ABN Amro Fuels European Gains

Elena
19 Mar, 2007
New York City

European stocks finished Monday trading session on a positive note, boosted by deal speculation in various sectors. Dutch banking group ABN Amro led the financial sector higher, rising 9.5% amid speculation that it had received a bid offer for 81 billion-pound from Britain''s Barclays. Brokers also helped the sector, with Deutsche Bank rising 1.7% on upgrades. The U.K. FTSE 100 rose 1%, the German DAX 30 climbed 1.4%, and the French CAC-40 gained 1.4%.

[R]1:00PM NY European markets rallied, lifted by merger speculation.[/R]
European stocks finished Monday trading session on a positive note, boosted by deal speculation in various sectors. Dutch banking group ABN Amro led the financial sector higher, rising 9.5% amid press speculation that it had received a bid offer for 81 billion-pound ($157 billion) from Britain''s Barclays. Investors believe that he acquisition bid is likely to spark a bidding war among companies interested in buying ABN Amro, including Spanish BBVA and Banco Santander, French BNP Paribas SA, and Dutch ING Groep NV. Brokers also helped the banking sector, with Deutsche Bank rising 1.7% on upgrades at Citigroup and Credit Suisse. Travel stocks were other notable gainers, with shares in Germany''s TUI up 9.6% after agreeing to merge its tourism operations with U.K.-based First Choice Holidays which soared 8.5%. The tobacco sector was also in the spotlight as tobacco firm Altadis rejected a bid of 45 euros a share from Imperial Tobacco. Altadis shares rose 6.1%, while Imperial Tobacco shares slipped 1.9%. The U.K. FTSE 100 rose 1% to 6,189.40, the German DAX 30 climbed 1.4% to 6,671.41 and the French CAC-40 gained 1.4% to 5,458.95.

Crude oil prices were little changed. Light, sweet crude April delivery traded at $57.10. Heating oil rose to $1.6901. Natural gas lost 6 cents to $6.861 per 1,000 cubic feet. London Brent rose 64 cents to $60.94. The U.S. dollar traded mixed against its major currency rivals. The euro was quoted at $1.3292, down from $1.3310. The dollar bought 117.52 yen, up from 116.74. The British pound traded at $1.9444, up from $1.9421. European gold prices rose. In London gold traded at $653.50 per troy ounce, up from $652.80. In Zurich, the precious metal traded at $651.80, up from $650.45. Silver rose to $13.15, up from $13.12.


[R]11:30AM Wall Street traded higher, boosted by merger activity. Dow rose 100 points.[/R]
U.S. stock averages traded sharply higher on Monday, with the Dow advancing by 100 points, lifted by overseas gains and a series of deal announcements including merger talk between two European banks. Dutch banking group ABN Amro ((ABN)) jumped 9% amid reports that it is in merger talks with the U.K.''s Barclays which will make an announcement on Tuesday. The bid offer is likely to spark a bidding war with other European banks interested in buying ABN Amro. Again on the merger-and-acquisition front, Community Health Systems ((CYH)), hospitals operator, agreed to acquire Triad Hospitals ((TRI)) for $54 per share, or about $5.1 billion. Community Health fell 6.5%, while Triad rose 5%.

The blue-chip average was sent notably higher by strong gains for Caterpillar Inc. ((CAT)), up 2.3%, McDonald''s Corp. ((MCD)), up 1.4% and United Technologies ((UTX)), up 1%.Financial shares on the Dow also contributed to the upward move, with American Express Co. ((AXP)), up 0.5%, Citigroup Inc. ((C)), gaining 1% and JP Morgan Chase & Co. ((JPM)), rising 1.6%. Again on the Dow, Walt-Disney Co. ((DIS)) rose 1.3%. The company announced on Friday a probe into its unit Pixar revealed that options had been backdated but that no one from the firm had engaged in any intentional or deliberate misconduct.

In world news, Brazil''s state-run oil company Petrobras and two partners agreed to buy Ipiranga, the No. 2 fuel distributor and refiner, in a $4 billion cash and stock deal. In late morning trading, the Dow rose 120.33, or 0.99%, to 12,230.74. The Standard & Poor''s 500 index rose 15.61, or 1.13%, to 1,402.56, and the Nasdaq composite index advanced 24.53, or 1.03%, to 2,397.19. Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.56% from 4.55% late Friday.


[R]10:30AM London benchmark index is higher Monday on M&A activity.[/R]
The UK market was higher on Monday. The FTSE 100 was up 28 points at 6,158.6.

Advancers

ABN gained 7.5% while Barclays added 0.4% on reports that the UK group was interested in making a bid for the Dutch bank. First Choice Holidays rose 7.8% after the tour operator announced plans to merge with TUI of Germany. The combined group, which will be 51% owned by TUI shareholders and will be listed on the London Stock Exchange.

Laird Group rose 9.5% after it pledged to return 100 million pounds to investors after the 242.5 million pound sale of its security systems division to Lupus Capital. It also reported a 94% rise in full-year profits.

Mid-cap goods retailer Mothercare was 1% stronger as it announced plans to buy Chelsea Stores, parent company of toy retailer Early Learning Centre, for 85 million. Mitchells & Butlers gained 4.2% on reports that financier Robert Tchenguiz was ready to bid for the pub and bar company. Wolseley rose 3.6% higher after it stood by its double-digit growth targets despite reporting lower interim profits

Decliners

AstraZeneca leads the decliners, down 2.1%, on more research disappointment. Heart drug AGI-1067 has failed its final phase III trial according to US biotech partner AtheroGenics. Imperial Tobacco lost 1.5% on speculation that the makers of Lambert & Butler cigarettes was ready to improve its offer for Altadis after the Spanish group rejected a 45 euro a share offer as too low. HMV shares slumped 3.9% as buyers continued to shun the music and books group.


[R]9:45AM Wall Street rallied at opening, boosted by deal announcements.[/R]
U.S. stocks rallied at opening Monday, boosted by gains in overseas markets and several merger deals totaling about $10 billion. ServiceMaster ((SVM)) surged over 12% after it announced that it will be bought by an investment group for $5.5 billion, including $1.02 billion in debt. Hercules Offshore ((HERO)) dropped nearly 10% after it said it agreed to buy Todco ((THE)) for $2.3 billion in cash and stock. Shares of Torco soared 17%. Quanta Services ((PWR)), provider of contracting services to utilities and telecommunications companies, gained 2.5%, following an agreement to acquire InfraSource Services ((IFS)) for $1.26 billion in stock.

Dutch banking group ABN Amro ((ABN)) was in the spotlight on merger speculation. The stock jumped 9% amid reports that it is in merger talks with the U.K.''s Barclays ((BCS)) which will make an announcement before the London exchange opens on Tuesday. The bid offer is likely to spark a bidding war with other European banks interested in either merging with ABN Amro or acquiring certain of its divisions.

Biotech and pharma stocks gained in early trading as shares of Atherogenics ((AGEN)) plunged almost 60% on news that its cardiovascular drug candidate AGI-1067 had failed a Phase III clinical trial. Technology stocks also posted strength, with shares of software makers Oracle Corp. ((ORCL)) and Adobe Systems Inc. ((ADBE)) each rising nearly 2% ahead of quarterly earnings releases on Tuesday. Shares of bellwethers International Business Machines Corp. ((IBM)), Hewlett-Packard ((HPQ)) and Apple ((AAPL)) also advanced.

Shares of large Internet companies advanced. Yahoo Inc. ((YHOO)) and Amazon.com Inc. ((AMZN)) rose nearly 1%, while Google Inc. ((GOOG)) inched up on reports it may be developing a software system for mobile phones. In the first hour of trading, the Dow Jones industrial average rose 79.87, or 0.66%, to 12,190.28. Caterpillar ((CAT)) and United Technologies ((UTX)) were among the leading gainers on the blue-chip average, rising 1.2% each. The Standard & Poor''s 500 index rose 9.97, or 0.72%, to 1,396.92, and the Nasdaq composite index rose 15.58, or 0.66%, to 2,388.24. Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.57% from 4.55% late Friday.


[R]9:00AM U.S. stock futures pointed to a positive opening.[/R]
U.S. stock futures pointed to a higher opening Monday, following a positive start for both European and Asian markets. Investors were awaiting a report on home sales and manufacturing in the Midwest, as well as the Federal Reserve''s two-day meeting on interest rates, starting on Tuesday.

In pre-market highlights, Nortel Networks ((NT)) dropped 2.7% after forecasting flat revenue, reflecting a decrease in revenues as a result of its sale of its third-generation UMTS radio-access business to Alcatel-Lucent. On the merger-and-acquisition front, ServiceMaster ((SVM), a provider of housecleaning, landscaping, and pest-control services, soared 13% in the pre-open after agreeing to be bought by a private-equity consortium for about $5.5 billion, including about $1.02 billion in debt. In other deal news, Hercules Offshore ((HERO)) fell 3.9% after it agreed to buy Todco in a deal worth $2.3 billion in cash and stock. Todco shareholders will receive 0.979 shares of Hercules Offshore and $16 in cash for each share of Todco common stock outstanding.

In broker news, J.P. Morgan upgraded drugstore chain Walgreen Co. ((WAG)) to overweight from neutral, sending its shares up. DaimlerChryasler ((DCX)) was upgraded to neutral from sell at Goldman Sachs, citing management''s plans to consider all options for the future of the Chrysler unit. S&P 500 futures added 7.30 points at 1,406.30 and Nasdaq 100 futures climbed 9.25 points to 1,773.25. Dow futures were up 49 points at 12,260.


[R]8:30AM NY-7:30PM Mumbai Sensex soars on fresh buying in large-cap stocks.[/R]
The Sensex on BSE finished 214.59 points, or 1.73%, higher at 12,644.99. The market-breadth was strong as there were almost three gainers for every two decliners. For 1,419 stocks that advanced, 1,110 declined and 79 remained unchanged. Of the 30 stocks in the Sensex 25 advanced, while the rest declined. The turnover on BSE was Rs 2,675.95 crore, much lower than Rs 3,608.60 crore on Friday. The turnover on NSE was Rs 4,965.07 crore, also much lower than Rs 7,058.77 crore. The poor turnover is because of a bank holiday on account of Gudhi Padva today. As a result, the settlement for trading done on Friday and today’s was clubbed for 21 March 2007. Brokerages have advised clients that shares purchased on Friday should not be sold on 19 March 2007.

Economic news

Despite protests by opposition members, the Rajya Sabha today passed the Appropriation Bill by voice vote, completing the first phase of the budget approval. The passage of Appropriation (Vote on Account) Bill, 2007 by the upper house will enable the central government to meet expenditure till the general Budget for 2007-08 is passed by Parliament. The Vote on Account was approved by Lok Sabha last week.

Steel industry associations said on Monday the government should consider increasing the exports duty on iron ore to at least Rs 600 per tonne. Finance Minister P Chidambaram, in the 2007-08 Budget, had announced an export duty of Rs 300 on iron ore exports, in order to keep more of the ore for domestic steel mills.

India, the second-largest sugar producer in the world, may export 1.5 million metric tons in the year through September. India has sold 250,000 metric tons abroad since it lifted an export ban in January and the prospects of enhanced production look bright.

Trading highlights

MindTree was the most-active stock with a turnover of Rs 248.30 crore followed by AMD Metplast and Reliance Communications.

Advancers

BHEL soared 6.3% to Rs 2,079 on reports that the company was in talks with two overseas firms for nuclear technology deals. BHEL also informed BSE that the tentative performance for FY 2007 will be announced on 3 April 2007, at a press conference to be addressed by the chairman & managing director.

Reliance Communications surged 5.4% to Rs 397. ONGC rallied 4% to Rs 793, and Gujarat Ambuja gained 3.5% at Rs 107. Tata Motors and NTPC moved up nearly 3% each to Rs 771 and Rs 144, respectively. Tata Motors announced on Thursday its small car project coming up at Singur, Kolkata, was on schedule and would be completed by the middle of next year.

HDFC Bank and ACC advanced around 2.5% each to Rs 927 and Rs 739, respectively. Car maker Maruti Udyog gained 1.40% to Rs 790.35, after the Indian government announced it will sell its remaining 10.3% stake in the company in the next financial year. Hindustan Lever advanced 1.84% to Rs 180.05, on reports that the company had raised prices of its detergent brands, Surf Excel Blue and Surf Excel Quick Wash. Index heavy Reliance Industries gained 0.96% to Rs 1,312.25

Decliners

ITC and Hero Honda slipped around 2% each to Rs 142 and Rs 640, respectively. Two block deals of 5 lakh shares each were struck in ITC for an average Rs 142.25 per share in early trade. Dr Reddy’s Labs was down 0.7% to Rs 677.8, were the other prominent decliners in the Sensex.


[R]7:00 AM European markets gain ground on Monday on speculation bids.[/R]
European markets were higher on Monday. The U.K. FTSE 100 index rose 0.6% to 6,167.60, the German DAX Xetra 30 Index rose 1% to 6,644.43 and the French CAC-40 index climbed 0.7% to 5,421.92. National benchmarks gained in all 18 western European markets except Luxembourg.

Advancers

ABN Amro rallied, leading the banking sector higher as it rose 7.9% on speculation that Barclays might offer about 60 billion euros for Amsterdam- based ABN Amro. Other banks also gained. BBVA shares rose 1.3%, BNP shares added 1.3% and ING shares increased 1.2%. The tobacco sector was also in the M&A spotlight as Franco-Spanish tobacco firm Altadis rejected a 45-euro-a-share bid from Imperial Tobacco of the UK. Altadis surged 5.9%.

Travel stocks were also higher, with shares in TUI of Germany up 7.7% after it agreed to merge its tourism operations with U.K.-based First Choice Holidays. Deutsche Postbank shares gained 3.1% in Frankfurt after it reported higher profit for 2006. Auto maker DaimlerChrysler rose 2.4% after it was upgraded to neutral at Goldman Sachs.

Vinci SA gained 2.4%. French billionaire Francois Pinault is reported to ally with the Mittal group as he seeks to buy a majority stake in Vinci, La Lettre de l''''Expansion said, citing unidentified U.S. investors.

Prudential Plc, British insurer, rallied 3.3% after the Observer yesterday reported an activist hedge fund is building a stake in the company, increasing speculation the company could be pressured to break itself up.

Decliners

Imperial Tobacco was the only notable decliners, down 1.5% in London.

Commodities

Gold climbed for a fourth consecutive session on speculation slowing U.S. economic growth and quickening inflation will raise investor demand for the metal as an alternative to U.S. stocks and bonds. Gold for immediate delivery rose $1 to $654.40 an ounce in early trade in London. Silver declined 1 cent to $13.15 an ounce.

Platinum climbed $8.50 to $1,225.50 an ounce and palladium advanced $2 to $352 an ounce. Copper declined on speculation a rise in Chinese interest rates will slow growth in demand for the metal used in plumbing and electrical cables. Copper for delivery in three months on the London Metal Exchange fell $90, or 1.4%, to $6,520 a metric ton. Nickel slipped after LME-monitored stockpiles rose for the first day in five. Inventories increased 138 tons, or 3.9%, to 3,702 tons. Aluminum fell $21 to $2,793 a ton, zinc declined $55 to $3,195 and lead dropped $26 to $1,900.

Crude oil fell near a six-week low in New York because some analysts and traders are concerned world economic growth will slow, cutting demand for fuel. Crude oil for April fell as much as 44 cents, or 0.8%, to $56.67 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude for May settlement in London fell less than New York West Texas Intermediate, dropping l 9 cents to $60.21 a barrel in electronic trading on London ICE Futures exchange.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Monday morning. The euro traded at $1.3287, down from $1.3310 late Friday in New York. The British pound traded at $1.9428, up from $1.9421. The dollar bought 117.35 Japanese yen, up from 116.74.