Europe Hits Six-Year Highs

Elena
02 Jan, 2007
New York City

European shares closed the first trading session of 2007 sharply higher, hitting six-year highs on hopes for more mergers and rising valuations. The utility sector was in the spotlight, with the world''s second largest water utility Suez rising 1.7%. The German DAX 30 rose 1.3%. The French CAC 40 climbed 1.4%, with Mittal Steel, Lafarge, and Alcatel-Lucent in the lead. London FTSE 100 soared 1.5%, led by metals and banking stocks.

[R]1:00PM European markets hit six-year highs on the first trading day of 2007.[/R]
European shares closed the first trading session of 2007 sharply higher, hitting six-year highs on hopes for more mergers and rising valuations. The utility sector that rose 37% in 2006, was in the spotlight on Tuesday. Shares in the world''s second largest water utility Suez gained 1.7% after billionaire French entrepreneur Francois Pinault left himself room to launch a late $92 billion bid for Suez as a planned merger between Suez and Gaz de France looks uncertain. The German DAX 30 rose 1.3%. The French CAC 40 climbed 1.4%, with Mittal Steel, Lafarge, and Alcatel-Lucent in the lead. London FTSE 100 soared 1.5%, boosted by metals companies like miner BHP Billiton, up 2.9%, and steelmaker Corus Group, rising 1.3% after a report that Indian Tata Steel could lift its 500 pence a share offer for the company. Banking stocks like Allied Irish Banks also provided a bost for the index, rising 4.4%.

[R]10:30 AM The Sensex on BSE advanced on Tuesday on wide rally.[/R]
The Sensex finished 155.33 points, or 1.13%, higher at 13,942.24. The market-breadth was strong as there were three gainers for every decliner. For 1,868 shares that advanced, there were 650 that declined, while 62 shares remained unchanged. Of the 30 stocks in the Sensex, 25 advanced while the rest declined. The turnover on BSE was Rs 3,380.94 crore, higher than Rs 3,419 crore on Friday. The turnover on NSE was Rs 5,938.27 crore, lower than Rs 7,556.12 crore on Friday.

Economic news

ICICI Bank on Tuesday stated it has raised interest rates on dollar and rupee deposits of accounts held in India by non-resident Indians, from January 1.

The merger of two sate owned airlines, Indian and Air India, was a subject of debate by the government of India. The government is likely to look for ways to conduct a speedy merger. State runs airlines have lost significant market shares to the domestic rivals in the last seven years. Eight domestic airlines are operating in India and at least six more airlines are likely to start operation during this year.

In trade today

Nissan Copper was the most active stock with a turnover of Rs 269.30 crore followed by Reliance Communications and Indiabulls.

Advancers

IT stocks led the advancers on the hopes of strong fourth quarter results. Satyam Computers led the advancers, up 5.04% to 508.35. TCS gained 2.46% to Rs 1,248.55, Infosys Technologies was up 1.43% to Rs 2,272.45 and Wipro advanced 1.15% to Rs 611.50.

Auto shares were also in demand on robust monthly sales figures for December 2006. Bajaj Auto surged 4.6% to Rs 2,738.75. The sales of the company in December surged 24% to 214,928 units from a year ago.

Maruti Udyog jumped 4.5% to Rs 969.25 after the company announced it sold 56,985 vehicles in December, a 23.7% increase from a year earlier. Hero Honda gained 3.61% to Rs 789.90. Bike sales edged higher in December 2006 to 245,000 units. Tata Motors gained 3.30% to Rs 929.90.

Ranbaxy Laboratories advanced 1.7% to Rs 398.40 after it was given final approval to manufacture and market Atenolol Tablets in the U.S.

Banking shares participated in the rally. ICICI Bank gained 0.7% to Rs 896.85. Index heavy Reliance Industries advanced 0.89% to Rs 1,281.65.

Mahindra & Mahindra soared 5.6% to Rs 956.10 as vehicle sales for December surged 38%. Nagarjuna Construction advanced 2.26% to Rs 219.70 after the company said it had won new orders worth Rs 255 crore.

Decliners

Tata Steel led the decliners today, down 0.81% to Rs 478.40. TVS Motor shed 2.46% to Rs 85.15. December sales dropped 4% to 103,188 units from 107,412 units a year earlier.

Other decliners included Dr Reddy down 0.8% to Rs 804.90, HDFC declined 0.6% to Rs 1,615, Hindustan Lever fell 0.25% to Rs 216 and BHEL shed 0.2% to Rs 2,293.


[R]9:30AM The London market surged on Tuesday on takeover speculation.[/R]
The main index in London, the FSTE 100, climbed 65 points, 1.1%, to 6,286.5 to its highest level since February 2001 in mid-morning trade.

Advancers

British Airways led FTSE 100 advancers helped by takeover rumors. The airline surged 2.6%. Utilities were also boosted by bid news after French billionaire Francois Pinault refused to rule out a possible takeover offer for Suez of France. Scottish & Southern Energy advanced 2.2% and Severn Trent was up 1.8%.

Miners were lifted by a strong session in Asia overnight as investors started the year buying resource stocks. Vedanta Resources and BHP Billiton both advanced 1.4%. Oil stocks made gains with Royal Dutch Shell up 1.3% and BG Group 1.1% higher.

British Land traded 1.1% up after it was one of several property companies to convert into real estate investment trusts. Land Securities gained 0.9% and Brixton was also higher by 1%.

Decliners

Beverage company Blavod Extreme was the only notable decliner, announcing it has seen growth in the last six months, though some of that has been at the cost of lower margins. The company slumped 15.38%.


[R]7:30 AM Asian markets advanced on Tuesday with HK advancing on tech stocks.[/R]
Asian markets finished higher on Tuesday, the first day of trading of the New Year. Japanese market was closed. In Hong Kong, the Hang Seng Index ended 1.7% higher at 20,310. China Mobile led the Hang Seng Index to a record high on the first trading day of the year, gaining 3.7% on a report it might seek a listing on the Shanghai Stock Exchange.

ICBC, the most active stock on Tuesday, surged 5.8%. China Construction Bank closed 2.8% higher, while Bank of China added 4.9%. Insurers also rallied with China Life, the largest insurance company in China by revenue, advancing 6.6%. Ping An Insurance gained 6.7% and PICC soared 12%.

In South Korea, Kospi Index advanced 0.1% to 1,435. Samsung Electronics added 2%, Hynix Semiconductor rose 2.3%, LG. Philips LCD advanced 5% and Samsung SDI surged 8.1%. Banks ended lower, though. Kookmin Bank shares shed 1.1% and Woori Finance Holdings declined 2.3%.

Australia S&P/ASX 200 gained marginally 0.01% to close at 5,670 with banks at the forefront of gains. National Australia Bank advanced 0.6%, Commonwealth Bank of Australia rose 0.4% and Macquarie Bank rose 0.9%.


[R]6:30 AM European markets were higher on Tuesday on utilities, industrial groups.[/R]
European markets were higher on Friday. By mid morning, FTSE 100 in London climbed 1% to 6,281.5, Frankfurt Xetra Dax gained 1% to 6,659.90 and the CAC 40 in Paris added 1.3% to 5,610.76.

Advancers

French billionaire Francois Pinault announced he would not rule out a takeover offer on Suez, whose 80 billion euro merger with Gaz de France was uncertain. Suez shares gained 1.5%, while Gaz de France added 1 %.

Mr Pinault was anticipated to break up Suez if he succeeded with a bid and sell the energy business to GDF, while the waste management and water assets were expected to be acquired by Veolia Environment. Norway Renewable Energy was boosted 3.5%.

Spain Gas Natural rose 2.6% and Iberdrola added 1.8% after the Spanish government approved higher tariffs last week.

Acciona, which bought a stake in power generator Endesa, gained 2.4%, while ACS which acquired holdings in both Union Fenosa and Iberdrola, added 1.5%.

France BNP Paribas boosted the banking sector as it gained 2.5%. It was the most active advisor to French companies on mergers and acquisitions in 2006. BBVA gained 2.4%, Banco de Sabadell added 2.5% and Banco Popular climbed 2.6%.

Decliners

There was only one notable decliner in early European trade. Shares in Veolia were down 3.6%.

Oil and gold

Oil rebounded to $61.34 a barrel in New York and Brent crude also advanced. Crude oil for February delivery advanced 29 cents, or 0.5%, to $61.34 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $61.24 in early trade London. Brent crude for February settlement rose 39 cents, or 0.6%, to $61.25 a barrel on the ICE Futures exchange

Gold climbed to a three-week high in London on rumors investors will buy the metal as an alternative to the dollar. Gold for immediate delivery rose $4, or 0.6%, to $640.80 an ounce in early trade in London.

Currencies

The euro welcomed new member Slovenia by advancing against the dollar in early European trading on Tuesday. The 13-nation European currency bought $1.3277, up from $1.3163 in late Friday trading in New York. The dollar also dipped against the British pound, which bought $1.9715, up from $1.9613 on Friday. Against the Japanese yen, the dollar slipped to 118.72 yen from 118.90 yen on Friday.