UK Advances on Miners

Ivaylo
08 Mar, 2007
New York City

London stocks kept their upward momentum on Thursday on a rally in the mining sector. Mining stocks led the plunge last week because they are largely seen as a proxy on global growth. Kazakhmys led the gainers in the sector. The market was also boosted by anticipated news that the Bank of England Monetary Policy Committee had left interest rates on hold at 5.25%. The gains in mining stocks helped the FTSE 100 advance 43.1 points to 6,199.6 by late morning.

[R]9:30AM London advanced in morning trade Thursday on strong miners.[/R]
The UK market was higher in early trade in London. The FTSE 100 advance 43.1 points to 6,199.6 by late morning.

Economic news

The cost of borrowing was not changed and stayed at 5.25% on Thursday, a signal that the Bank of England is ready to wait and see how successful previous interest rate hikes have been in cooling the economy. The decision of the Bank was not surprising given recent mixed data. In addition, turmoil in global equity and currency markets over the past week had made it less likely that the monetary policy committee at the Bank would want to risk delivering a surprise hike to an already nervous market.

Advancers

The Kazakhmys led the gainers in the sector surging 3.7% after it made its first steps into the petroleum sector with the purchase of Dostan-Temir, which holds the right to sign the contract to explore for oil and gas in the East Akzhar region to the west of the country. Other miners tracked Kazakhmys and advanced. Vedanta Resources rose 3.5% and Lonmin gained 2.8%.

Profits, topping forecasts, from insurer Royal & Sun Alliance sent the company 1.9 %. RSA reported profits to 780 million pounds, raised its final dividend by 35 % and unveiled a new policy to match that rise in 2007. Drax Group was broadly flat after the power generator reported a 144 % rise in pre-exceptional earnings of 583 million pounds.

Of the mid-caps, Temporary power supplier Aggreko posted a 47.5% hike in full year pre-tax profit Thursday and added it expects to achieve a material increase in profits this year and to be ahead of current market expectations. The stocks advanced 7.1%.

Decliners

British American Tobacco led the decliner amongst the large-caps, down 1.3%. Property stocks also retreated after a strong performance in the previous session. Slough Estates lost 1.1% while Hammerson slipped 0.7%.

[R]9:00AM Asia finished mostly higher Thursday with gains in domestic stocks.[/R]
Asian markets finished mostly higher on Thursday. Japanese Nikkei rose 1.9% to 17,090.31. Toshiba rallied 4.9% after Goldman Sachs recommended investors to buy the stock. Nippon Steel, the world second-biggest steelmaker, settled up 4.5% with the share boosted as investors sought stocks, which are likely to lift dividend payouts. Retail group Daiei soared 7.1% after the Nikkei daily reported Aeon would take a 15% stake in the struggling supermarket and department operator. Inpex Holdings, the largest oil producer in Japan, advanced 1.6% as the crude-oil prices ended at their highest level in almost a week.

In Hong Kong, the Hang Seng Index ended 1.36% higher at 19175.17, boosted by stronger-than-expected earnings by Hong Kong Exchanges & Clearing as the stock surged 3.6% after the city''s stock-and-derivatives exchanges operator posted an 88% rise in its 2006 net profit, on a strong increase in market turnover and investment income last year. Hong Kong carrier Cathay Pacific also gained 2.5%, as the company on Wednesday reported net profit for 2006 rose 24% on strong passenger loads and surcharges.

South Korean Kospi Index advanced 0.92% to 1,423.89 and Taiwan Weighted Price Index added 1.24% to 7,573.87. Australia S&P/ASX 200 Index bucked the trend and dipped 0.1% to 5,799.60 while Singapore Straits Times Index surged 2.1% to 3,122.49.

[R]8:00AM NY-7:00PM Mumbai Sensex spurts Thursday on buying in large-caps.[/R]
The Sensex finished 469.60 points, or 3.73%, higher at 13,049.35. The market-breadth was strong as there were more two gainers for every decliner. For 1,748 stocks that advanced, 776 declined and only 57 stocks were unchanged. Of the 30 stocks in the Sensex, there were no decliners. The turnover on NSE was Rs 7,954.06 crore, compared with Rs 8,881.84 crore on Wednesday.

Economic news

Prime Minister Manmohan Singh said that more public sector units should be listed in the stock exchanges. He added that the government would everything possible to help build stronger public sector and give it full managerial and financial autonomy. He also said that the economy was expected to grow by over 9% during 2006-07. He announced that the government was ready to change the approach to SEZs and added that land acquisition and resettlement has to be done in a humane manner.

State Bank of India, the largest commercial bank in the country, will announce 50-100 basis points rise in lending rates this month in the wake of the recent 75 basis points increase in the prime lending rate.

Trading highlights

Reliance Industries was the most-active stock with a turnover of Rs 199.70 crore followed by Indus Fila and MindTree.

Advancers

Hindustan Lever jumped nearly 9.5% to Rs 183.8, BHEL rallied 8% to Rs 2,175.5 and Gujarat Ambuja soared 8.4% to Rs 112.9. Other strong performers included HDFC Bank spurting 6.2% to Rs 972.3, Ranbaxy surged 6.2% to Rs 328.8, Dr Reddy’s Lab rose 6.7% to Rs 677, Grasim advanced 6.2% to Rs 2,235.2 and L&T rose 4.6% to Rs 1,521.1.

Telecom stocks kept their momentum and gained for the second straight day on the eve of the listing of Idea Cellular on Friday on March 9 2007. Reliance Communications surged 5.6% to Rs 434.1, and Bharti Airtel gained 4.8% to Rs 757.5. Idea Cellular is to listed on the bourses on Friday, March 9 2007 and had priced its IPO at the upper end of Rs 65 - Rs 75 price band on a strong response to the issue.

Index heavy Reliance Industries advanced 3.6% to Rs 1,335 and IPCL jumped 11.8% to Rs 259. Reliance said that its board will meet on March 10 2007 to consider a proposal for merging subsidiary, IPCL, with the company.

Steel stocks rebounded on intense buying on firm global steel prices. SAIL jumped 15% to Rs 107, and JSW Steel rose 8% to Rs 447.70. Tata Steel advanced nearly 4% to Rs 428.90. Shareholders of the Corus Group have agreed to Tata Steel $12 billion takeover of the European steelmaker. SBI, Wipro and Satyam ended with gains of around 3.5% each at Rs 1,000, Rs 577, Rs 446, respectively.

Decliners

There were no decliners of the 30 stocks in the Sensex.

[R]6:30AM Europe was higher Thursday morning on commodities, earnings.[/R]
European markets advanced on Thursday morning. The German DAX Xetra 30 rose 0.4% at 6,646.51, the French CAC 40 rose 0.5% at 5,481.55 and the U.K. FTSE 100 rose 0.4% at 6,179.90.

Advancers

Suez, which is trying to merge with Gaz de France, advanced 1.3%. The firm announced its profit grew an above-forecast 43.5% to 3.6 billion euros, a record high, on cost reduction measures. Aegon advanced after reporting a 19% profit rise and Anglo Irish Bank climbed after saying first-half earnings per share should rise 40%.

BP was up 1.2% extending gains from Wednesday on an unexpected dwindling of U.S. energy inventories. Veolia shares added 1.5% as a 23.5% dividend hike to 1.05 euros a share offset a below-forecast profit increase of 22% to 759 million euros. PPR the owner of French department stores and the luxury goods group Gucci, gained 1.4% having said its annual profit rose a stronger-than-forecast 28%.

Decliners

Carrefour, one of the most volatile stocks on Wednesday, were flat although it said 2006 profit jumped 58% to 2.27 billion euros or up an in-line 3% when excluding sale of its Korean operations. Pernod Ricard shares slipped 3.9% after the maker of Martell brandy reported a below-forecast 2.4% first-half profit rise.

Oil and gold

Crude oil traded near $62 a barrel in New York on speculation that gasoline demand will rise as the summer driving season approaches in the U.S. Crude oil for April delivery rose 5 cents to $61.87 a barrel on the New York Mercantile Exchange in early trade in London. Brent crude fell 1 cent to $62.49 a barrel on the ICE Futures exchange in London. Gold opened Thursday at a bid price of $652.35 a troy ounce, up from $647.50 late Wednesday.

Currencies

The euro has risen 0.8% against the dollar in the past month to $1.3150 on the premise the central bank will increase its main refinancing rate to 3.75% from 3.50%. The yen dropped to 154.08 per euro in London from 152.93 in New York late yesterday. It fell to 117.15 against the dollar from 116.06. The pound gained against the yen and climbed for a third day versus the dollar before interest-rate setting meeting today by the Bank of England. Against the yen, the pound rose to 226.10 and was at 225.69 by in London from 224.35 late yesterday. The pound advanced against the dollar, trading at $1.9347 compared with 1.9330 yesterday.

[R]5:30AM Gold and silver advanced on Wednesday on stronger oil, lower dollar.[/R]
April gold advanced $6.70 to $652.90 a troy ounce on the New York Mercantile Exchange. May silver rose 12 cents to $13.105. April platinum dropped $3.30 to $1,195.50 an ounce, while June palladium dropped 25 cents to $351.65 an ounce. The most-active May copper contract rose 7.40 cents to settle at $2.7875 per pound.

The front-month April crude oil contract settled up $1.13 at $61.82 a barrel after trading as low as $60.64. April gasoline added 4.22 cents to end at $1.8955 a gallon. Front-month April heating oil settled up 2.01 cents at $1.7674 a gallon. April natural gas settled down 10.6 cents at $7.366 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures settled down 0.90 cent at $1.1110 a pound, with May off 0.80 cent at $1.1220. Futures on raw sugar in foreign ports for May settled down 0.08 cent at 10.68 cents a pound, with July off 0.06 cent at 10.58 cents.