phone company in the world, lost 0.7%, as Essar Teleholdings Ltd., which is in possession of 33% of Hutchison Essar, has offered $11 billion for the rest of the company, turning the battle for control of the Indian mobile phone company into a three way fight with Vodafone and Reliance Communications

BP, the second-largest oil company by market value in Europe, shed 0.9% as crude oil traded below $61 a barrel, near a one-month low, due to mild weather reducing demand for heating fuel.

BG Group oil and gas leader, dipped 1.1% after it agreed to purchase a power plant in the New England region of the U.S. for $685 million.

Advancers

Chemical and paints firm ICI is one of the major advancers, rising 1.6%, after reports suggested it could be a bid target for Dutch rival Akzo Nobel.

HSBC, the biggest bank by market value in Europe, advanced 0.2% and Barclays, the third- largest bank by assets in the U.K., advanced 0.3%.

BHP Billiton and Anglo American advanced 0.8% and 0.3%, respectively on copper, aluminum and zinc increase on the London Metal Exchange.

PartyGaming surged 4.2%. The biggest Internet poker company in the world announced it is in talks on buying assets from Empire Online Ltd.

International Hotel Group has kept its winning streak after the stellar performance yesterday as bid rumors continue to circulate.

[R]7:30 AM Asian markets advance on Thursday, Japan finish little changed.[/R]
Asian markets finished higher on Thursday. The Nikkei 225 Index rose fractionally 0.01% to close at 17,224.81. Stocks were led higher by steels and brokerage-house shares. Nippon Steel surged 5.3% and Kobe Steel gained 3% on sustained expectations of robust earnings and expectations for realignment in the industry. Inpex Holdings slipped 0.2%, though, on caution about chasing upside following one-month rally in market. Other advancers included brokerage-firm stocks, with Daiwa Securities Group rising 0.8%. Shares of digital camera maker Canon fell 0.9% and Kyocera and Advantest were down respectively 0.6% and 0.5%.

In Hong Kong, strong fund inflows and rotational buying of large-caps helped fuel the benchmark index to a record high for the third consecutive session. The Hang Seng Index gained 1.4% to 20,001.91 an all-time high. BOC Hong Kong, the Hong Kong-listed arm of Bank of China, gained 8.4%, and Bank of Communications rose 1.5%. But China Construction Bank retreated 0.2% and ICBC shed 1.2%, as investors estimate their valuations as too high.

In South Korea, the Korea Composite Stock Price Index, or Kospi, ended up 0.7% at 1,434.46. Korean Air gained 2.3%, after the company announced that it aims to achieve 640 billion Korean won ($689.2 million) in operating profit in 2007, 14% higher than its target of 560 billion won for 2006.

Indexes in Australia, New Zealand and Singapore also advanced after finishing at record highs Wednesday. Australia S&P/ASX Index advanced 0.3% to 5,660.50, New Zealand NZX-50 rose 0.4% to 4,047.29 and Singapore Straits Times Index put up 0.1% to 2,963.49. Taiwan Weighted Price Index closed flat at 7,732.93.

[R]6:30AM European stocks canceled out earlier gains on Thursday due to oil stocks.[/R]
European markets were flat on Thursday. By mid morning, the FTSE 100 in London was flat at 6,245.3, Frankfurt Xetra Dax edged slightly higher at 6,610.95 and the CAC 40 in Paris was down 0.1% at 5,532.51.

Advancers

Property stocks were in focus as investors welcomed news from the US housing market as data showed sales of new homes rose 3.4% in November, topping forecasts. British Land gained 2%, while Land Securities Group added 1.5%. The decision of Dutch property group Rodamco Europe to buy a 50% stake in a Moscow shopping centre was also seen as a positive event. . Rodamco shares advanced 0.6%.

The housing data coming out of Britain also beat forecasts, with U.K. house prices up 10.5% for the year, according to the Nationwide Building Society. Shares in home builder Persimmon advanced 1%.

SAP shares gained 0.8% after a company official told a German newspaper that a double-digit growth is foreseen in coming years, powered by order growth and new products.

Siemens, the German conglomerate, advanced 1.1% after winning a 7.1 billion euros deal to modernise and manage the non-military IT systems of the country armed forces over 10 years.

Decliners

After crude prices dipped more than 3% over the past three days, oil stocks performed badly on Thursday, leading the markets lower. BP shed 0.7%, while BG Group shed 1.2%.

Also, Vodafone Group shed 0.5% after the U.K. telecom group lodged reportedly a bid for Hutchison Essar, which values the Indian operator as a whole at $17 billion to $18 billion.

Oil and gold

Crude oil for February delivery advanced 16 cents to $60.50 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London. Brent crude for February settlement traded at $60.70 a barrel, up 18 cents, on the London-based ICE Futures exchange.

Gold opened Thursday at a bid price of $628.02 a troy ounce, up from $627.00 late Wednesday.

Currencies

The euro was slightly higher against the U.S. dollar on Thursday in thin holiday-season trading. The euro bought $1.3132 in morning European trading, compared with $1.3123 in New York late Wednesday. The British pound advanced to $1.9575 from $1.9564. The dollar bought 118.77 Japanese yen, up marginally from 118.74 yen on Wednesday.

[R]5:00 AM Gold futures advanced on Wednesday on a fall of the dollar.[/R]
At settlement, February gold gained $3.40 to end at $630.30 a troy ounce on the New York Mercantile Exchange, while March silver finished 20 cents higher at $12.925 an ounce. January platinum closed $7.30 lower at $1,115.70 an ounce, while March palladium ended 30 cents lower at $328.90 an ounce. The most-active March copper contract advanced 3.60 cents to settle at $2.9140 per pound.

The front-month February crude oil contract shed 76 cents, or 1.2%, to $60.34 a barrel. That was the lowest finish for the front-month contract since Nov. 27. January heating oil fell 1.45 cents to settle at $1.6088 a gallon, while January unleaded gasoline rose 1.53 cents to close at $1.5875 a gallon. Natural gas for January delivery closed Wednesday 27.5 cents lower at $5.838 a million British thermal units

On the New York Board of Trade, Arabica coffee surged on fund buying and March coffee finished 1.20 cents higher at $1.2890 a pound, while May coffee advanced 1.15 cents to settled at $1.3185 a pound. Raw sugar in foreign ports slipped partly due to technical sales. The March contract finished 0.07 cents lower at 11.79 cents a pound.