EMI Weighs on UK

Ivaylo
12 Jan, 2007
New York City

London fell closer to 6,200 ahead of the US open with miners, oil issues and the real estate sector leading the decline. Music company EMI is the worst hit, following its profit warning. All the big mining stocks plunged as metal prices continued to weaken. Antofagasta, Xstrata and Anglo American led the decliners. Oil groups were under pressure again following the slide in crude oil prices. The FTSE 100 shed 17 points, or 0.26%, at 6,214 in mid-afternoon on Friday.

[R]9:30AM NY-2:30PM London The FTSE declines on real estate, oil, mining stocks.[/R]
The FTSE 100 lost 17 points, or 0.26%, at 6,214 in mid-afternoon on Friday.

Advancers

There were only a few gainers on the market. Hotel company, InterContinental Hotels, was advanced as bid talk resurfaced. Speculation has centered on a private equity bid from the likes of Permira, Starwood Capital or a consortium in the Middle East. InterContinental Hotels gained 1.85%.

Bear Stearns upgraded drug giant AstraZeneca to outperform from peer perform with a higher target arguing that the shares are now looking relatively cheap following the recent sell-off. AstraZeneca advanced 1.41%.

Decliners

The profit warning from EMI is the main company news though. Annual profits at its music business will miss expectations after a weak Christmas. Music boss Alain Levy is also leaving as part of a 110 million pounds cost-cutting exercise and will be replaced by executive chairman Eric Nicoli. EMI plunged 6.71%

Miners are firmly in negative territory with Antofagasta, Xstrata and Anglo American leading the decliners, despite a bullish note from Deutsche Bank which saw Kazakhmys upgraded to buy from hold. Antofagasta was down 1.79%, Xstrata shed 1.46%, Anglo American declined 1.58% and Kazakhmys lost 0.76%.

Oil stocks are under pressure again following the decline in crude oil prices to under $52 a barrel overnight. Cairn Energy was off 1.78% and Royal Dutch Shell fell 1.11% today.

[R]7:30 AM Asian markets closed higher on Friday on strong US close overnight.[/R]
Asian markets closed higher on Friday. The Nikkei 225 Index in Japan rose 1.3% to end at 17,057.01, after dropping during the past two sessions. The stronger dollar, which inflates exporters overseas earnings when brought back to the country, prompted investors to buy Kyocera, Sony and NEC. Shares of Kyocera jumped 3%, Sony added 2.4% and NEC advanced 4.1%. Other gainers included banks and brewery stocks, with Mitsubishi UFJ Financial rising 2.7% and Asahi Breweries adding 2.5%.

The Korea Composite Stock Market Index, or Kospi, rose 1.7% to 1,388.37. Samsung Electronics and Posco reported strong fourth quarter results. US rise and the European Central Bank decision to keep its rates unchanged also helped boost the market. Samsung Electronics, rose 3.6%, after the company said it earned 2.35 trillion Korean won in the fourth quarter, down from 2.56 trillion won a year earlier.

The Hang Seng Index gained 1.2% to 19,613.41. China Mobile led gains, rising 1.9%. HSBC also lent support, advancing 0.3%. And Swire Pacific added 1.8% after the company outlined its investment plans. Affiliate Cathay Pacific also surged 5.5% on a bullish outlook and declining fuel prices. The Shanghai Composite Index shed 3.7%, the sharpest single-day drop since July 13. China Petroleum & Chemical, the top refiner by capacity in Asia, plunged 7.3%. Shanghai International Port dipped 7.2%, Daqin Railway sank 6.4% and China Yangtze Power dropped 6%.

Australia S&P/ASX 200 Index advanced 1.3% to 5,638.80, while New Zealand NZSX-50 Index finished up 0.1% at 4,051.84. Taiwan Weighted Price Index rose 1.9% to 7,761.71 and Singapore Straits Times Index gained 1.3% to 3,009.09.

[R]6:30AM European markets decline on Friday on SAP and Carrefour weak results.[/R]
European markets were lower on Friday. In early trade, the U.K. FTSE 100 index lost 0.2% at 6,220.80, Germany Xetra Dax slipped 0.1%, at 6,684.11, while in France the CAC 40 was essentially flat, slightly lower at 5,609.19.

Decliners

SAP plunged heavily, down 7.7% as the German software company took investors by surprise with disappointing fourth quarter results. Carrefour shed 4.7% after slower than forecast sales growth from the French retailer in the fourth quarter thus prompting widespread broker downgrades and price target reductions.

Advancers

Sodexho Alliance was in favor, advancing 3.3% as traders continued to expect stronger-then-anticipated first quarter sales which the French contract food and services group posted on Wednesday.

Accor staged a strong performance for a second session, adding 2.8% after two leading brokers stated French hotels group could return significant cash to shareholders through further asset sales.

Oil and gold

Oil rebounded from a 19-month low under $52 a barrel on Friday. US crude oil was up 71 cents at $52.59 a barrel in early electronic trade in London. Brent crude was up 93 cents at $52.63. Gold opened Friday at a bid price of $613.25 a troy ounce, down from $614.60 late Thursday.

Currencies

The dollar traded at 120.43 yen in early trade in London, from 120.50 late yesterday in New York. Against the euro, it was at $1.2911, from $1.2892. The pound today strengthened to 66.20 against the euro, its highest since June 2005, from 66.36 pence yesterday. It was also at $1.9467.

[R]5:00 AM Gold and silver end little changed Thursday on oil weakness.[/R]
February gold gained 50 cents to end at $613.90 a troy ounce on the New York Mercantile Exchange while March silver finished up 1.5 cents at $12.46 an ounce. April platinum moved down $12 to close at $1,144.80 an ounce. March palladium advanced $1.95 to end at $332.85 an ounce. Most active March copper lost 0.50 cent to close at $2.6590 per pound, after moving above the previous session high to $2.70, its strongest level since Jan. 3.

The February crude oil contract shed $2.14 to end at $51.88 a barrel. It traded at an intraday low of $51.80 a barrel, a level not seen since May 2005. February heating oil slipped 4.51 cents to finish at $1.4804 a gallon. February gasoline settled down 3.87 cents to $1.3905 a gallon and February natural gas declined 46.3 cents to stop at $6.292 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures lost 0.10 cent to end at $1.2065 a pound, with May down 0.10 cent at $1.2375. March futures on raw sugar in foreign ports also dipped 0.10 cent to close at 11.02 cents a pound.