FTSE Higher on BAE, Centrica

Ivaylo
22 Feb, 2007
New York City

London equity market regained momentum on Thursday as a series of strong earnings reports helped the FTSE 100 back toward the 6,400 level. Large-cap stocks continued to advance, as the market was upbeat on results from BAE Systems and Centrica. The benchmark index, the FTSE 100 rose 0.6% to 6,395.1, a gain of 38 points, helping restore most of the 55 lost from the previous session.

[R]9:30 AM London rallies Thursday, boosted by BAE and Centrica.[/R]
The UK market was trading higher by mid-morning on Thursday. The FTSE 100 rose 0.6% to 6,395.1, a gain of 38 points.

Advancers

Shares in the aerospace and defense company BAE advanced sharply after it posted a strong set of annual results, underpinned by programme schedule and the continued growth from its US businesses. BAE Systems was up 4.3% after it reported earnings of 1.2 billion pounds, up from 909 million pounds a year ago. It also issued an upbeat outlook for the year ahead.

Utility company Centrica announced its residential arm returned to profit in the second half after it lifted retail prices, though underlying pre-tax profit still declined slightly. Centrica was 4.2% higher after the energy distributor also stated its British Gas unit went back into the blue in the second half despite the loss of over 1 million customer account.

News of a 12% rise in annual profit before tax at Hanson helped the aggregates provider 0.4% higher, while takeover talk boosted Drax Group, up 3.7%, and Scottish & Southern Energy, 2.5% higher.

Decliners

Investors took profits in Capita after the outsourcing company reported an 18% rise in full-year profit before tax, in line with expectations. Shares in the collector of the London congestion charge and the BBC licence fee declined 3.8 %.

Among the mid-caps, Rentokil Initial slumped 8.1 % as the washrooms-to-pest control group admitted that profits in 2007 were unlikely to rise. Bookmaker Ladbrokes reported a sharp increase in annual pre-tax profit following the sale of its hotel unit and bumper World Cup winnings. Its shares however fell 2.2%.

[R]9:00AM Asian markets ended higher Thursday with Japan at record close.[/R]
Asian markets finished mostly higher on Thursday. Japanese Nikkei Index finished 1.1% higher at 18,109. On Wednesday the Bank of Japan lifted interest rates a quarter of a percentage point, bringing its benchmark rate to 0.5%. Resona led the advancers, gaining 0.9% and Mitsubishi UFJ Financial Group advanced 0.7%. Shares of Sony edged up 0.3% while camera maker Nikon surged 4.2%. Canon Inc., the world biggest maker of digital cameras, added 1.7%.

Hong Kong Hang Seng Index added 0.8% to 20,809. In Hong Kong, shares of China Mobile advanced 2.9% to lead gains among Hong Kong large-caps. The telecom company, the largest by subscribers in China, announced on Wednesday it added 4.86 million subscribers in January, lifting its total subscriber base to 360.1 million.

Shares of Sung Hung Kai Properties, owners of the tallest skyscraper in the city, rose 1.7%, while real-estate group Cheung Kong Holdings surged 3%. Among large-cap decliners, HSBC Holdings shed 0.2%. Other indexes also advanced. South Korean Kospi Index advanced 1% to 1,465 and Australian S&P/ASX 200 increased 1.1% to close at 6,017.

[R]6:30AM European markets advanced on Thursday on strong insurers.[/R]
European markets were higher on Thursday. In early trade, Frankfurt Xetra Dax added 0.7% to 6,988.01, the CAC 40 in Paris gained 0.7% to 5,731.51 and London FTSE 100 climbed 0.6% to 6,394.1.

Advancers

BASF led advancers in early trade after the German chemicals group posted a 17.3% rise in Q4 core earnings, meeting expectations, thanks to demand growth and the performance of recent acquisitions.

Axa, the second-biggest insurer in Europe, gained 1.9% after posting a forecast-beating 18% rise in full-year net profit thanks to strong performances from global stock markets last year. Allianz, top insurance group in Europe, gained 1.6% after a 57% rise in fourth-quarter profit.

Banks were mostly higher, with National Bank of Greece leading following a better-than-forecast 36% gain in full-year net profit. Swiss food group Nestlé climbed 2.1% as strong growth in its food and beverages business helped it reach a record for annual net profit.

Decliners

Belgium KBC Group fell 2.6% after its 1.9% fall in underlying Q4 net profit did not match expectations on rising costs and loan impairment. The biggest banking group in Norway DnB Nor fell 2.7% despite beating expectations with Q4 earnings as net interest income and commission disappointed.

Oil and metals

Crude oil was virtually unchanged as traders said surge in prices yesterday were not justified because U.S. gasoline supplies may be sufficient to meet summer driving demand. Crude oil for April delivery fell 46 cents, or 0.8%, to $59.61 a barrel on the New York Mercantile Exchange and traded little changed in early trade in London. Brent oil for April settlement fell 48 cents, or 0.8%, to $58.87 a barrel on the ICE Futures exchange in London.

Gold declined in London on speculation that price swings in the metal will discourage demand from jewelers, the biggest buyers of the metal. Gold for immediate delivery declined $2.30, or 0.3%, to $676.55 an ounce. Silver dropped 2 cents to $14.205 an ounce. Palladium was little changed at $344.75 and platinum fell $3.50 to $1,224. Copper rose for a second day in London on speculation that demand from Chinese buyers is gaining. Copper for delivery in three months on the LME advanced $95, or 1.6%, to $5,885 a ton.

Currencies

The dollar advanced, touching its highest against the euro in more than a week, on speculation Federal Reserve members will reiterate the risk of inflation. The dollar rose to $1.3088 against the euro in early trade in London, from $1.3139 yesterday in New York. The dollar also traded at 121.30 yen from 120.93 yesterday, when it had the biggest gain since Dec. 8. The greenback was at $1.9495 against the U.K. pound, from $1.9540 yesterday.

[R]5:00AM Gold surged on inflation concerns and Iran-related issues.[/R]
Gold for April delivery ended up $23 at $684 an ounce, its highest close since July 7, on the New York Mercantile Exchange. Other metals prices also advanced on Nymex. March silver futures gained 44.3 cents to $14.273 an ounce, April platinum surged $14.10 to $1,233.20 an ounce and March palladium was up $4.40 at $344.15 an ounce. March copper finished up 6.85 cents at $2.6545 a pound.

The front-month April crude oil contract closed up $1.22 at $60.07 a barrel after rising to $60.63. Front month March heating oil settled up 3.66 cents at $1.6816 a gallon. March gasoline gained 5.56 cents to end at $1.7047 a gallon and March natural gas settled up 6.1 cents at $7.646 a million British thermal units.

On the New York Board of Trade, March Arabica coffee futures ended up 1.95 cents at $1.1515 a pound, with May up 1.25 cents at $1.1645. March futures on raw sugar in foreign ports declined 0.08 cent to finish at 10.71 cents a pound, with May down 0.15 cent at 10.39 cents. Corn futures surged to 10-year highs Wednesday on the Chicago Board of Trade. March corn ended 11 cents higher at $4.2625 per bushel, May corn settled higher 10.75 cents higher at $4.39, and December finished 9.75 cents higher at $4.23.