Scania Helps European Rise

Elena
07 Mar, 2007
New York City

European stocks finished modestly higher on Wednesday, supported by gains in the shares of truck maker Scania on merger-and-acquisition speculation. Stocks traded mostly flat on cautiousness ahead of key interest-rate decisions tomorrow. Scania climbed 3.7% after Volkswagen lifted its stake in the Swedish truck maker, thus putting pressure on Scania to merge with Germany''s Man AG. The German DAX 30 added 0.3%, the French CAC 40 rose 0.3%, and the U.K. FTSE 100 also gained 0.3%.

[R]1:00PM European markets finished modestly higher.[/R]
European stocks finished modestly higher on Wednesday, supported by gains in the shares of truck maker Scania on merger-and-acquisition speculation. Stocks traded mostly flat on cautiousness ahead of key interest-rate decisions. Both the European Central Bank and the Bank of England announce interest-rate decisions on Thursday. Scania climbed 3.7% after Volkswagen lifted its stake in the Swedish truck maker, thus putting pressure on Scania to merge with Germany''s Man AG. Man climbed 3.1% in Frankfurt. Volkswagen shares rose 2.5%. Among other movers today, Carrefour reversed earlier gain to close down 2% after its chairman Luc Vandevelde resigned. Earlier in the day shares rallied after Groupe Arnault and Colony Capital said they bought a 9.8% stake. Other European food retailers gained, with shares in Britain''s Morrison Supermarkets, up 1.7% and shares of Germany''s Metro, up 1.1%. The German DAX 30 closed up 0.3% at 6,617.75, the French CAC 40 rose 0.3% to 5,455.07, and the U.K. FTSE 100, in which a number of companies traded without dividend rights, also added 0.3% to 6,156.50.

Crude oil prices jumped $1 on data showing an unexpected drop in crude oil inventories. Light, sweet crude April delivery rose $1.13 to $61.82. Heating oil added 2 cents to $1.7679. Natural gas fell to $7.463 per 1,000 cubic feet. London Brent jumped $1.13 to $62.52. The U.S. dollar traded down against its major currency rivals. The euro was quoted at $1.3147, up from $1.3121. The dollar bought 116.48 yen, down from 116.67. The British pound was quoted at $1.9307, up from $1.9292. European gold prices rose. In London gold traded at $647.50 per troy ounce, up from $641.60. In Zurich, the precious metal traded at $648.60, up from $642.30. Silver rose to $12.94, up from $12.72.


[R]11:30AM Stock averages traded lower. Rising oil weighed on the Dow.[/R]
U.S. stock markets traded in a tight range Wednesday. The Dow erased earlier gains to join the Nasdaq and S&P 500 in the negative territory. The blue-chip average decline followed a notable increase by the oil price. Crude oil rose 91 cents to $61.60 after weekly inventory data showed an unexpected drop in oil supplies last week. Shares of major energy companies advanced, including Exxon Mobil, up nearly 1%. The oil and gas producer said it is planning to start up more than 20 new projects in the next three years. Among other oil majors, Valero ((VLO)) advanced 2.5% and ConocoPhillips ((COP)) advanced 1.9%. Other notable gainers in the oil service sector included Weatherford ((WFT)), up 2.8% and Global Industries ((GLBL)), rising 3.6%. In the housing sector, Toll Brothers ((TOL)) moved 1.1% higher.

Financial services stocks were leading losers on the S&P 500 index, with shares of Bank of America ((BAC)) falling 0.9%. Weakness was also visible in the biotechnology sector. Drug company CV Therapeutics Inc. ((CVTX)) weighed heavily on the Nasdaq with a decline of 25% as its angina drug ranolazine did not meet the primary efficacy endpoint in a late stage study. In late morning trading, the Dow Jones industrial average fell 20.75, 0.17%. The Standard & Poor''s 500 index fell 4.27, or 0.31%, to 1,391.14, and the Nasdaq composite index rose 11.72, or 0.49%, to 2,373.42. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.51% from 4.53% from late Tuesday.


[R]9:45AM U.S. stock markets opened little changed, looking for direction.[/R]
U.S. stock markets opened little changed Wednesday, looking for direction after heavy recent losses and the partial recovery in the previous session''s rally. Investors were also cautious ahead of the release of February employment report on Friday. On the one hand, the Dow was weighed by AT&T ((T)) and American Express ((AXP)), each falling over 1%, but on the other hand, it was supported by gains for industrial shares, including Coca-Cola ((KO)), Boeing ((BA)) and Caterpillar ((CAT)), each rising 1.2%. Clothing retailer American Eagle Outfitters ((AEOS)) fell 3.7% after the company''s Q4 report failed to impress investors. BJ''s Wholesale Club ((BJ)) rose 2% after the retailer posted Q4 earnings drop of 77% to 18 cents a share, down from 76 cents a year ago hurt by special items.

Among companies driven by analyst comments, Deere & Co. ((DE)) climbed 4% after Lehman Bros. lifted its rating on the stock to overweight. Kellogg ((K)) gained 1% after it was upgraded to buy from neutral by Goldman. on the side of the losers, Campbell Soup ((CPB)) lost 1.5%, following a downgrade to sell from neutral at Goldman Sachs. In corporate news, CV Therapeutics ((CVTX)) fell 26% after the drug maker said its only approved drug failed to show adequate improvement over a placebo at treating heart disease. In midmorning trading, the Dow Jones industrial average rose 12.25, 0.10%, to 12,219.84. The Standard & Poor''s 500 index fell 0.96, or 0.07%, to 1,394.45, and the Nasdaq composite index rose 2.81, or 0.12%, to 2,382.33. Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.53%from late Tuesday.

[R]Crude oil and gasoline inventories declined.[/R]
Government data released Wednesday showed that crude oil inventories dropped in the most recent week, reversing some of the gains posted in the previous couple weeks. Meanwhile, gasoline and distillate stockpiles continued to slide. The Department of Energy''s Energy Information Administration said that crude oil inventories fell 4.8 million barrels in the week ended March 2. Specifically, the measure dropped to 324.2 million barrels from the previous week''s level of 329 million barrels. This followed an increase of 1.4 million barrels recorded in the previous week and an advance of 3.7 million barrels in the week before that. Oil inventories for the week were 5.1% below last year''s level. Meanwhile, gasoline inventories showed a week-over-week decline of 3.8 million barrels. This added to a recent streak of declines, including a slide of 1.9 million barrels in the previous week. The level of gasoline inventories was 3.9% below last year. Distillate fuel oil had an inventory decline during the week ended March 2 as well. Stockpiles of these products, which include heating oil, slipped by 1.3 million barrels. This added to recent declines, with a draw down of 3.8 million barrels taking place in the previous week.


[R]9:30AM UK market trades slightly lower on Wednesday on ex-dividend stocks.[/R]
The UK market was lower on Wednesday by mid-day. The FTSE 100 was off 14 points at 6,125.8 having been more than 30 points lower earlier in the session.

Advancers

Property stocks were higher in London on JP Morgan decision. British Land gained 2.4% and Great Portland advanced 3.1%, while Hammerson gained 3 %. Resolution added 3% as news of a change of top management at the closed life fund consolidator boosted hopes of a takeover.

Severn Trent also advanced 2.8% as Merrill Lynch upgraded the utility from hold to buy. Merrill Lynch also upgraded Kelda Group, up 1.8%.Among the mid-caps, PartyGaming surged 8.4% on bid news raising hopes of consolidation in the sector. Sportingbet rallied 12.2% as it confirmed that it had been approached.

Decliners

Leading banks moving ex-dividend, were the main drag, including Lloyds TSB and Royal Bank of Scotland. Lloyds was off 4.2%, RBS shed 2.2%, Barclays retreated 1.7% and Standard Chartered dropped 1.2%.

Other stocks moving ex-dividend included cigarette maker BAT, down 1.9%, and Diageo, off 1.2%. Other decliners included ITV, off 1.4% as the commercial broadcaster posted lower annual profits and weaker revenue.

J Sainsbury slipped 1% a day after hectic trading in the grocer was powered by news that property entrepreneur Robert Tchenguiz had increased his stake to just over 3% and on market speculation that the CVC-led consortium was close to unveiling its offer for the company.


[R]9:00AM U.S. stock futures pointed lower on strengthening yen.[/R]
Following a sharp rebound in the previous session, U.S. stock futures pointed to the downside on Wednesday, reflecting a mixed performance in overseas markets and renewed strength in the Japanese currency against the dollar. In economic news, U.S. private sector employment added 57,000 in February, marking the weakest growth since July 2003. Investors also awaited news on the economy''s health with the Fed''s Beige Book release. Among pre-market highlights, American Eagle Outfiiter ((AEOS)) said February same-store sales rose 6% and projected Q1 earnings in the range of 31 to 33 cents a share. The stock dropped 5.4% in pre-market trading. Again in the retail sector, BJ Wholesale ((BJ)) reported Q4 earnings decline, with adjusted results missing analyst forecasts. The stock lost 1% in the pre-open.

Avalon Pharmaceuticals ((AVRX)) was a notable gainer with shares soaring 25% ahead of the open after the company said it entered into a collaboration agreement with Merck ((MRK)). Among companies driven by analyst comment, Google ((GOOG)) rose nearly 1% after the Internet search giant was upgraded by UBS to buy from neutral, due to valuation. Deere & Co. ((DE)) was also upgraded by Lehman Bros. to overweight from equal weight. Company''s shares rose 1.3%. S&P 500 futures fell 2.00 points to 1,393.40 and Nasdaq 100 futures slid 4.50 points to 1,740.50. Dow industrial futures shed 25 points to 12,190.


[R]8:00AM U.S. Google and Deere & Co. gained in the pre-open on brokerage upgrades.[/R]
Google ((GOOG)) was upgraded to buy from neutral at UBS, citing valuation. According to analysts, returns in longer-term initiatives, including payments, mobile, video, and other forms of advertising, could take a long time to develop, whereas the company’s fundamentals as an online search engine provide good basis for a buy recommendation at current levels. The stock closed Tuesday up $16.61 at $457.55, but was still down 11% from its Jan. 16 high of $513. Google’s shares traded up 1% in the pre-open.

Deere & Co. ((DE)), agricultural and construction equipment maker, was upgraded to overweight from equal weight at Lehman Bros. The broker lifted its rating on the stock, due to increased confidence about the durability of higher agricultural prices and the company''s ability to leverage high end market demand. Shares of the company edged up 0.4% in pre-market trading. They have lost 8.1% since hitting an all-time high of $116.50 on Feb. 22, but are still up 13% since the end of 2006.


[R]6:30AM European markets were higher on Tuesday on M&A and retail stocks.[/R]
European stock markets were higher on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.3% to 6,615.78, the CAC 40 in Paris climbed 0.3% to 5,455.81 and the FTSE 100 in London rose 0.2% to 6,148.0.

Advancers

Carrefour, the French retailer, was up 2.6% after two investment groups announced they had jointly acquired 9.1% of the company. Groupe Arnault and Colony Capital said the move was a long-term strategic and industrial investment.

The retail sector was boosted by the development and domestic rival Casino Guichard rose 3.4%, while Metro of Germany climbed 2.6%. Bid speculation lifted Dutch bank ABN Amro 1.5% as an increasing chorus of hedge fund investors suggested the bank would deliver better shareholder returns if it merged with another large group.

Volkswagen, the German carmaker, is a step closer to its hope of integrating the European truckmaking sector after it raised its stake in Sweden’s Scania to just over 20% of share capital and 35% of voting rights. Shares in Volkswagen gained 1.5 %, while Scania added 1% and MAN gained 2.7%.

Decliners

Vallourec, the French maker of steel tubes, fell 5.2% after its 2006 net profit fell shy of market expectations. A number of heavily-weighted British banks which went ex-dividend capped gains. Lloyds TSB fell 3.8%, Barclays lost 2% and Royal Bank of Scotland shed 2.2%.

Oil and gold

Crude oil advanced on speculation that greater gasoline demand in the U.S. will cause inventories to drop as the summer driving season approaches. Crude oil for April delivery rose as much as 33 cents, or 0.5%, to $61.02 a barrel on the New York Mercantile Exchange and was at $60.90 in early trade in London. Brent crude gained 55 cents, or 0.9%, to $61.94 a barrel on the ICE Futures exchange and traded at $61.79 in London. Gold traded in London at $646.35 per troy ounce, up from $641.60 late Tuesday.

Currencies

The U.S. dollar was lower against other major currencies in European trading Wednesday morning. The euro traded at $1.3125, up from $1.3121 late Tuesday in New York. The British pound traded at $1.9300, up from $1.9292. The dollar bought 116.44 Japanese yen, down from 116.67.