London Recovers on Xstrata

Ivaylo
06 Mar, 2007
New York City

The UK market recovered some territory on Tuesday as dealers sought to put more than a week of volatile trading behind them. After a hesistant start, the market closed the morning session strongly ahead as miners took heart from Xstrata upbeat results and comments. Helped also by a sharp increase in its dividend from International Power, the FTSE 100 was 53.4 points higher at 6,112.1 at mid-day.

[R]9:30AM London market gains ground Tuesday with miners helping the advance.[/R]
The UK market advanced in early trade on Tuesday. The FTSE 100 was 53.4 points higher at 6,112.1 at mid-day.

Advancers

Miner Xstrata was higher 4.4%, topping forecasts with a 119% increase in underlying profits last year, supported by strong copper and nickel prices. Net profit soared to $4.89 billion, including a full year from acquisitions, compared with forecasts of $4.6 billion. The news supported other miners, which rose in sympathy. Antofagasta rose 2.6% and Anglo American was 2.5% stronger.

International Power led the gainers, up 6.2%, as the power generator raises its dividend by 75% and reported a 44% growth in operating profit of 773 million pounds. Takeover speculation sent Royal & Sun Alliance 2.6% higher on talk that the insurer final exit from the US had left it vulnerable to a bid. Sampo of Switzerland was the likely bidder. Legal & General, the life assurer, was also lifted by bid rumours. It gained 2.5%.

Decliners

British Airways, which lost 6.6% in the previous session, fell a further 0.7% on continued concerns about the possible introduction of liberal aviation services between the US and Europe.

Debt Free Direct plunged 4.9% as it warned that profits for 2007 are now expected to be around 10% to 15% below current estimatesof between 9.7 million pounds to 10.3 million pounds.

[R]8:30AM Asia ended mostly higher on Tuesday with Japan leading the way.[/R]
Asian markets closed mostly higher on Tuesday. In Tokyo, the Nikkei 225 benchmark index advanced 1.2% to 16,844.50. Japanese Internet and cellphone operator Softbank gained 3.5%, while Sony added 4.6%, as investors returned to shares as the yen eased. Brokerage firm Nikko Cordial advanced 13.7% after Japan''s third-largest brokerage said it was in advanced talks with Citigroup on a possible deal. Toyota rose 3.5%, leading broad gains among automotive shares.

Hang Seng Index in Hong Kong gained 2.1% to 19,058.56. Shares of China Life Insurance and other mainland financial stocks led the rebound. China Life surged 6.7%, while Industrial & Commercial Banking added 5.3% and China Construction Bank gained 4%. PetroChina, the listed entity of Chinese largest oil producer, ended 2.1% higher after oil prices recovered from a nearly two-week low in Asian electronic trading. HSBC Holdings advanced 2%, after the third-largest bank in the world posted a net income rise of 4.7% to $15.79 billion in 2006 from $15.79 billion.

Shanghai Composite Index in China finished 1.8% higher at 2,840.18. Australian S&P/ASX added 2.1%, while New Zealand NZSX-50 traded flat. Singapore Straits Times Index advanced 1.8% and Malaysia KLSE Composite gained 1.8%. Taiwan Weighted Price Index advanced1.5 % and South Korea''s Kospi Index rose 2%. Indonesia JSX Composite added 2%. Thailand SET Index bucked the broader trend, shedding 0.7% to 672.43.

[R]6:30AM European stock markets advanced in early trade on Tuesday.[/R]
European markets were higher on Tuesday. In early trade, the German DAX Xetra 30 rose 0.7% to 6,579.76, the French CAC 40 rose 0.5% to 5,410.65 and the U.K. FTSE 100 advanced 0.3% to 6,077.90.

Advancers

Swiss drugmaker Novartis surged 3% after it announced it won U.S. Food and Drug Administration clearance for Tekturna, a high-blood-pressure treatment. International Power rallied 4.3% after reporting a 44% profit increase on higher power prices in the U.K. as well as an improved performance from U.S. assets and a contribution from acquisitions. It also lifted its dividend 75%. Xstrata added 3.5% after the nickel and copper mining company reported annual adjusted profit more than doubled to a stronger-than-forecast $4.89 billion, with revenue rising 56% to $26.88 billion.

Financial and resource stocks were also higher on broker comment, recovering some of the heavy losses of recent sessions. Danske Bank gained 1.4% after Goldman Sachs upgraded the stock from neutral to sell. Crédit Agricole rose 2.1% after Citigroup raised its recommendation on the French bank from sell to hold. Belgium Fortis meanwhile, gained 1.9% after WestLB lifted its rating from add to buy. German steelmaker Salzgitter gained 4% after Credit Suisse upgraded the stock from neutral to outperform.

Decliners

France Telecom fell 0.7% after reporting slumping profits, saying that its 2007 dividend won''t be raised and not providing a sales outlook. Frankfurt airport operator Fraport dropped 3.8% after warning that its 2007 profit would fall below 2006 levels, saying its dividend will be stable and reporting a below-consensus 7% rise in operating profit for 2006.

Oil and gold

Oil climbed away from $60 on Tuesday, drawing strength from an increase in Asian and European stocks after five days of losses. U.S. crude gained 37 cents to $60.44 a barrel, having dropped $1.57 on Monday to touch a two-week low of $59.55. London Brent crude was up 55 cents to $61.09.

Gold rose the most in two weeks on expectations a decline in the dollar against the euro will revive demand for the metal as an alternative investment. Gold for immediate delivery gained $7.80, or 1.2%, to $644.40 in early trade in London.

Currencies

The dollar recovered against the yen Tuesday from the previous day in Asia but remained slightly lower than overnight New York levels. The dollar was trading at 116.27 yen, down from 116.37 yen late Monday in New York, but above the 115.60 yen it cost late Monday in Asia. The euro rose to $1.3106, from $1.3098. The U.K. pound rebounded from a four- month low against the yen. The pound gained 1.1% against the yen, trading at 224.42 yen in early trade in London, from 221.88 yesterday. Against the euro, it was at 68.06 pence, from 68.16, and traded at $1.9263 from $1.9205.

[R]5:00AM Arabica coffee plummeted, gold and silver decline on Monday.[/R]
March Arabica coffee ended down 3.80 cents at $1.1055 a pound, with May off 3.65 cents at $1.1150. Futures on raw sugar in foreign ports for May closed down 0.56 cent at 10.66 cents a pound, with July down 0.46 cent at 10.56 cents.

April gold dipped $4.90 to $639.20 a troy ounce on the New York Mercantile Exchange. May silver shed 21 cents to finish at $12.75. April platinum settled down $31.20 an ounce to $1,180.60 an ounce, while June palladium lost $3.60 an ounce to end at $347 an ounce. The most-active May copper contract declined 3.65 cents to settle at $2.6705 per pound.

The front-month April crude oil contract settled $1.57 lower at $60.07 a barrel, the lowest for a front-month contract since Feb. 21. Front-month April heating oil slipped 4.34 cents to $1.7248 a gallon. April gasoline fell 5.71 cents to $1.8447 a gallon while April natural gas added 1.1 cents to finish at $7.254 a million British thermal units.