Smiths Sale Boosts London

Ivaylo
15 Jan, 2007
New York City

Smiths Group rallied after it agreed to sell to General Electric for $4.8 billion in cash. Following the disposal, it proposes to return 2.1 billion pounds to shareholders. Other aerospace stocks advanced in sympathy, with BAE, Rolls-Royce and Cobham higher. Investors favored also oil companies as crude prices edged higher after recent losses. BP, Cairn Energy and Royal Dutch Shell all moved higher. By mid-afternoon, the FTSE 100 gained 26 points, or 0.42%, at 6,266.

[R]9:30AM NY – 2:30PM London FTSE gains on Smiths sale to GE.[/R]
By mid-afternoon, the FTSE 100 in London advanced 26 points, or 0.42%, at 6,266.

Advancers

Smiths Group jumped 11.9% higher as it confirmed plans to sell its aerospace division to US conglomerate GE for 2.4 billion pounds. The company said it would return $1.1 billion of the proceeds to shareholders. The news boosted fellow defence stocks Meggitt, up 4.7%, and Cobham, 3.6% higher. BAE Systems was also 1.98% higher and Rolls-Royce gained 2.31%.

Investors favored also oil companies as crude prices edged higher after recent losses. BP was, 0.73%, Cairn Energy gained 1.38% and Royal Dutch Shell moved 1.11% higher. Elsewhere, Vedanta Resources gained 2.2% as its Q3 earnings beat expectations. Takeover speculation pushed utility group Scottish & Southern Energy 2.7% higher.

Aviva, the life assurer, gained 1.6% as Credit Suisse lifted its rating from neutral to outperform. Amonf mid-caps, Carillion rose 4.4% as the support services group raised profit guidance for the year.

CSR, the Bluetooth chipmaker, was 1.6% higher after it said the purchase of two smaller rivals would allow it to make components for satellite navigation computers more cheaply.

Decliners

There were very few decliners. Digital video surveillance group March Networks plunged 36.34% after it said lower than expected orders from its largest customer would hit full year profit and revenue.

Sports Café shares slumped 28% as the themed bar operator confirmed that takeover talks had ended and admitted it was seeking to raise additional funding.

[R]7:30 AM Asian markets finish higher buoyed by financial stocks in Japan, China.[/R]
Asian markets closed higher on Monday. The Nikkei Index in Japan closed the day 0.9% higher at 17,210. Banks surged on expectation that higher interest rates would improve the spreads they can charge on loans. Sumitomo Mitsui Financial rose 3.3%, Towa Bank advanced 5.6%. Among brokerage shares, Nikko Cordial closed 3.3% higher while Mitsubishi UFJ Securities added 2.5%.

The Hong Kong Hang Seng Index advanced 2.3% to 20,069. Property and China-related companies shone, lifted by strength in regional bourses. New World Development gained 4.2%, Sun Hung Kai Properties advanced 3.5% to and Cheung Kong Holdings added 3.3%. The Kospi Index in South Korea edged 0.2% higher to 1,391. Chip maker Samsung Electronics gained for a third consecutive session, up 1.5%. Steelmaker Posco also rose for a third straight session, finishing 1% higher on its plan to buy back shares and pay out higher dividends.

The Shanghai Composite Index soared 4.7% to 2,795. Banks recovered after recent consolidation. ICBC gained 4.5% and Bank of China surged 5.5%, while insurer China Life soared late in the session, hitting the 10% daily limit. Transport companies rallied after China cut reduced the price of domestic gasoline and jet fuel Sunday on a drop in international oil prices. Shanghai Bashi Industrial Group jumped 5.5% to and Dazhong Transportation Group soared 9.7%. Air China added 4.3% to and China Eastern Airlines closed 3.5% higher.

S&P/ASX 200 in Australia gained 0.6% to end at 5,674. BHP Billiton led the gainers on the market, up 0.6%. Woodside Petroleum and gold miner Newcrest Mining followed suit, advancing 1.6% and 2.5% respectively. Taiwan closed 0.3% higher at 7,784.

[R]6:30AM European stocks gain Monday on resource stocks, oil and paper groups.[/R]
European markets advanced on Monday. In early trade, FTSE 100 in London added 0.5% to 6,269.5, Xetra Dax in Frankfurt gained 0.5% to 6,738.74 and the CAC 40 in Paris rose 0.4% to 5,641.95.

Advancers

Smiths Group rallied 14.4% as it agreed to sell its aerospace business to General Electric and also said that it would return 2.1 billion pounds to its shareholders. Oil firms BP and Total rose more than 1% each, while miner Vedanta Resources gained 3.3%. Vedanta also posted higher third-quarter profits.

Energy-related stocks bounced back as oil prices surged back above $53 a barrel on the prospect of production cuts from the Organisation of Petroleum Exporting Countries. Prospective merger partners Statoil and Norsk Hydro led the advancers in the sector. Statoil gained 2.4%, while Norsk added 1.8%. Finnish refiner Neste Oil gained 2.6%, French group Total added 1.1% and Repsol of Spain moved 1% higher.

Papermakers and logging companies also gained helped by, the strong performance of the top two logging groups in Finland. UPM-Kymmene rose 2.6% and Stora Enso added 2.2%. SCA of Sweden climbed 2.7%.

Decliners

Power station builder Alstom of France declined 2.4% after Dresdner Kleinwort cut its rating from buy to add despite the recent strong showing of the stock.

Oil and gold

Oil prices advanced above $53 a barrel Monday on reports that OPEC may hold an emergency meeting to try to reverse the 13% drop in oil prices this year. Crude oil for February delivery gained 26 cents to $53.25 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude contract for February delivery gained 44 cents to $53.39 a barrel on the ICE Futures exchange in London. Gold opened Monday at a bid price of $625.50 a troy ounce, up from $617.72 late Friday.

Currencies

The euro continued to rise against the U.S. dollar Monday as traders awaited a number of economic reports from the U.S. later this week. The euro bought $1.2938, up from $1.2915 on Friday. The British pound advanced to $1.9647 from $1.9581 on Friday, driven by the possibility that the decision by the Bank of England last week to hike its key interest to 5.25%, could signal more increases. The dollar bought 120.56 Japanese yen, up from 120.35 yen late Friday.

[R]5:00AM Copper futures declined on profit-taking Friday, gold advances.[/R]
The most-active March copper contract lost 5.60 cents to end at $2.6030 per pound on the New York Mercantile Exchange. February gold settled up $13 at $626.90 a troy ounce, while March silver gained 42 cents to close at $12.88. April platinum added $7.30 to $1,152.10 an ounce and March palladium settled up $2.10 at $334.95 an ounce.

The February crude oil contract rose $1.11 to finish at $52.99 a barrel. February heating oil moved 2.32 cents higher to end at $1.5036 a gallon. February gasoline gained 4.15 cents to close at $1.4320 a gallon and February natural gas also ended up 30.9 cents at $6.601 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures lost 0.35 cent to settle at $1.2030 a pound, with May off 0.30 cent at $1.2345. Futures on raw sugar in foreign ports for March declined 0.09 cent to close at 10.93 cents a pound.