FTSE Lower on Weak Earnings

Ivaylo
20 Feb, 2007
New York City

London market edged lower on Tuesday on a busy day for corporate news. Leading shares declined from last night six-year closing high as dealers digested the latest large-cap earnings news. Scottish & Newcastle was the biggest decliner despite strong earnings report, while Polaron soared Tuesday on a possible approach from Cooper Controls. With five large-caps reporting today, the benchmark index FTSE 100 in London dipped 0.36% at 6,421 in mid-afternoon trade.

[R]9:30AM NY-2:30PM London FTSE dips on Tuesday in a day of corporate news.[/R]
The UK market was lower on Tuesday. The benchmark index FTSE 100 in London dipped 0.36% at 6,421 in mid-afternoon trade.

Advancers

Intelligent building control systems outfit company Polaron soared 20.3% on Tuesday after it agreed a recommended cash offer from Cooper Controls of UK. Still on bid talk, Hanson rose 4.2% as news that Vulcan Materials of the US had agreed to buy Florida Rock Industries for $4.6 billion raised hopes of further bids to come in the aggregates sector. EMI also rose 6.7% after the music group confirmed it was in talk that could lead to another potential bid approach from Warner Music of the US. In broker comment, Drax Group gained 3.9% as Goldman Sachs upgraded the power generator from neutral to buy. Goldman also upgraded mid-cap nuclear power group, British Energy, and its shares surged 5.1%.

Decliners

Scottish & Newcastle fell 4.2% despite reporting stronger profits as investors focus on news of margin pressure on higher energy costs. News of a further decline in profits at Barclayscard took the shine off the record annual profits at Barclays. The bank stated that growth in bad debts rose in the second half of the year, helping limit downside. Barclays shares fell 0.3%. Rexam shed 3.6% after the largest packaging group in the world reported a 1% decrease in annual profit of 303 million pounds, missing consensus forecasts. Cadbury Schweppes lost 1.1% after profits last year were hit by product recalls in the UK.

[R]8:30AM Japan finished flat on Tuesday while South Korea advanced.[/R]
Asian markets ended mixed on Tuesday. Japanese benchmark index Nikkei 225 closed almost flat, down 0.01% at 17,939.12. Trading was wary ahead of a closely watched decision on interest rates by the Bank of Japan, expected Wednesday. Mitsubishi UFJ Financial Group led decliners in banking shares on concerns the Bank of Japan may hold off on making any changes to its key interest rate at this time. Shares of Mitsubishi UFJ shed 1.3%, while Mizuho Financial Group dipped 0.2%.

Nippon Steel advanced 2.4%, however, on hopes of additional consolidation within the sector after the company announced on Monday it had raised its stake in a smaller steel maker. Sapporo Holding declined 1.6%. The third-biggest beer maker in Japan is facing a $1.3 billion takeover approach from U.S. equity fund Steel Partners.

South Korean Kospi index rose 0.29% to 1,452.96. Steel maker Posco finished up 2.4% on a share buyback and reports late in the session that Standard & Poor''s lifted its credit rating on the company. Australian benchmark index S&P/ASX 200 fell 0.01% to 5,989.70.

[R]6:30AM European markets were lower on Tuesday on weak real estate stocks.[/R]
European equity markets declined on Tuesday. By mid morning, Frankfurt Xetra Dax shed 0.1% to 6,978.84, the CAC 40 in Paris lost 0.3% to 5,723.81, while London FTSE 100 was flat at 6,444.3.

Advancers

EMI added 7.3%. EMI announced it received an approach from Warner. EMI said there was no certainty the approach would lead to a takeover offer. Some auto makers gained. Volkswagen, the German carmaker, gained 3.5% as expectations were raised that the company would lift its dividend when it posts its full-year numbers later in the session. Volvo added 1.8% after it agreed to buy Nissan Diesel to add production in Asia, the world fastest- growing economic region. Shareholders in Nissan Diesel, fourth-largest truck maker in Japan will receive 540 yen a share. That is 22% higher than the closing price yesterday. Volvo already owns 19% of Nissan Diesel.

Decliners

Real Estate companies dipped after Land Securities of the UK posted a 2.2% increase in its net asset value per share, but said higher interest rates were beginning to have a cooling effect on the property market. Shares in Land Securities shed 2.3%, while Unibail of France lost 1.7% and Rodamco Europe, listed in Amsterdam, dropped 0.5%. Oil companies retreated after crude prices fell by around 1% overnight. Total of France was down 0.5%, while Norwegian Statoil lost 0.6%.

Crude oil and gold

Oil prices gained on Tuesday after shedding 1% a day earlier as traders were torn between supply anxieties in Nigeria and the nearing end of winter oil demand in top consumer the United States. Crude oil also recovered some of the losses on Monday, trading at $58.67 a barrel on the Globex electronic platform. London Brent crude rose 31 cents to $58.45 a barrel. The New York Mercantile Exchange did not issue a settlement price on Monday as its trading floor was closed for the Presidents Day holiday. Gold for immediate delivery fell $1.90, or 0.3%, to $668.85 an ounce in early trade in London.

Currencies

The euro bought $1.3141 in morning European trading, slightly up from its level of $1.3135 in New York late Monday, hitting six-week highs on worries about nuclear issues and Iran. The British pound rose to $1.9489 from $1.9453. The dollar bought 119.94 yen, compared with 119.56 yen Monday.

[R]5:30AM Gold rises, silver and platinum decline Tuesday on weaker dollar.[/R]
Gold for immediate delivery rose as much as 90 cents, or 0.1%, to $671.65 an ounce, and traded at $671.05. Gold yesterday rose as high as $673.55, its highest since July 17. Some financial markets in Asia, including China, are closed for the Lunar New Year holidays. Silver dropped 4 cents to $13.965 an ounce. Palladium declined $2 to $338.50 and platinum slipped $2.50 to $1,213.50. Copper on the London Metal Exchange rose as much as $40, or 0.7%, to $5,845 a metric ton in after-hours trading and was at $5,845. Prices have gained 19% in the past year

Crude oil for March delivery was at $58.56 a barrel, up 3 cents, in after-hours electronic trading on the New York Mercantile Exchange. The more active April contract dropped 2 cents to $59.21 after falling 1.1% yesterday. Brent oil for April settlement rose 9 cents, or 0.2%, to $58.23 a barrel on the ICE Futures exchange in London. Gasoline for March delivery was at $1.6499 a gallon in after-hours trading, after gaining 0.1% to $1.6471 yesterday.