London Rebounds

Ivaylo
28 Feb, 2007
New York City

Although still deep in the red, London is near its best levels of the session as the benchmark index moved off session lows in midday trade. The index is also supported by US futures readings pointing to a positive open on Wall Street, although mining stocks, banks and oil majors all fell. Whitbread has reversed initial losses and is leading the gainers. After losing 2.3% in the previous session, the FTSE 100 rallied in mid-session trade, trimming losses to 1%, or 64 points, at 6,222.0.

[R]9:30AM London trims losses Wednesday on a strong opening in US.[/R]
The UK market was lower on Wednesday. After losing 2.3% in the previous session, the FTSE 100 rallied in mid-session trade, trimming losses to 1%, or 64 points, at 6,222.0.

Advancers

Whitbread, the leisure group, is leading the gainers after a very strong trading statement this morning. It announced sales for the first 50 weeks of the year to February 15 2007 have grown by 10.3% and same-store sales are up by 4.3%, though it played down takeover talk. Whitbread rose 2.2%. Retailer Debenhams also advanced on talk that acquisitive Icelandic firm Baugur is circling. Shares have jumped 6%.

Decliners

The mining sector bore the brunt as Xstrata fell 2.4% and Anglo American dropped 2.5%. Banks were also sharply lower, led by HBOS, after the Scottish bank posted annual profit in line with forecasts but warned of increased margin pressure in the coming months. The owner of Halifax fell 4.3%. In the wider sector, Barclays lost 2.7%, Northern Rock fell 2% and Royal Bank of Scotland was 1.7% lower.

Other stocks which fell included Alexon Group down 4.6% as Merrill Lynch lowered its recommendation on Alexon, the U.K. owner of almost 1,400 clothing stores and department-store concessions, to neutral from buy. Allergy Therapeutics lost 5%, as the U.K. vaccine maker announced its six-month loss widened to 6.76 million pounds from 535,000 pounds a year earlier.

[R]9:00AM Asia closes lower on Wednesday on weak performance from US market.[/R]
Asian markets closed lower on Wednesday. The Shanghai Composite Index rebounded 3.9%, adding 109.28 points to finish at 2,881.07 on Wednesday. On Tuesday, the Shanghai index plunged 8.8%. The drop followed fears that government would undertake measures to slow the fast-moving index. Premier Wen Jiabao tried to steady investor sentiment by issuing a comment through state press late Wednesday in order to allay the fears.

Other markets around the region plunged on the pooe performance by US markets overnight. Japanese Nikkei 225 stock index lost 515.80 points, or 2.9%, to 17,604.12. Australian stocks settled down 2.7% after shedding 3.5%, while Singapore Straits Times Index was off 3% to 3,136.58 points, after sagging 5.6% earlier. Philippine stocks nosedived 7.9%, their worst drop since 1997, at the height of the Asian financial crisis. Many Asian markets were in correction mode after their recent spectacular performance. Benchmark indexes in China, Australia and Singapore had all hit records in February. Before the plunge this week, Malaysian stocks had advanced 17% this year, while Philippine shares had climbed about 12%.

[R]6:30AM European markets declined following global sell-off.[/R]
European markets were lower on Wednesday. By mid morning, Frankfurt Xetra Dax fell 1.6% to 6,712.13, the CAC 40 in Paris shed 1.7 % to 5,494.49 and London’s FTSE 100 slid 1.6% to 6,187.9. Of the emerging markets, Turkish Istanbul share index fell more than 3%, while Russian RTS index was off 2.7%.

Advancers

There were no prominent advancers.

Decliners

Rodamco Europe, the Dutch shopping centre owner, fell 4.3%. The company earlier in the week reported quarterly earnings that missed market expectations. Also in the sector, French Unibail fell 3.5 % and Spanish Metrovacesa shed 2.1%.

Stocks connected with emerging markets were lower and Raiffeisen International, the Austrian bank which owns assets across Russia and eastern Europe, fell 3.2%. EFG Eurobank, which has exposure through its Turkish assets, fell 3.5%. Swiss bank Julius Baer, the best performing stock on the SMI index this year, fell 3.8%. Eon, the German utility fell 4.2% after further doubts were cast on its 41billion euros bid to takeover Spanish Endesa.

Munich Re, the German reinsurer, fell 1.4% after it reported record full-year earnings of 3.5 billion euros, but added that it expected a general tendency towards a somewhat softer market.

Oil and gold

Crude oil for April delivery shed $1.54, or 2.5%, to $59.92 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the biggest intraday drop since Feb. 20. It traded at $60.96 in early trade in London.

Brent crude for April settlement lost as much as $1.12, or 1.8%, to $60.24 a barrel on the ICE Futures exchange and traded at $61.14 a barrel in early trade in London.

Gold rose as investors sought a haven following a rout in global equities sparked by the biggest decline in Chinese share prices in a decade and amid tension over Iranian nuclear research. Gold for immediate delivery rose as much as $9.30, or 1.4%, to $672.65 an ounce and traded at $671.95 in early trade in London.

Currenciers

The euro was lower against the U.S. dollar Wednesday as fears of a worldwide slump in markets weighed on the common currency. The euro bought $1.3188, compared with the $1.3243 it bought in New York late Tuesday. The British pound fell to $1.9552 from $1.9632 the day before. The dollar rose to 118.58 Japanese yen from 118.22 yen.

[R]5:00AM Gold declines as Chinese stock market plunges on Tuesday.[/R]
Gold futures for April delivery closed down $2.60 at $687.20 an ounce, while May silver managed to almost recover from a decline to $14.42 an ounce to end at $14.69, down 14.2 cents. May copper lost 1.6%, or 4.5 cents, to close at $2.825 a pound. June palladium fell by $4.90 to close at $356.60 an ounce but April platinum closed $11.30 higher at $1,253.30 an ounce.

Crude oil futures closed at two-month highs. The front-month April crude contract settled up 7 cents at $61.44 a barrel, the highest for a front-month contract since Dec. 22. Front month March gasoline added 3.84 cents to end at $1.8161 a gallon. March heating oil settled up 2.31 cents at $1.7793 a gallon and March natural gas lost 17 cents to finish at $7.533 a million British thermal units.

On the New York Board of Trade, Arabica coffee futures closed weaker but industry buyers curbed a speculative-led slide to three-day lows. March closed down 0.55 cent at $1.1730 a pound, with May off 0.60 cent at $1.1830. Futures on raw sugar in foreign ports for March reached a two-month high, as they settled up 0.43 cent at 11.45 cents a pound, with May up 0.11 cent at 10.80 cents.