London Tracks Global Markets Lower

Ivaylo
27 Feb, 2007
New York City

In London, the FTSE 100 was lower with all but a few stocks trading in negative territory. Commodity stocks that have dictated the market direction were hit by concerns over a potential windfall tax in South Africa. Anglo American, Xstrata and Kazakhmys spearheaded the other major decliners amongst the miners. By mid afternoon the FSTE 100 was 142 points, or 2.2%, lower at 6,292.2.

[R]9:30AM London is lower Tuesday, following weak global markets.[/R]
The UK market was lower on Tuesday. By mid afternoon the FSTE 100 was 142 points, or 2.2%, lower at 6,292.2.

Advancers

With the crude price gaining further to top $62 a barrel, Royal Dutch Shell was one of only a handful of FTSE 100 advancers. The oil company was up 0.3%, while Reuters was the biggest advancer, up 1.4%, ahead of the information group figures on Thursday.

Engineer GKN was up 8.4% after an upbeat trading statement alongside its final results. Broker Cazenove provided a further boost, upgrading the shares to outperform from in line. Chrome and chemical company Elementis was also higher 4.3% after it posted a 159% rise in full year profit and said 2007 has started on a positive note, with further progress expected this year.

Decliners

As Chinese market tumbled today, mining stocks bore the brunt of the sell-off as gains in the sector have largely been powered by Chinese demand. Xstrata lost 5.3%, Vedanta Resources eased 4%, BHP Billiton dropped 4% and Lonmin fell 3.8%. Kazakhmys dropped 5.8%. Confidence in the sector was further eroded by concerns over a potential windfall tax in South

Asia-focused bank Standard Chartered shed 2.7% despite beating forecasts with a 19% increase in full-year profits. Car rental group Avis Europe slumped 17.5% after it announced annual pre-tax profit almost halved and expects market conditions to remain tough.

[R]9:00AM Asia finishes lower on Tuesday, China plummets.[/R]
Asian markets ended lower on Tuesday. The Shanghai Composite Index plunged 8.8% to close at 2,771.79, its biggest single-day drop since February. 18, 1997. Shares in airlines, steelmakers and financial issues led declines. Profit-taking was triggered by woories new macro-tightening policies could be introduced after the annual session of the China National People Congress that reconvenes on March 5. Baoshan Iron & Steel hit the 10% downside limit, Citic Securities plummeted 9.7% and China Life Insurance declined 9%.

Japanese Nikkei 225 ended 0.52% lower to 18,119.92, as property shares declined. Mitsui Fudosan retreated 2.5%. The firm had advanced about 38% in the last three months. Decliners also included Mitsubishi Estate, whose shares fell 2.8%. Toyota Motor rose 0.2% after reports that biggest vehicle maker in Japan plans to spend up to 100 billion yen to build a sport-utility vehicle assembly plan in Mississippi.

Other indices around the region also declined. Hong Kong Hang Seng Index settled 1.76% lower at 20,147.87. Australian S&P/ASX 200 finished 0.83% lower at 5,993.80 and Singapore Straits Times Index shed 2.29% to 3,232.02. Taiwan Weighted Price Index retreated 0.02% to 7,901.96, while South Korean Kospi ended 1.05% lower at 1,454.60.

[R]6:30AM Europe is lower on Tuesday on weakness in banking sector.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax shed 1.5% to 6,927.34, the CAC 40 in Paris lost 1.6% to 5,669.2 and London FTSE 100 fell 1.5% to 6,339.6.

Advancers

GKN, U.K. maker of car and airplane parts, rallied 8.7%, as the company said full-year profit more than tripled to 177 million pounds or $347 million after it sold more plane components and reduced spending on reorganization.

Reuters Group advanced 1.4% as Credit Suisse Group raised its recommendation on the world largest publicly traded provider of financial data to outperform from neutral.

Decliners

Austrian Raiffeisen International, which has substantial operations in Russia and Ukraine, fell 6.3%. Erste Bank, which also has businesses across central and eastern Europe, shed 3.4%. National Bank of Greece, which owns Finansbank of Turkey, fell 3.3%. Bank of Piraeus lost 3.1%.

BHP, the world largest mining company, lost 3.9% and Rio Tinto, the third biggest, declined 3.5%. Xstrata, the world fourth-biggest nickel producer, dropped 4.8%.

ABB, the Swiss engineering group, fell 4.6% after Deutsche Bank downgraded the stock from hold to buy. Shipping and port operator Möller Maersk was also hit by its exposure to emerging markets. The company, which owns shares in shipyards in Russia and China, also said that proposed tax changes in Denmark would have severe negative consequenses. The shares fell 4.2%.

Oil and gold

Crude oil traded little changed, near a nine-week high in New York, on speculation rising fuel demand and refinery shutdowns cut U.S. gasoline supplies. Crude oil for April delivery was at $61.48 a barrel, up 9 cents, on the New York Mercantile Exchange in early trade in London. Brent crude traded at $61.47 a barrel, up 14 cents, on the London-based ICE Futures exchange.

Gold fell in London after two days of gains to a nine-month high prompted some sales by investment funds. Gold for immediate delivery declined $1.40, or 0.2%, to $685.15 an ounce in early trade in London.

Currencies

The euro advanced against the U.S. dollar Tuesday, hitting two-month highs, after Alan Greenspan warned that the United States could be in a recession later this year. His remarks Monday night supported the euro to $1.3211 in morning European trading, hitting two-month highs, and above the $1.3185 it bought in New York late Monday. The British pound was barely changed, moving to $1.9652 from $1.9644. The dollar dropped to 119.58 Japanese yen from 121.04 yen.

[R]5:00AM Gold and silver advanced Monday on technical buying and stronger oil.[/R]
April gold advanced $3.10 to end at $689.80 a troy ounce on the New York Mercantile Exchange, while May silver settled up 9.6 cents at $14.832. April platinum overnight peaked at $1,252, its strongest level since November and settled up $4.40 at $1,242 an ounce. June palladium dipped $2.20 at $361.50 an ounce. The March copper contract gained1.55 cents to finish at $2.8555 per pound.

April crude oil on the New York Mercantile Exchange advanced 25 cents to end at $61.39 a barrel. Front month March gasoline gained 1.46 cents to end at $1.7777 a gallon. March heating oil settled up 0.57 cent at $1.7562 a gallon while March natural gas declined 20.8 cents to close at $7.547 a million British thermal units.

On the New York Board of Trade, Arabica coffee futures slid to two-day lows. The March contract settled down 1.40 cents at $1.1785 a pound, with May off 1.25 cents at $1.1890. Futures on raw sugar in foreign ports for March gained 0.05 cent at 11.02 cents a pound, with May up 0.05 cent at 10.69 cents.