Sainsbury Sends London Higher

Ivaylo
02 Feb, 2001
New York City

The UK benchmark index was higher on Friday on news of bid interest in J Sainsbury. Two American and a British company said they assessed a potential offer but were still at the preliminary stages. Other retailers surged on the news. Housebuilders also traded higher, together with Imperial Tobacco and British Airways. Royal Dutch Shell retreated after Goldman Sachs downgraded the stock. The FTSE 100 gained 42.4 points, 0.7%, to 6,324.6 in mid-day session.

[R]9:30AM NY-2:30PM London FTSE gains on Friday on likely bid for Sainsbury.[/R]
The UK market was higher on Friday. The FTSE 100 gained 42.4 points, 0.7%, to 6,324.6 in mid-day session.

Advancers

American KKR and Blackstone and London-based CVC said they were assessing a potential bid for J Sainsbury but were at the preliminary stage. Sainsbury jumped 18.3%, boosting other retailers. William Morrison gained 6.5% as Tesco firmed 3.2%, Kingfisher added 3.8% and Marks & Spencer put on 3.3%.

Housebuilders traded higher with Redrow advancing 1.7 per cent, Persimmon higher by 1.1% and Barratt Developments 0.8%.

Imperial Tobacco shares also advanced as JP Morgan took on board the chances of a bid for the group and repeated its overweight rating on the stock. The tobacco company traded 5.6%.

British Airways shares moved higher by 1.8% on mixed third-quarter results. The airline reported a 27% drop in operating profits but its revenue advanced 0.5% from a year ago.

Decliners

Royal Dutch Shell declined 1.1% after Goldman Sachs reduced its rating on the stock from buy to neutral.

Accountancy software group Sage shed 1% after Merrill Lynch downgraded the stock from buy to neutral on valuation grounds as the shares have climbed above its price target.

Vehicle salvage specialist Universal Salvage has received a bid offer worth, valuing the company at 57 million pounds. However, the stocks declined 1.32%.

Legacy software group Micro Focus says that revenue growth for this year should meet or marginally exceed the top end of its previously estimated range of 7% to 10%. Micro Focus dipped 0.2%.

[R]7:30 AM Asian shares closed higher Friday with Japan up while China was down.[/R]
Asian markets finished higher on Friday. In Tokyo, the Nikkei closed 0.2% higher at 17,547.11. Shares of Sony rose 1.6%, adding to gains from Thursday on a broker upgrade. Sumco advanced 3%, as the world second-largest maker of silicon wafers intends to spend $3 billion to more than triple its capacity for producing advanced wafers by 2010. Nikko Cordial, Japanese third largest brokerage house, gained 12.5%. Bucking the market uptrend, Matsushita Electric shed 0.6% on profit-taking.

Hong Kong Hang Seng Index ended 0.7% higher at 20,563.68. Lenovo Group led the advance, as it jumped 7% after posting quarterly net profit rise of 23% from the prior year. The gains came as Credit Suisse downgraded the share to underperform from neutral. The Shanghai Composite index swung from early gains to close 4% lower at 2,673.21. Citic Securities Co., the biggest publicly traded brokerage, dipped 7.3%, Baoshan Iron & Steel Co., No. 1 steelmaker in China, declined 6.5%.

The Kospi index gained 30.24, or 2.2%, closing at 1,413.14 in Seoul. The index advanced 3.1% this week, the largest weekly gain since June 30. Hyundai Heavy surged to a record, adding 5.4% on record growth in Q4 results and Samsung Heavy Industries Co., the world second-largest shipbuilder, gained 4.8%. Other indexes around the region also advanced. Australian S&P/ASX 200 closed 0.3% higher at 5,831.50, while the Singapore Straits Times Index finished 1.6% higher at 3,217.68. Taiwan Weighted Price Index closed 0.9% higher at 7,777.03.

[R]6:30AM European stocks were higher Friday on strong utility sector.[/R]
European markets were higher on Friday. By mid morning, the FTSE 100 in London gained 0.4% to 6,309.8, Frankfurt Xetra Dax added 0.2% to 6,863.03, and the CAC 40 in Paris gained 0.3% to 5,678.51.

Advancers

Eon, the German utility, gained 3.2% on expectations that the company would be spared a costly bid battle for Endesa of Spain after rival bidder Gas Natural abandoned the race. Sainsbury advanced after a group of investors announced they were considering a bid for the supermarket. Sainsbury shares jumped 14.5%. Carrefour added 3.2% as it stated it was close to signing an agreement with the Indian government to set up retail operations in the country. Ahold, the Dutch retailer which posted a drop in Q4 sales in the previous session, gained 1.7%, while French Casino Guichard added 1.6%.

Q4 profit of Volvo missed forecasts, but an improved outlook from the company and the announcement of an extraordinary pay-out helped boost the shares 2.4%. Domestic rival Scania advanced 3.3%.

Decliners

Ericsson, the Swedish telecoms equipment and networks group, led the decliners, down 5.8%, after reporting Q4 earnings that missed expectations and lowering its 2007 growth forecasts. Nokia, which recently merged its networks systems with that of Siemens, fell 0.9%, while Siemens fell 1%.

Shares in Endesa were down 0.6%, while Acciona, the Spanish construction group that holds 21% of Endesa shares, was 2.2% lower.

Oil and gold

Oil prices recovered Friday on continued cold weather in the United States. Crude oil for March delivery rose 18 cents to $57.48 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for March delivery gained 29 cents to $57.01 a barrel on the ICE Futures exchange in London. Gold opened Friday at a bid price of $656.64 a troy ounce, down from $658.29 late Thursday.

Currencies

The euro was little changed against the U.S. dollar Friday, declining slightly despite signs that the U.S. manufacturing sector was tightening. The euro bought $1.3018 in morning European trading, down from $1.3021 in New York late Thursday. The British pound shed $1.9672 from $1.9677, while the dollar rose to 120.88 Japanese yen from 120.66 yen.

[R]5:00AM Gold futures advanced on Thursday on oil strength and dollar weakness.[/R]
April gold ended up $5.10 to $663 after hitting a high of $667, the contract strongest intraday level since Aug. 9. March silver gained 15.5 cents to close at $13.725 an ounce. April platinum advanced $10.50 to end at $1,192.80 an ounce and March palladium closed $4.35 higher at $344.90 an ounce. March copper dropped by 2.5%, surrendering 6.4 cents, to close at $2.5305 a pound.

The March crude oil contract ended 84 cents lower at $57.30 a barrel. Natural gas for March delivery fell 1.8%, losing 13.7 cents to close at $7.53 per million British thermal units. March heating oil finished down 2.49 cents at $1.6589 a gallon and March gasoline closed down 2.71 cents at $1.5253 a gallon.

On the New York Board of Trade, March Arabica coffee futures advanced 1.10 cents to end at $1.1875 a pound, with May up 0.85 cent at $1.2175. Futures on raw sugar in foreign ports for March gained 0.03 cent to close at 10.63 cents a pound.