Utilities Lift European Markets

Elena
03 Apr, 2007
New York City

European stocks posted gains on Tuesday, helped by news that German utility giant E.On will abandon plans to buy Spain''s Endesa. Shares of Acciona rose 5.9%, Enel added 1.3% while Endesa eased 0.8%. The mining sector also provided support as copper prices advanced. Rio Tinto and BHP Billiton helping the resource sector to advance more than 2%. The German DAX 30 increased 1.6%, the French CAC-40 index rose 1.2%, and the U.K. FTSE 100 closed up 0.6%.

[R]1:00PM NY European markets posted gains, boosted by utility and mining stocks.[/R]
European stocks posted gains on Tuesday, helped by news that German utility giant E.On will abandon plans to buy Spain''s Endesa. The mining sector also provided support as copper prices advanced. Higher opening on Wall Street further drove sentiment higher. Shares in Germany''s E.On gained after it reached an agreement with rivals Acciona and Enel SpA to withdraw a bid for Spanish utility Endesa SA in exchange for a portfolio of the Spanish group''s European assets. Shares of Acciona rose 5.9%, Enel added 1.3% while Endesa eased 0.8%. Other utilities, including Suez and Scottish & Southern rose by more than 1.5%. In Spain, Gas Natural rose 3.4% and Union Fenosa increased 4%. In other deal moves, shares in German tire maker Continental rose 3.2% on bid speculation. Miners were among the notable advancers on firm copper prices, with Rio Tinto and BHP Billiton helping the resource sector to advance more than 2%. The German DAX 30 increased 1.6% to 7,045.56, the French CAC-40 index rose 1.2% at 5,711.91, and the U.K. FTSE 100 closed up 0.6% at 6,366.10.


[R]11:30AM Dow Jones gained over 120 points. Homebuilders advanced.[/R]
U.S. market averages posted solid gains in early trading, with the Dow Jones industrials adding more than 120 points. Leading gainers on the blue-chip average were shares of Altria Group Inc. ((MO)), up 2.2%, Home Depot Inc. ((HD)), up 2.5% and Wal-Mart Stores ((WMT)), higher by 1.7%. Stocks benefited from falling oil prices, as well as signs of improving housing market. The National Association of Realtors'' index for pending sales of existing homes increased at a seasonally adjusted annual rate of 0.7% to 109.3 in February from a reading of 108.5 in January.

Homebuilders rose after the rise in pending home sales. Pulte Homes rose 3.2%, KB Home ((KBH)) rose 3.1%, and Toll Brothers ((TOL)) gained 3%. Alcatel-Lucent ((ALU)) rose 2.2% after it agreed to acquire privately held Tropic Networks Inc. Financial terms of the deal were not disclosed. Technology stocks posted strength, helped by a positive outlook from Napster ((NAPS)) which sent its stock 7% higher. Evergreen Solar ((ESL)) climbed 7% on extension contract from SunEdison. F5 Networks ((FFIV)) advanced 4.6%.

In the financial sector, subprime lender New Century Financial ((NEWC)) rose 4.4%. On Monday it filed for bankruptcy protections as it cut 54% of its workforce. Accredited Home Lenders ((LEND)) surged 22% after it said it received new financing from a commercial bank and confirmation of an existing loan from an investment bank. Among automakers releasing monthly sales, Porsche Cars North America Inc. said that U.S. sales rose 2.9% in March to 3,278 vehicles from 3,185 last year. Volvo Cars of North America LLC said sales fell 4.8% in March, to 12,002 units from 12,605 a year ago. Sales in the U.S. fell 4.4% to 10,666 vehicles. In late morning trading, the Dow rose 124.51, or 1.01%, to 12,506.81. The Standard & Poor''s 500 index was up 12.81, or 0.90%, at 1,437.36, and the Nasdaq composite index added 30.62, or 1.26%, to 2,452.88. Bonds were slightly lower after the home sales data, with the yield on the benchmark 10-year Treasury note at 4.66%, up from 4.65% late Monday.


[R]9:45AM U.S. stocks rallied on strong pending home sales.[/R]
U.S. stocks rallied at opening Tuesday, extending recent gains. Market sentiment was boosted by data showing higher-than-expected February pending homes sales, which suggested that the housing market was stabilizing. Shares of home builders moved to the upside, with Beazer Homes USA ((BZH)), rising more than 2%. A notable decline in crude oil prices amid easing tensions between the UK and Iran also gave a boost. Consequently, shares of oil companies moved lower, with Exxon Mobil ((XOM)) losing 0.5%. Among other Dow components, Altria Group ((MO)) and United Technologies ((UTX)) gained, each rising 1%.

Shares of larger Internet companies gained, led by Google Inc. ((GOOG)), up 2.4% after announcing a TV ad-selling trial with the owners of the Dish Network. eBay Inc. ((EBAY)) rose 2.6% after Bear Stearns slightly increased Q1 profit and sales estimates for the company. Shares of online music seller Napster ((NAPS)) jumped 7% after announcing that its Q4 results will beat its own estimates.

In earnings news, Iridex Corp. ((IRIX)), a provider of laser systems, dropped 16% after the company reported a Q4 net loss of 48 cents a share, compared with a net profit of 5 cents a share, in the year-ago period. Revenue fell to $9.04 million from $10.4 million last year. In the first hour of trading, the Dow Jones industrial average rose 66.07, or 0.53%, to 12,448.37. The Standard & Poor''s 500 index was up 6.47, or 0.45%, at 1,431.02, and the Nasdaq composite index rose 15.47, or 0.64%, to 2,437.73. Bonds were slightly lower ahead of the data, with the yield on the benchmark 10-year Treasury note at 4.65%, up from 4.64% late Monday.


[R]9:30AM London trades in the positive Tuesday afternoon with utilities and miners leading.[/R]
The UK market was higher in afternoon trade on Tuesday. The FTSE 100 was up 0.45% to 6,344 in afternoon trade.

Advancers

Scottish & Southern Energy gained 2%, while International Power was 2.1 % higher and Scottish Power rose 1%. Severn Trent rose 1.4% after underlining its growth targets, while Kelda Group rose 1.2% and mid-cap Northumbrian Water Group was up 2.5%.

Severn Trent announced that process improvements are expected to result in staffing levels in Severn Trent Water being reduced by around 600 posts over the next five years. Severn added it has delivered a trading performance last year consistent with its expectations.

Miners were going well, led by Kazakhmys and Xstrata on better copper prices. Kazakhmys gained 3% and Xstrata rose 2.7%.

Decliners

Strategic Thought, down almost 17%, said it has seen a recovery in the performance and closed more ARM deals than last year but was still slower than anticipated due to delays. Life group Resolution says embedded value per share rose by 18% to 613p in 2006, reflecting the benefit of the acquisition of Abbey life businesses and a strong performance across all its businesses.

Publisher Bloomsbury, down 1.31%, reported profits crashed to 5.2 million pounds in 2006 from 20.1 million pounds in 2005, as expected, on turnover of 74.8 million pounds versus 109.1 million pounds last time. The firm added it had made a good start to current year with a strong pipeline of titles.


[R]9:00AM Wall Street to extend gains, awaiting U.S. automakers sales.[/R]
U.S. stock futures indicated a higher opening, supported by a notable decline in crude oil prices as tensions between Britain and Iran subsided. Light sweet crude dropped 97 cents to $64.98 in premarket trading on the Nymex. On Tuesday, automotive stocks are expected to be in focus as the nation''s automakers are due to release March sales figures that could help market extend yesterday’s gains. Ford Motor Co. ((F)), Chrysler ((DCX)) and General Motors ((GM)) are all likely to report lower sales compared to last-year figures, while Toyota Motor ((TM)) Honda ((HMC))and Nissan ((NSANY)) are expected to release higher U.S. sales. General Motors, the nation''s largest automaker, said its Q1 sales in China jumped 25%. As U.S. sales have been sluggish, overseas markets are seen as a key driver to sales. Results will be closely watched to determine the pace of consumer spending.

Financial stocks may also draw attention, as further weakness is expected from the bankruptcy of New Century Financial Corp. ((NEW)), the biggest mortgage lender to collapse in the slumping U.S. housing market. Tax preparer H&R Block ((HRB)) whose subsidiary Block Financial was given an unstable outlook from Moody''s Investors Service is also expected to come under pressure. Apple ((AAPL)) and Warner Music ((WMG)) were in the spotlight as the European Commission charged them, among others, with breaking antitrust rules by limiting access to music downloads by country. S&P 500 futures improved 6.30 points to 1,439.60 and Nasdaq 100 futures climbed 8.25 points to 1,798.25. Dow industrial futures hiked up 44 points to 12,493.


[R]8:15AM The European Commission charged Apple with breaking antitrust rules.[/R]
Apple ((APPL)) and leading record companies were charged by the European Commission with breaking antitrust rules. It objected to the territorial restrictions applied to online music sales.

The E.C. issued a ‘statement of objections’ which gives respondents two months to defend themselves in writing. The commission claims that Apple and the major record companies like the joint venture between Sony ((SNE)) and Bertelsmann, the Universal Music arm of Vivendi , Warner Music ((WMG)) and EMI Group are limiting consumers’ access to music downloads by country. On condition that the companies are found guilty, they are subject to paying a fine of up to 10% of annual global revenue.

Apple rejected the accusations, stating that they did nothing to violate E.U. law. The company said they will continue to work with the E.U. to resolve the problem. EMI said it doesn''t believe it has violated European law. Apple and EMI on Monday announced a pact to sell music without that protection.


[R]8:00AM NY-7:00PM Mumbai Sensex recovers Tuesday in an across-the board rally.[/R]
The Sensex on BSE finished 169.21 points, or 1.36%, higher at 12,624.58. The market-breadth was slighlty positive as 1,390 stocks advanced, while 1,040 declined and only 88 stocks remained unchanged. Of the 30 stocks in the Sensex, 25 stocks advanced, while the rest declined. The turnover on BSE was Rs 2,880 crore, compared with Rs 2,924.08 crore on Monday. On NSE, the turnover was Rs 6,745.48, slightly lower than Rs 6,866.85 crore on Monday.

Economic news

The Securities and Exchange Board of India, or SEBI, has published a consultative paper on regulation of investment advisers that include, banks, chartered accountants, tax consultants, certified financial planners and the media.

The High Powered Expert Committee looking into issues necessary to make Mumbai an international financial centre has stated six advantages that India has in creating such a centre. The committee has also added that the country has witnessed rapid GDP growth and more growth of cross-border flows on both the current and the capital accounts.

Trading highlights

Reliance was the most-active stocks with a turnover of Rs 112.20 crore followed by Renuka Sugar and Indiabulls.

Advancers

BHEL and NTPC surged over 4.5% each to Rs 2,254 and Rs 154, respectively. BHEL reported net profit rose 42% in fiscal year 2007, to Rs 2385 crore from Rs 1679 crore in fiscal year 2006. The company announced a target of 10 billion dollars, or about Rs 44,000 crores, turnover by 2011-12. Wipro soared more than 3% to Rs 534.2, after investing Rs 375 crore at the Pune facility, increasing capacity from 6,300 to 17,000 seats. The facility focusses on developing solutions for banking, insurance, and telecom industries.

Infosys Technologies advanced 2.2% to Rs 1,964, while TCS rose 1.28% to Rs 1,204 and Satyam Computers moved 2.8% higher, at Rs 459. Tata Steel gained 1.2% to Rs 429, after completing its $12 billion acquisition of Corus Group. Tata Steel paid 608 pence per ordinary share in cash.

Tata Motors gained 1.8% to Rs 681.1, after announcingon Monday vehicle sales in March rose 11% to 62,779 units from 56,406 units a year earlier. Sales of commercial vehicles increased 13% to 30,720 units, its highest monthly sales to date, from 27,289 units, while sales of cars and utility vehicles rose 14% to 25,760 units, also the highest monthly sales.

Index heavy Reliance Industries gained 1.90% to Rs 1,338.50, having advanced from a low of Rs 1,309.55, to a high of Rs 1,346.

Decliners

Cipla led the large-cap decliners today, down 0.8% to Rs 224, while HDFC was 0.6% lower to Rs 1,424. Bajaj Auto sank 0.5% to Rs 2,289.5 and SBI was 0.4% off to Rs 927.


[R]7:30AM Asian markets finished higher on Tuesday with China at record high.[/R]
Asian markets ended higher on Tuesday. Tokyo Nikkei 225 average ended 1.3% higher at 17,244.05. Mitsui & Co. rose 3.3% after the company said it had won a 90 billion yen contract with a group of other companies to build a railroad line in Saudi Arabia. Other Japanese gainers included Sony, whose shares rose 2.4%.Shares of Nikon, gained 4.2%, extending its recent rising trend. Among auto makers, shares of Honda rose 2.5% while Toyota Motor fell 0.1%.

Hong Kong Hang Seng Index ended 0.9% up at 20,002.70, while Shanghai Composite Index closed 1.2% higher to 3,291.29. Advances were fueled by heavy large-cap buying on strong fund inflows and expectations of buoyant first-quarter earnings. Shanghai-listed shares of China Life gained 1.1%, while property group China Vanke added 2.6%.Shares of Citic 1616 Holdings, a telecom unit of mainland conglomerate Citic Pacific, surged 73% above their offer price in debut Hong Kong trading.

Australian S&P/ASX 200 ended 1.7% higher at 6,013.4, a five-week high. Gains were buoyed after Wesfarmers announced it acquired 11.3% of Coles Myer. Shares of BHP Billiton rose 1.9% after copper futures rose 3.3 cents to $3.179 a pound. South Korean Kospi index added 0.3% to end at 1,463.75, Singapore Straits Times Index ended 1.3% higher at 3,288.36, Taiwan Weighted Price Index rose 0.6% to close at 7,932.91.


[R]6:30AM Europe was higher Tuesday on takeover activities, miners.[/R]
European markets were higher on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.9% to 6,997.43, the CAC 40 in Paris gained 0.6% to 5,678.9 and London FTSE 100 climbed 0.5% to 6,345.3. National benchmarks rose in all 18 markets in western Europe.

Advancers

German utility Eon abandoned its attempt to take full control over Spanish Endesa after coming up against too many obstacles, including counter bids and stakebuilding by rivals and tough regulatory conditions imposed by Spanish authorities. Eon conceded defeat to Enel of Italy and Spanish builder Acciona. Eon shares were up 7%, while Enel added 2.1% and Acciona added 4.3%.

Scottish & Southern Energy, the third-largest gas and electricity supplier in the UK, rallied 1.7%. Centrica, the biggest energy supplier in the UK, climbed 1.8 %.

BHP, the world largest mining company, gained 1.7 %, while Rio Tinto, the world third-largest mining company, climbed 2.4 %. Xstrata, the world fourth-largest copper producer, advanced 2.8%.

German tyre and car parts maker Continental rose 3.9% on speculation it was the target of an unnamed private equity bid.

Telecom Italia continued its climb higher following interest from AT&T and America Movil in buying stakes in the company. After gaining 10% in the previous session, the shares were up a further 1.5%.

Decliners

There were no major decliners.

Oil and gold

Crude oil fell as the U.K. planned talks with Iran on the release of 15 British sailors and marines, easing concern the dispute would disrupt crude supplies from the Middle East. Crude oil for May delivery declined $1.20, or 1.8%, to $64.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange and was at $64.88 in early trade in London time. Oil has risen about 5.2% since the sailors and marines were seized, on March 23. Brent crude for May settlement fell as much as 88 cents, or 1.3%, to $67.86 a barrel in electronic trading on the ICE Futures exchange. Gold traded in London at $663.10 per troy ounce, up from $658.40 late Monday.

The dollar was higher against most other major currencies in early European trading Tuesday. The euro traded at $1.3354, down from $1.3373 late Monday. The British pound traded at $1.9761, down from $1.9775. The dollar fetched 118.53 Japanese yen, up from 117.57.