FTSE Down on Miners

Ivaylo
16 Feb, 2007
New York City

London stocks retreated from six year highs in mid-day trade on Friday as mining stocks declined and recent bid talks started to fade, although there were gains for Compass Group after a positive trading statement. SABMiller lost as hopes for consolidation among international brewers also died away. Kingfisher and Next led retailers higher. The FTSE 100 was 0.2% lower at 6,422.4, down 11 points.

[R]9:30AM London equities declined on Friday on fading bid talks, miners.[/R]
The UK market was lower on Friday. In mid-day trade, the FTSE 100 was 0.2% lower at 6,422.4, down 11 points.

Advancers

Upbeat trading statement from Compass Group, the largest contract caterer in the world, sent its shares 2.2% higher. Kingfisher, the retail company behind the Homebase DIY chain was boosted by 3.1% after SG Securities increased the broker rating on the stock to buy from neutral. Retailer Next also made gains after Goldman Sachs changed its stance on the stock to buy from neutral and raised its price target.

Boeing and Lockheed were reportedly both considering making UK acquisitions in a move designed to leave them well positioned to win British arms contracts moved shares in the sector, especially among mid-cap stocks. Cobham was 0.7% higher and Meggitt added 1.1%. Isoft, the healthcare software provider, rose 8.3% after IBA Health of Australia confirmed it was in talks with the company about a potential recommended all-paper offer.

Decliners

The mining sector was leading decliners as its volatile trading continued to track metals prices on commodities markets. BHP Billiton fell 1.1%, Antofagasta was 1.3% weaker and Lonmin lost 1.2%. Press reports that US private equity house Cinven was losing interest in bidding for Sainsbury sent the supermarket chain 0.7% lower.

SABMiller retreated from gains made in the previous session as hopes for consolidation among international brewers died away. Reports linking Anhheuser Busch and InBev with a potential merger generated gains across the sector on Thursday, but looked only to have short-term impact as SABMiller fell 1.3%.

[R]7:30AM Asian markets declined on Friday with Japan falling on profit-booking.[/R]
Asian market ended mixed on Friday. Tokyo''s Nikkei 225 Index ended 0.1% lower, falling 21.58 points to 17,875.65. Among the advancers in Tokyo, Canon Inc. rose 3.8%. The camera maker announced it plans to spend up to 100 billion yen ($837.98 million) to buy back as many as 17 million shares. Brewery group Sapporo Holdings shares rose 12.6% after U.S. hedge fund Steel Partners announced it planned to spend up to 150 billion yen to raise its stake in the company from 18% to 66.6%. Toyota Motor eased 0.1%, while Honda fell 2.5%. Sony Corp reversed earlier losses to finish up 1.1%.

Hong Kong Hang Seng edged higher 0.14% to 20,567.91. The market was under a little bit of pressure mainly because of weakness in Japan. In the short term, the market is likely to continue to be quite volatile because investors have adopted a relatively short-term trading strategy. Financial markets in Hong Kong will be closed Monday and Tuesday. Around the region, Australia S&P/ASX 200 fell 0.6% to 5,935.5, Singapore Straits Times Index lost 0.5% to 3,236.93, and Thailand SET Index fell 0.8% to 688.

However, South Korean Kospi index gained 0.4%, to 1,448.81, Malaysia KLSE Composite Index added 0.4% and Indonesia Composite Index was up 0.2%. Shanghai Composite Index in China rose 0.2% to a record 2,998.46. The index also had hit an intraday record, at 3,036.35. After the close of trading on Friday, the People''s Bank of China said it raised banks reserve requirement ratio by 0.5%, effective from Feb 21, in an attempt to control better rapid credit growth and surging liquidity.

[R]6:30AM European markets declined on Friday led lower by miners, banks.[/R]
European markets were lower on Friday. In early trade, Frankfurt Xetra Dax fell 0.2% to 6,946.7, the CAC 40 in Paris lost 0.3% to 5,706.71 and London FTSE 100 shed 0.2% to 6,421.5.

Advancers

Gecina, the French property group, gained 7.2% after reporting net profit nearly trebled in 2006 thanks to rising rental revenues and growth in the value of its property portfolio. Michelin, the French tyremaker, surged 5.2% after the previous session restructuring announcement prompted broker upgrades. JPMorgan added Michelin to its focus list and lifted its price target, while Morgan Stanley updated its price target and maintained its overweight rating. Credit Suisse raised its recommendation from underperform to neutral. In corporate news in a relatively quiet session, shares in catering firm Compass Group gained 2.4% after it said that its trading in the first four months of 2007 has been encouraging and marginally ahead of expectations.

Decliners

Shares in Swedish financial services group Swedbank fell 3% despite reporting a better-than-expected increase in Q4 profits. Strong trading revenues drove operating profit 18 % higher in the quarter, but investors were more concerned by rising costs. BBVA, the Spanish bank, fell 4% after it announced the sale of its stake in utility group Iberdrola and plans to issue 196 million new shares to help fund the $9.6 billion acquisition of Texas-based bank Compass Bancshares.

Oil and gold

Crude oil prices slipped Friday on forecasts for warmer weather in the U.S. Northeast, the largest heating oil market in the world. Light, sweet crude for March delivery dropped 5 cents to $57.94 a barrel on the New York Mercantile Exchange. Gold bullion opened Friday at a bid price of $666.30 a troy ounce, down from $667.30 late Thursday on the New York Mercantile Exchange.

Currencies

The dollar was mixed against other major currencies in European trading Friday morning. The euro traded at $1.3122, down from $1.3142 late Thursday. The British pound traded at $1.9483, down from $1.9511. The dollar traded at 119.36 Japanese yen, up from 119.18.

[R]5:00AM Copper advanced Thursday, gold and silver decline.[/R]
The most-active March copper advanced 8.7 cents to $2.6640. April gold lost 60 cents to end at $671.40 a troy ounce, while March silver dipped 0.3 cent to finish at $13.962 an ounce. April platinum settled down 20 cents at $1,216.90 an ounce, while March palladium shed $3.05 to $342.80 an ounce.

The front-month March crude futures contract declined one penny at $57.99 a barrel after falling to $56.62 a barrel, its lowest level since Jan. 31. March gasoline slipped 1.90 cent to close at $1.5972 a gallon, while March heating oil settled down 1.12 cent at $1.6271 a gallon. March natural gas gained 5.1 cents to end at $7.292 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures closed up 0.35 cent at $1.1405 a pound, with May up 0.10 cent at $1.1670. Raw sugar futures hit six-week highs as funds covered shorts in heavy volume and traders bought the March-May spread in rollovers before expiration on Feb. 28. The March contract gained 0.55 cent to 11.11 cents a pound, with May 0.40 cent higher at 10.85 cents.