FTSE Slips as Wolseley Dips

Ivaylo
15 Feb, 2007
New York City

The UK market slipped into the red after hovering around six-year highs on Thursday, with upbeat news boosting Diageo and Reed Elsevier, but ebbing away bid talk around Wolseley led to losses for the stock. Miners have come under selling pressure, overshadowing gains elsewhere. Pendragon was the main advancer among mid-caps on strong earnings results. In early afternoon, the FTSE 100 was down 0.11% at 6,414.

[R]9:30AM NY-2:30PM London FTSE slips on Wolseley, mining stocks.[/R]
The UK market declined in early afternoon on Thursday. At 2:30 PM GMT, the FTSE 100 was down 0.11% at 6,414.

Advancers

Shares in Reed Elsevier, the Anglo-Dutch publishing company, gained 5% after it posted a 7% increase in adjusted earnings per share and announced plans to sell its Harcourt US educational operations. Another stronger advancer was Diageo surging 4.5% as the brewer of Guinness and Smirnoff vodka boosted full-year profit forecast as it released interim results marching expectations. The company also announced its sales of premium whiskies in the US were robust, helping its spirits operations increase net sales by 8%. Among the mid-caps, car dealer, Pendragon, gained 4% after the company reported a 51% increase in annual profit before tax. BAE Systems found a firm footing and advanced 2.4% after Credit Suisse held its outperform advice and Merrill Lynch kept its buy recommendation and lifted its price target.

Decliners

Wolseley led the decliners, falling 3.1% after reports of bid interest in the plumbing and heating goods supplier died away. Traders said that the rumours triggered a wave of short-covering in the stock. Engineering company Tomkins declined 2.2% after it reported a 7% decline in full-year pre-tax profit of 244.8 million pounds. It also added that the outlook for its markets remained difficult. Miners dipped as investors took to profit-booking following the recent rally in the sector. Antofagasta decreased 0.9%, and Rio Tinto, off 0.4%, are among the worst performers. Dream Direct gave a warning this morning that quarterly sales tumbled 21%, with restructuring costs expected to tip the home shopping retailer deep into the red for the full year. Shares plummeted 33%.

[R]8:30AM Asian markets rallied on Thursday with Japan at seven-year high.[/R]
Asian markets finished higher on Thursday. Japanese Nikkei Index ended 0.8% higher at 17,897. Retailers led the gainers. Department store Takashimaya jumped 10%, while convenience-store operator Seven & I Holdings gained 4.7%. The Hong Kong Hang Seng Index jumped 1.6% to 20,538. In Hong Kong, large-caps ended higher after comments by U.S. Federal Reserve Chairman Ben Bernanke raised expectations for a U.S. interest-rate reduction later this year, sending the benchmark index higher. Sun Hung Kai Properties advanced 1.8%, Cheung Kong was up 1.2% and Hang Lung Properties closed 2.8% higher.

The Shanghai Composite Index surged 3% to 2,993. Large-capitalized Baoshan Iron & Steel added 3.3%, China Chemical & Petroleum rose 2.9% and Bank of China surged 4%. Australian S&P/ASX 200 advanced 0.5% to close at 5,993. Corporate earnings and strong overseas markets pushed the Australian share market to the 6,000-point level Thursday, hitting its fifth consecutive daily high. Telstra made the biggest contribution to strength in the market, advancing 3.9% after posting a smaller-than-expected fall in its first-half profit. Other markets around the region also rose. South Korean Kospi Index advanced 0.5% to 1,444 and Taipei ended 0.9% higher at 7,809.

[R]6:30AM European markets dipped on Thursday on weakness in the banking stocks.[/R]
European markets were lower on Thursday. . By mid morning, Frankfurt Xetra Dax added 0.1% to 6,964.2, the CAC 40 in Paris fell 0.1% to 5,722.8 and London FTSE 100 shed 0.2% to 6,409.1.

Advancers

DaimlerChrysler, German carmaker, advanced 5.3% after the board of the company on Wednesday proposed a restructuring of the ailing US Chrysler unit. The company also stated that all options were on the table, raising the possibility of a full or partial sale of the division, or a spin off.

Michelin, French tyre maker, added 6% as it targeted between 1.5 billion euros and 1.7 billion euros in cost reductions in the period to 2010 as it struggled with the violent impact of raw materials prices.

Reed Elsevier, Anglo-Dutch publishing group, said it about to sell its underperforming education arm after posting full-year pre-tax profit that missed expectations. The company announced that the sale would result in a more cohesive and predictable business that would generate earnings per share growth of around 10% a year. The shares gained 6%.

Luxury goods group LVMH gained 4.2 % after releasing record full year profits, despite the negative impact of a strong euro, and said it expected further growth in 2007 so long as foreign exchange conditions did not deteriorate. Christian Dior, which owns around 42% of LVMH, also reported strong 2006 results. Its shares gained 4.4%.

Swiss bank Credit Suisse gained 3.6% after posting record Q4 profits that easily topped market forecasts, thanks to a 130 % rise in trading revenues.

Decliners

Banks retreated on concerns over the French retail banking division of BNP Paribas. The bank tooped forecasts with its Q4 net profit, although operating profit was a little weaker than expected due to unforseen costs related to its takeover of Italy’s BNL last year. BNP Paribas fell 3.4%.

Société Générale, which declined in the previous session as similar concerns were raised after it posted full-year results, was down 1.8 %. Credit Agricole shed 2.6%.

Oil and gold

Oil inched above $58 a barrel on Thursday in volatile trade that has trapped prices in a narrow range. U.S. crude for March delivery was 29 cents higher at $58.29 a barrel in early trade in London. Brent crude for April was up 34 cents at $57.77. Gold for immediate delivery was little changed, up 52 cents, or 0.1% at $669.55 an ounce in early trading in London.

Currencies

The euro bought $1.3137 in morning European trading, up slightly from $1.3128 in New York late Wednesday. The British pound rose to $1.9663 from $1.9625. The dollar fell to 120.17 yen from 120.78 yen.

[R]5:00AM Gold and silver advanced Wednesday on weaker dollar.[/R]
April gold advanced $3.50 to end at $672 a troy ounce on the New York Mercantile Exchange while March silver gained 5 cents to finish at $13.965 an ounce. April platinum settled up $11.10 at $1,217.10 an ounce and March palladium added $1.25 to end at $345.85 an ounce. The most-active March copper declined 0.75 cent at $2.5770 per pound after hitting a two-week high.

March crude oil contract lost $1.06 to close at $58 a barrel and March heating oil fell 5.49 cents at $1.6383 a gallon. March gasoline, though, bucked the trend and added 0.71 cent to $1.6162 a gallon. March natural gas shed 12.6 cents to end at $7.241 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures gained 0.35 cent to close at $1.1405 a pound, with May up 0.10 cent at $1.1670. Futures on raw sugar in foreign ports for March also gained 0.18 cent to finish at 10.56 cents a pound, with May up 0.09 cent at 10.45 cents.