UK Leads in European Trading

Ivaylo
01 Feb, 2007
New York City

London stocks were sharply higher by mid-day on Thursday, tracking gains on US market which rallied overnight after the US Federal Reserve left rates unchanged and reduced the possibility of a rate hike this year. Royal Dutch Shell also rallied after it posted strong Q4 profits. The UK property sector gained on consolidation expectations. On the broader market, the FTSE 100 advanced 89.3 points, or 1.4%, at 6,292.4 by mid-session trade.

[R]9:30AM NY-2:30PM London UK stocks rallied, boosted by US Fed decision.[/R]
The UK market was higher on Thursday. The FTSE 100 added 89.3 points, or 1.4%, at 6,292.4 by mid-session trade.

Economic news

UK manufacturers started the year on an upbeat mood. The latest poll from the Chartered Institute of Purchasing Supply and the Royal Bank of Scotland on Thursday showed that its main index of manufacturing activity rose to 52.8 in January, higher than the upwardly revised 52 in December. Production growth was evident across most sectors, with intermediate goods particularly strong.

Advancers

Royal Dutch Shell announced Q4 earnings were $6 billion compared to $5.4 billion a year ago and production rose to 3,645 thousand barrels of oil equivalent per day compared to 3,500 a year ago. Shares in Shell rose 2.8%, as the rest of the sector also advanced. BG Group gained 1.6% and BP was 0.8% stronger.

BSkyB surged 4% after Lehman Brothers upgraded the media stock from equal-weight to overweight. Miners were stronger with Xstrata up 1.9% after announcing it had reached an agreement with a union representing workers at its Canadian mine, to avoid strike action. The property sector was also in focus. Shares in British Land added 2.6% and Hammerson by 2.1%. Slough Estates put on 1.7%.

Balfour Beatty shares surged 9.3% following its acquisition of Centex Construction, a US building company, for $362 million in cash. AstraZeneca, drug company, climbed 3.2% after posting strong full-year gains. Profits rose 28% but the company announced plans to cut 3,000 jobs and predicted slower growth this year.

Decliners

There were only a few decliners. Rio Tinto traded 1% lower after second-half net profits advanced but failed to meet market expectations. The mining company issued a cautious trading outlook and said it expects some moderation of global economic growth. F&C Asset Management, the fund manager, plunged 5.56% further after the dismal trading statement on Wednesday.

[R]7:30 AM Asian stocks finished higher on Thursday with Japan and HK rallying.[/R]
Asian markets ended higher on Thursday. Japanese Nikkei Index finished 0.8% higher at 17,520. Daiichi Sankyo rallied 5.1%, Asahi Kasei surged 4% and All Nippon Airways soared 4.3%. Nikko Cordial plummeted 16%, however, as investors remained worried about a potential delisting on abuse of venture capital by formet executives.

The Hong Kong Hang Seng Index surged 1.6% to 20,430. Retail store supplier Li & Fung advanced 4.7%. Sun Hung Kai Properties rose 2.2%, while Sino Land gained 3.7%. South Korean Kospi Index added 1.7% to close at 1,383. Korean car makers advanced in line with the market despite new data showing weak car sales in January. Hyundai Motor gained 1.3% and Kia Motors climbed 2.2%.

The Shanghai Composite Index bucked the upward trend and shed 0.03% to close at 2,785 after falling 4.9% Wednesday. China Minsheng Banking rose 2.3% after plummeting 9.3% Wednesday and Citic Securities gained 2.3% after plunging 7.2% in the previous session. Daqin Railway, however, fell 5.2% and Hua Xia Bank dropped 2.7%.

Australian S&P/ASX 200 gained 0.7% to 5,814. Miner Rio Tinto advanced 2.2%, making the biggest contribution to strength in the market, ahead of its earnings report. Alumina jumped 5.6% after posting a 62% increase in full year profit. Adelaide Bank also rose 4.2% after posting its results. The index in Taiwan ended 0.02% higher at 7,702.

[R]7:00AM European markets advanced Thursday supported by financial shares.[/R]
European markets were higher on Thursday. By mid morning, the FTSE 100 in London climbed 1.1% to 6,269.3, Frankfurt Xetra Dax added 0.9% to 6,846.57, and the CAC 40 in Paris gained 1.1% to 5,671.68.

Advancers

Deutsche Bank, the biggest bank in Germany, posted a forecast-topping record full-year net profit of 6 billion euros on strong growth in investment banking and trading income. The stock rose just 0.1%. UBS, the Swiss investment bank, rose 1.2%, while Société Générale of France and BNP Paribas, whose price targets were upgraded on Wednesday by Oddo Securities, gained 1.4% and 1.6% respectively. Axa, the second-biggest insurer in Europe, gained 2.7% after reporting that full-year sales rose by nearly 10%.

Oil stocks were led by Royal Dutch Shell, which rose 2.1% in Amsterdam after reporting a forecast-topping 2.6% rise in underlying Q4 profits. European peers were buoyed by the news and Total of France rose 1.5%, while Austrian OMV added 2.3%.

Novo Nordisk, the Danish drugs company which posted strong earnings in the previous session, rose 2.8%. Novartis, the Swiss drugmaker, gained 1.1% after JPMorgan upgraded the stock from neutral to overweight and raised its price target.

Decliners

Henkel, the German household goods group, fell 3.9% after its 7.3 % rise in Q4 earnings fell short of expectations, while improvements in profit margins also disappointed.

Oil and metals

The front-month March crude oil contract on the New York Mercantile Exchange rose $1.17, or 2.1%, to $58.14 a barrel, the highest settlement of crude futures since Jan. 3. Gold for immediate delivery was little changed at $653.40 an ounce in early trade in London. Silver rose 4 cents to $13.565 an ounce today, palladium gained $1 to $339.50 an ounce and platinum advanced $3 to $1,183 an ounce.

Currencies

The dollar advanced against the euro, stopping a three-day drop, before a U.S. report expected to show manufacturing grew in January at the fastest pace in four months. The currency traded at $1.3010 versus the euro in early trade. in London, from $1.3032 late yesterday in New York. The dollar traded at 120.59 yen, from 120.70 yen. The pound was at 66.21 pence per euro in London from 66.31 pence late yesterday. It was also at $1.9645 versus the dollar from $1.9655.

[R]5:00AM Gold and silver futures gained Wednesday on weaker dollar, fund buying.[/R]
April gold gained $7.70 to end at $657.90 a troy ounce on the New York Mercantile Exchange. March silver advanced 19.5 cents to $13.57, and April platinum settled up $1.70 at $1,182.30 an ounce. March palladium declined 70 cents to close at $340.55 an ounce. March copper ended up 3.3 cents at $2.5945 a pound.

The front-month March crude oil contract closed up $1.17 at $58.14 a barrel. February heating oil settled up 1.66 cents at $1.6546 a gallon. Front-month February gasoline declined 2.04 cents to finish at $1.5009 a gallon and March natural gas also lost 7.3 cents to end at $7.667 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures settled 1.10 cents higher at $1.1765 a pound, with May up 1.15 cents at $1.2090. Futures on raw sugar in foreign ports for March gained 0.05 cent to end at 10.60 cents a pound, with May up 0.06 cent at 10.81 cents.