FTSE Slips, Whitbread Soars

Ivaylo
20 Mar, 2007
New York City

Whitbread is viewed as a potential private equity break-up candidate on account of its diverse portfolio of assets. The financials sector are still in the spotlight after Barclays bank confirmed it was in merger talk with ABN Amro of the Netherlands. Prudential gained on broker comment, while Friends Provident slumped on poor annual results. In mid-morning trade, the FTSE 100 was down 7.5 points to 6,181.7.

[R]10:30AM London equities were lower on Tuesday. Whitbread surges on M&A.[/R]
The UK market was lower on Tuesday. In mid-morning trade, the FTSE 100 was down 7.5 points to 6,181.7.

Advancers

Shares in Whitbread, the leisure group, rallied 10.4% as rumours circulated of a possible 23 pound-a-share bid. Barclays gained 4.6% while Lloyds TSB firmed 2% and Royal Bank of Scotland added 1.7 % on expectations of further merger activity to come. Bid speculation also raised shares of ICAP, the inter-dealer broker, 3.6% higher. Prudential rose 3.3 % as Citigroup lifted its price target on the life assurer and confirmed a buy rating.

Mid-caps leisure stock were also upbeat on the Whitbread break-up story. Punch Taverns gained 2.7%, Mitchells & Butlers gained 2.6% and Marston advanced 2.1%.

Decliners

Friends Provident plunged 6.7 % after its annual profits declined 3% to 509 million pounds, mainly on lower earnings from asset management arm F&C. Broadcaster BSkyB shed 1.9% as media regulator Ofcom launched an investigation into the pay TV market that could lead to a Competition Commission probe into the industry.

Peruvian silver and gold miner Hochschild Mining was off 2.9% to profit taking after the profits of the group increased by 89%.

[R]10:00AM Asia finishes higher as export-oriented stocks boosts markets.[/R]
Asian markets closed higher on Tuesday. The Nikkei 225 finished 0.9% higher, adding 153.65 points to 17,163.20. Auto maker Toyota gained 0.9% and Nissan Motor advanced 1.2%, while property company Mitsui Fudosan jumped 4%. Consumer-electronics producer Sanyo Electric added 1.1% following resignation of Chairwoman Tomoyo Nonaka on Monday.

Hong Kong Hang Seng Index rose 0.5% to end at 19,356.90. Expectations of strong earnings results by large-caps, including China Mobile, spurred the benchmark Hang Seng Index higher. China Mobile, which has the second-largest weighting in the benchmark index after HSBC, gained 0.9%. The Hang Seng China Enterprises Index, a benchmark of Hong Kong-listed China shares, closed 0.3% up, 23.41 points higher, at 9,248.67.

Elsewhere around the region, Australia S&P/ASX 200 closed 0.3% higher and Singapore Straits Times Index advanced 0.1%. Malaysia KLSE Composite added 1.1%, while Taiwan Weighted Price Index ended almost flat, down slightly 0.02% and South Korean Kospi edged higher 0.1%. China Shanghai Composite Index moved in and out of positive territory before closing 0.6% higher. Thailand SET Index was up 0.4%. Among decliners, New Zealand NZX-50 traded 0.3% weaker, and Indonesian JSX Composite shed 0.1%.

[R]9:00AM NY-7:00PM Mumbai Sensex gains in volatile trade, Ranbaxy rallies.[/R]
The Sensex on BSE finished 60.95 points, or 0.48%, higher at 12,705.94. The market-breadth was positive although it weakened at the end of the session. For 1,367 stocks that advanced, 1,201 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 17 advanced, while the rest declined. The turnover on BSE was Rs 2,910.12 crore, higher than Rs 2,675.95 crore on Friday, but unusually low for the second day in a row. The turnover on NSE was Rs 6,056.26 crore, higher than Rs 4,965.07 crore.

Economic news

Heavy capital inflows drove the Indian rupee to an 18-month high against the dollar on Tuesday. At noon, the rupee stood at 43.98/99 per dollar, having struck a high of 43.9225 per dollar, its strongest since late-September 2005.

The Prime Minister Dr Manmohan Singh will preside over a meeting of the Planning Commission to work out state-wise strategies for achieving the annual farm growth to beyond 4%.

The entertainment and media industry in India is likely to grow at 18% compound annual growth rate and reach a projected size of Rs 1,00,000 crore by 2011 from its present size of Rs 43,700 crore.

Trading highlights

MindTree was the most-active stock with a turnover of Rs 157.70 crore followed by Reliance Communications and AMD Metplast.

Advancers

Ranbaxy led the advancers, soaring over 6% to Rs 336.4 as reports circulate that the company has withdrawn its bid for Merck generics business. The company exited the race on concerns that the acquisition would not add to earnings.

Reliance Energy surged 4.1% to Rs 476.1 and index heavy Reliance Industries gained 0.5% to, Rs 1,321.05 on market rumors it may sign a joint venture with US-based Dow Chemical Co. Bank shares added on short-covering in the derivatives segment. HDFC Bank gained 3% to Rs 954 and State Bank of India rose 2.6% to Rs 953.

Cement shares advanced on reports that the government may offer a five-year tax break to cement plants set up after April 1 2007. Grasim gained 4% to Rs 2,124, Gujarat Ambuja Cements gained 3.4% to Rs 110.9 and ACC was up 0.3% to Rs 742. Hindustan Lever added 2.1% to Rs 184 and Cipla gained 2.5% to Rs 230

Decliners

BHEL dropped 1.7% to Rs 2,044. Infosys slipped 1.5% to Rs 2,054. The increase of the rupee pushed down IT shares as their derive their revenue mostly in dollar terms. Wipro shed 1.4% to Rs 571.25 and TCS shed 0.6% to Rs 1252.3. TCS and Wipro gyrated between positive and negative territory during the day.

Tata Steel was down 1.3% to Rs 424 and Hero Honda lost 0.8% to Rs 635.30. Reportedly, Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japanese company Honda, proposes to entry-level 100-cc motorcycle segment and will be tough competion.

[R]8:00AM European shares were lower Tuesday despite gains in banking stocks.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax fell 0.2% to 6,659.09, the CAC 40 in Paris was off 0.4% at 5,437.67 and London FTSE 100 edged 0.1% higher to 6,196.2.

Advancers

Dutch bank ABN Amro gained 3.5% after confirmation of the merger talks with Barclays. The two companies said they were in exclusive primary discussions over a merger that could value the combined bank at 80 billion or 117 billion euros. Shares in Barclays rose 4.4%.

German sports car maker Porsche gained 3.1% after upgrades from both Morgan Stanley and Lehman Brothers. Morgan Stanley raised its price target on Volkswagen after the company strong results, particularly from its Audi division. Shares in VW gained 1%. Among mining stocks, BHP Billiton was also generally stronger, up 1.4%, supporting the UK benchmark index.

Decliners

The energy sector pushed market lower, after crude fell below $57 a barrel. Royal Dutch Shell fell 1%, while France Total shed 0.9% and Italy’s Eni lost 1 %. Chemicals group Lanxess lost 1.4% after its sales dropped 2.9% to 6.94 billion euros in 2006. The company posted a profit in 2006 of 197 million euros.

Deutsche Post, the German mail and logistics group, fell 5.8% after forecasting a 7 % fall in operating profit for 2007. Friends Provident the U.K. provider of life insurance, pension products, and asset-management services, declined 5% after it reported that 2006 pretax profit fell 34% and underlying pretax profit fell 3%.

Oil and gold

Oil prices rose but were hovering just under $57 a barrel Tuesday as traders responded to a drop the day before and looked for market drivers. Crude oil for April delivery rose 37 cents to $56.96 a barrel in electronic trading on the New York Mercantile Exchange. The April contract, which expires Tuesday, fell 52 cents the day before amid expectations of rising crude stocks. On London ICE Futures exchange, May Brent crude gained 32 cents to $60.84 a barrel.

Gold prices rose. Gold traded in London at $654.40 per troy ounce, up from $653.50 late Monday. In Zurich, gold rose to $652.85, up from $651.80. Silver opened in London at $13.13 per troy ounce, down from $13.15.

Currencies

The U.S. dollar was mixed Tuesday against other major currencies in European trading. The euro traded at $1.3284, down from $1.3301 late Monday in New York. Other dollar rates compared with late rates Monday in New York included: 117.77 Japanese yen, up from 117.59; 1.2151 Swiss francs, up from 1.2124. The British pound traded at $1.9556, up from $1.9443.

[R]6:00AM Platinum rallied Monday while gold and silver gained modestly.[/R]
April platinum surged $13.50 to end at $1,234.70 an ounce on the New York Mercantile Exchange while June palladium gained $1.70 to $354.10 an ounce. April gold finished up 40 cents at $654.30 a troy ounce and May silver added 1.8 cents to close at $13.233. The most-active May copper contract rose 1.05 cents to settle at $3.0215 per pound.

The front-month April crude oil contract declined 52 cents to close at $56.59 a barrel. April gasoline bucked the broad trend and added 5.10 cents to end at $1.9581 a gallon, the highest close for a front-month contract since Aug. 22. Front-month April heating oil lost 0.04 cent to finish at $1.6884 a gallon. April natural gas shed 7.7 cents to finish at $6.847 per million British thermal units.

The May Arabica coffee contract closed down 0.10 cent at $1.1025 a pound, with July off 0.05 cent at $1.1315. Futures on raw sugar in foreign ports for May dipped 0.04 cent to 10.22 cents a pound, and July lost 0.02 cent to end at 10.15 cents.