London Surges on Bid Talk

Ivaylo
14 Feb, 2007
New York City

The FTSE 100 breached the 6,400 barrier on Wednesday for the first time in more than six years. Wolseley surged following a report in a newspaper that Cinven was preparing a bid. While an apparent denial from Cinven pulled the stock back, the plumbing and heating products group was still trading higher. Mining stocks continued to benefit from higher metals prices as the price of tin touched an all-time high. By late morning, the FSTE 100 in London was trading broadly flat at 6,379.4.

[R]9:30AM The FTSE 100 advanced Wednesday on miners, Wolseley.[/R]
The UK market was higher. By late morning, the FSTE 100 in London was trading broadly flat at 6,379.4.

Advancers

Wolseley touched a high and although Cinven denied any future bid, Wolseley was still trading 4.6% higher. Mining stocks continued to benefit from higher metals prices as the price of tin and copper surged.Rio Tinto rose 2%, Vedanta Resources gained 2.1%, Anglo American added 1.8% and Antofagasta firmed 1.5%. Prudential rose 0.8% as ABN Amro set a new price target on the life assurer, a 23% upside.

Decliners

EMI led the decliners, falling 10% after the music publisher issued its second profit warning in a month. The company announced it expected revenue from its recorded music division to decline by about 15%. GlaxoSmithKline lost 0.9% as the pharmaceutical group traded without rights to its latest dividend payment. Cruise operator Carnival also went ex-dividend, losing 0.4%. British Energy continued its downward journey, hitting its lowest level since June 2005. The nuclear power group was down 4.2%.

[R]8:00AM Asia finishes higher Wednesday with Australia leading the stocks higher.[/R]
Asian markets finished mostly higher on Wednesday. Sydney''s benchmark S&P/ASX 200 ended 0.4% higher at 5,960.50. BHP advanced 0.8%, while Rio Tinto added 2.3%. BHP and Rio Tinto were considering individual bids for Alcoa. Shares of Alumina gained 1.5%. In a statement to the Australian Stock Exchange, Alumina stated it does ot have any information about a possible takeover of its U.S.-based partner, Alcoa Inc. The Nikkei in Tokyo finished 0.74% higher at 17,752.64. Sony, Bridgestone and other large-caps gained, tracking gains on US markets on Tuesday. Shares of Sony advanced 3.8% while Bridgestone rallied 4.2% after guiding higher operating profit for the current fiscal year

South Korean benchmark Kospi index closed 1.3% higher at 1,436.10 as tensions over North Korea’s nuclear program subsided. Samsung Electronics rose 1.6% while LG Philips LCD declined 3% after the company said it was asked by the Korea Exchange to clarify speculation that Japanese consumer-electronics company Matsushita Electric Industrial may buy a stake in the company. Hong Kong Hang Seng Index closed 0.4% higher at 20,209.91. Shares of Hutchison Telecom advanced 1.5%. The telecom group plummeted 15% on Tuesday after confirming it had agreed to sell its 67% stake in Indian telecom-operator Hutchison Essar to Vodafone Group for $11.1 billion. Taiwan Weighted Price Index ended 0.9% higher at 7,809.45 and Singapore Straits Times index closed 1.1% higher at 3,182.21. Indonesian benchmark JSX Composite also closed up 1.4% at 1,750.98.

[R]6:30AM Europe trades higher on Wednesday on strength in software, services.[/R]
European markets were higher on Wednesday. The benchmark FTSE 100 Index in London increased 11.1, or 0.2%, to 6,392.90 in London in mid-morning trade, breaching the 6,400 level earlier. German Xetra Dax added 25.8 points, or 0.4%, to 6,921.18 and France’s CAC 40 gained 19.8 points, or 0.4%, at 5,702.44.

Advancers

Wolseley Plc surged 4.7% on a report Cinven Ltd. may make a 10 billion-pound, or $19 billion, bid for the company. Commerzbank rose 2.7 % after the second largest commercial lender in Germany reported record net profits for last year and raised its earnings targets for 2007. Adecco added 2.1% after Deutsche bank upgraded the Swiss employment group from hold to buy. Rio Tinto Group, up 2% and Xstrata Plc, 1.7% led gains by mining shares after copper and gold rose. Electrolux AB had the biggest rally in a decade, surging 18%, after the world second-largest household appliances maker returned to a profit. ASML Holding NV led technology stocks higher, up 2.2% as earnings surged at Applied Materials Inc. of the U.S. DaimlerChrysler AG, was up 1.5%, and led a rally by car companies after a newspaper reported it may sell its loss-making U.S. unit Chrysler.

Decliners

DSM fell heavily in early trade, retreating 8.6% after Q4 results from the Dutch chemical group fell short of forecasts. Societe Generale fell 2.3% after Q4 profits also missed market forecasts.

Oil and gold

Crude oil on the New York Mercantile Exchange rose $1.25, or 2.2%, to $59.06 a barrel. March gasoline gained 5.64 cents, or 3.6%, to $1.6091 a gallon. Gold climbed to a six-month high in London as the dollar extended declines against the euro, spurring demand for the precious metal as an alternative asset. Gold for immediate delivery gained $4.10, or 0.6%, to $668.35 an ounce in early trade in London.

Currencies

The euro advanced to the highest in almost six weeks against the dollar after European Central Bank Governing Council member Klaus Liebscher stated that ECB is concerned inflation will accelerate. The euro rose to $1.3097 in early trade in London from $1.3039 late yesterday in New York. Against the yen, it advanced to 158.56 from 157.98. The pound canceled out its decline against the euro and rose against the dollar after Bank of England policy makers announced inflation will fall to the 2% target by Q4 based on market forecasts for a second interest-rate increase this year. Against the euro, the pound was at 66.96 pence in London from 66.97 on Feb. 13, its weakest since Jan. 9. It was at 67.11 pence before the central bank released its quarterly inflation report. The U.K. currency was also at $1.9551 from $1.9525 before the report and $1.9469 late yesterday. Against the dollar, the yen traded at 121.29 in London from 121.16 late yesterday in New York.

[R]5:00AM Gold and silver ended higher Tuesday on wider-than expected deficit.[/R]
The most-active April gold advanced $1.20 to $668.50 a troy ounce while the most-active March silver settled 20 cents higher at $13.915 an ounce after hitting a two-month high of $14.00. April platinum gained $14.70 to end at $1,206 an ounce and March palladium settled at $344.60, up $6.85. The most-active March copper rose to $2.60 per pound, which its highest level since Feb. 1. The contract finished at $2.5845, up 10.70 cents.

The front-month March crude oil contract gained $1.25 to $59.06 per barrel and front-month March heating oil added 4.78 cents to close at $1.6932 per gallon. March gasoline advanced 5.64 cents to finish at $1.6091 per gallon. March natural gas settled up 14.1 cents at $7.367 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures declined 0.20 cent to end at $1.1370 a pound, with May off 0.35 cent at $1.1660. Futures on raw sugar in foreign ports for March dropped 0.01 cent to close at 10.38 cents a pound, with May down 0.04 cent at 10.36 cents.