FTSE Weakens on Utilities

Ivaylo
05 Jan, 2007
New York City

UK stocks fell on Friday under the weight of weak utility with oil and gas stocks also suffering heavy losses. UK utility shares were punished as the biggest energy companies in Europe could face restrictions by the EU competition commissioner in the wake of an inquiry into the sector which found evidence of complicity and other severe market violations. The FTSE 100 fell 16.8 points, or 0.3%, to trade at 6,270.2 in mid-morning session.

[R]9:30AM NY – 2:30PM London The FTSE retreats on utilities, oil and gas stocks.[/R]
The FTSE 100 in London shed 16.8 points, or 0.3%, to trade at 6,270.2 in mid-morning session.

Decliners

Scottish & Southern Energy suffered heavy losses of 3% while International Power shed 2.3%. Kelda Group declined 1.3%. Cairn Energy also lost 2%, hit by weaker oil prices as crude dropped below $56 a barrel. Royal Dutch Shell was off 1% and BG Group lower by 1.5%.

Miners declined on copper prices which hit 9-month lows on continuing demand worries. BHP Billiton retreated 1.5% while Lonmin traded 1.4% lower.

CSR, Bluetooth maker for mobile phone components, continued to trade in the red after recently being accused of violating a wireless connections technology patent. It was down 2.5%.

Games Workshop Group were down by 8.4% following a profit warning. The company, which makes and sells figurines, announced that full year sales, and therefore profits, are likely to miss current market expectations.

Advancers

Support services firm Cape announced that earnings for the full year will top market expectations as its strong first half performance has continued throughout the second half of the year and will yield a positive set of full year results.

The retail sector attracted attention a day after well received results from fashion group Next. Merrill Lynch was moved to reiterate buy advice and the previous target price, with increased profit and earnings forecasts.

Supermarket leader Tesco was in focus, up 2.22%, as well as rival William Morrison, 1.39% higher, while J Sainsbury advanced 0.84% before the trading update next Thursday.

[R]7:30 AM Asian markets closed mostly down with Japan lower and HK higher.[/R]
Asian markets ended mostly lower on Friday. IN Japan, the Nikkei 225 index closed down 262.08 points, or 1.5%, to 17,091.59. Exporters were hit by profit-taking. Toyota Motor shed 2.4%, while Honda fell 3%. Toshiba Corp advanced 1.6% though, after the Nikkei daily reported the second-largest machinery maker in Japan intends to market a new boiling-water reactor for nuclear power plants. The stronger yen also hurt exporters of consumer electronics. Canon Inc dipped 2.1% while camera maker Nikon slipped 3.8%.

The Hang Seng Index in Hong Kong bucked the downtrend and gained 0.9% to 20,211.28. Mainland financial shares ended mixed. Shares of Industrial & Commercial Bank of China added 0.4%, while Bank of China lost 0.5%. Mainland insurer China Life Insurance declined 3.3%. The Shanghai Composite in China ended 1.9% lower to 2,664.85, while Singapore Straits Times index rose 0.3%.

Australia S&P/ASX 200 pared early gains to finish down 0.2% at 5,572.00, while New Zealand''s NZSX-50 advanced 0.2% to 4,035.27. Shares of the largest mining company in the world, BHP Billiton, fell 0.9%, while Rio Tinto shed 1.5%. Resource companies declined, tracking drops in energy prices. Australian Woodside Petroleum lost 1.9%

[R]6:30 AM European markets slipped on Friday on weaker commodities, tech stocks.[/R]
European markets were lower on Friday. The FTSE 100 in London shed 0.5% to 6,255.5, Frankfurt Xetra Dax fell 0.6% to 6,636.94, the CAC 40 in Paris lost 0.5% to 5,546.44.

Decliners

Credit Suisse downgraded its rating on world number one handset maker Nokia from outperform to neutral. Nokia shed 3.4 %. French rival Alcatel-Lucent dipped 1.2%, while Ericsson of Sweden, whose Sony-Ericsson joint venture is the world fourth-biggest handset maker, slipped 0.9%.

Alstom, the French engineering group, also fell 4.2% after Citigroup reduced its recommendation from hold to sell, on the premise that investors were paying too much for the stock

Energy stocks were weak as oil prices declined on the back of strong US inventories. The producers worst affected were Statoil of Norway, which fell 2.2% and British BG Group, down 2.2%.

Total, the largest oil refiner in Europe, dropped 1.1% and Royal Dutch Shell Plc, the biggest oil company in the region, decreased 0.9%.

Advancers

Weakening oil prices gave a boost, however, for airline stocks in Europe. German Lufthansa led the advancers, up 2.6% and Air France-KLM gained 1.9% and Irish Ryanair added 1.7%.

Telecommunications shares advanced, paced by Royal KPN NV, the largest Dutch phone company, and Telecom Italia SpA, the biggest phone operator in Italy. KPN added 1.4% as did Telecom Italia.

Oil and gold

Crude oil stayed virtually the same in New York, ready for its biggest weekly decline since April 2005, as mild U.S. weather reduced consumption and fuel stockpiles jumped. Crude oil for February delivery traded at $55.52 a barrel, down 7 cents, on the New York Mercantile Exchange in early trade. Brent crude for February settlement rose 8 cents to $55.19 a barrel on the London-based ICE Futures exchange.

Gold rose for the first day in three in London on speculation investor demand will increase because of declines in the dollar. Gold for immediate delivery rose $1 to $623 an ounce in early trade in London. Silver rose 1 cent to $12.605 an ounce in London while platinum gained $5 to $1,125.50 and palladium increased $4.50 to $341.50.

Currencies

The dollar advanced slightly on the euro, extending its rally begun earlier in the week and ahead of the release of key payroll data in the U.S. later Friday. The euro bought $1.3080 in early trading, barely down from $1.3087 in New York late Thursday. The British pound also declined to $1.9403 against the dollar, down from $1.9427 overnight. Against the Japanese yen, the dollar bought 118.15, down from 119.10 yen in New York.

[R]5:00 AM Gold and copper drop on Thursday, while silver gained.[/R]
February gold shed $3.60 to end at $626.20 a troy ounce on the New York Mercantile Exchange while March silver advanced 16.5 cents to finish at $12.835 an ounce. January platinum was almost steady, adding a mere dime to $1,132.50 an ounce. March palladium added $3.50 to close at $345.55 an ounce, while the most-active March copper contract sank 4.70 cents to end at $2.6020 per pound.

The front-month February crude oil contract lost $2.73 to end at $55.59 a barrel. February heating oil also shed 4.50 cents to close at $1.543 a gallon. Front-month gasoline declined 6.19 cents to $1.487 a gallon. February natural gas slipped 0.1 cent to close at $6.162 a million British thermal units.

On the New York Board of Trade, March contract Arabica coffee futures gained 1.4 cents to end at $1.25 a pound, with May up 1.4 cents at $1.2805. Futures on raw sugar in foreign ports for March lost 0.24 cent to finish at 11.27 cents a pound, with May down 0.21 cent at 11.30 cents.