Norilsk Nickel Bids $4.8 B for LionOre Mining

Elena
03 May, 2007
New York City

Wall Street started trading moderately higher on Thursday, as stronger-than-expected Q1 productivity growth and a modest increase in labor costs helped generate some optimism about the outlook for interest rates. However, the upside move was limited by 3% decline for General Motors amid 90% profit drop. In corporate news, Russia''s Norilsk Nickel, the world''s largest nickel producer, offered to buy Canada''s LionOre Mining International for $4.8 billion.

[R]9:45AM U.S. markets opened higher, boosted by productivity report.[/R]
Wall Street started trading moderately higher on Thursday, as stronger-than-expected Q1 productivity growth and a modest increase in labor costs helped generate some optimism about the outlook for interest rates. However, the upside move was limited by 3% decline for General Motors ((GM)) amid 90% profit drop. Among other earnings-related movers, CBS ((CBS)) added 0.6% after it said quarterly profit fell 5.9%, hurt by a tax charge selling radio stations and lower TV syndication income. At the same time, its adjusted earnings per share were slightly above analyst expectations.

Martha Stewart Living Omnimedia ((MSO)) posted wider Q1 loss, weighed down by a charge associated with production of its syndicated TV program. The multimedia empire reported a loss of 23 cents per share, compared with a loss of 13 cents per share last year. Company's stock dropped 1.7%. European largest oil copmpany Royal Dutch Shell PLC ((RDS-B)) said its Q1 earnings rose 5.7%, despite falling oil prices and declining profit at its production and refining arms.

In corporate news, Russia's Norilsk Nickel, the world's largest nickel producer, offered to buy Canada's LionOre Mining International for $4.8 billion in cash, seeking to break up Xstrata's agreement to buy the company. The Dow Jones Industrial Average was up 7 points at 13,218. The S&P 500 was up 1.75 points at 1,497, while the Nasdaq Composite rose 0.6 points to 2,558.


[R]Labor productivity rose 1.7% in Q1.[/R]
The Department of Labor released its preliminary report on productivity and labor costs in the first quarter on Thursday, showing productivity growth that exceeded economist expectations and labor cost growth that slowed substantially from the fourth quarter. The report showed that productivity in the non-farm business sector rose 1.7 percent following a revised 2.1 percent increase in the fourth quarter. Economists had expected productivity growth of 0.8 percent compared to the 1.6 percent growth originally reported for the previous quarter.

The stronger than expected productivity growth came as output increased by 1.4 percent, while hours worked decreased by 0.3 percent. In the fourth quarter output and hours increased by 2.9 percent and 0.8 percent, respectively. The first quarter productivity growth also reflected a 2.7 percent increase in productivity in the manufacturing sector, which compares to a 1.9 percent increase in the fourth quarter.

The Labor Department added that the pace of growth in unit labor costs slowed to 0.6 percent in the first quarter from a revised 6.2 percent in the fourth quarter. The unit labor cost growth in the fourth quarter was originally reported at 6.6 percent. The increase in unit labor costs in the fourth quarter was due in large part to big bonuses paid to high-income workers.


[R]First-time jobless claims dropped 21,000.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended April 28, showing that jobless claims unexpectedly fell compared to an upwardly revised reading for the previous week. The report showed that jobless claims fell to 305,000 from the previous week''s revised figure of 326,000. Economists had expected jobless claims to rise to 325,000 from the 321,000 originally reported for the week ended April 21.

The Labor Department also said that the less volatile four-week moving average fell to 328,750 from the previous week''s revised average of 333,250. Additionally, the report showed that continuing claims in the week ended April 21 dropped to 2.495 million from the preceding week''s revised level of 2.588 million. The unexpected decrease in initial jobless claims may generate some optimism about the April employment report that is due to be released on Friday. Economists expect the report to show an increase of about 100,000 jobs.


[R]9:30AM FTSE 100 rallies on strong earnings results from Unilever, Royal Dutch Shell.[/R]
The UK benchmark hit a new record on Thursday.

The FTSE 100 hit 6,530.4 in early exchanges, its highest level since 2001. By mid-day, the FTSE 100 index advanced 30.6 points to 6,515.2.

Advancers

Prudential led the advancers on reports that some shareholders were insisting on a break-up of the life assurer. The shares rose 5.1 per cent.

Consumer goods company Unilever gained 5.1 per cent as it reported a 5 per cent rise in first-quarter pretax profit. Same-store sales rose 4.3 per cent while margins also improved.

Royal Dutch Shell advanced 1.8 per cent o £18.40 on earnings of $6.9 illio in the first quarter compared to $6.1 billion a year ago and topped forecasts with a 14 per cent rise in net profit.

ICI gained 1 per cent on a 12 per cent growth in profit before tax. The paints and chemicals company also announced its outlook for the second quarter remained positive and expectations for the year as a whole remained unchanged.

British American Tobacco announced first-quarter profit from operations advanced 11 per cent, also beating expectations. The cigarette group gained 1.3 per cent

Decliners

A profit warning weighed on Games Workshop, pulling it 20.6 per cent lower. Shares plunged after the war gaming model specialist issued a warning that full year profits are unlikely to meet market expectations on weaker than anticipated sales in continental Europe.

Carter & Carter, down 7.9%, said that non-executive chairman Rodney Westhead will become chief executive on an interim basis after the car mechanic training group said Phillip Carter is believed to have been killed in a helicopter crash on Tuesday night.


[R]9:15AM Asian markets finish higher Thursday in a broad rally.[/R]
Asian markets rallied Thursday. Markets in Japan and China were closed for public holidays. In Hong Kong, the Hang Seng Index closed 1.4% higher at 20,681.58. China Mobile led gains among Hong Kong large-caps, as the world largest cellular operator by subscribers surged 1.5%. HSBC Holdings gained e 0.9%, adding to prior-session gains.

South Korean Kospi advanced 0.4% to end at 1559.86, slightly below its all-time high of 1,565.03. Hyundai Motor, the largest auto maker in South Korea, gained 0.2%, while industrial conglomerate Hyundai Heavy Industries added 1.5%. Samsung Electronics Co., a leading maker of flash memory chips used in digital cameras and music players, added 0.4%.

Australian benchmark S&P/ASX 200 index closed 0.1% higher at 6,245.60, adding to its record finish in the previous session as BHP Billiton and other mining shares held onto their previous gains. BHP Billiton added 0.6% and Rio Tinto climbed 0.8%. The National Australia Bank added 0.1% ahead of its first-half earnings, which are due to be released next week.

Singapore Straits Times Index added 1.4% to close at 3,463.86, while Malaysia KLSE Composite finished up 1.4% to 1,341.18.


[R]9:00AM U.S. stock futures turned higher on robust Q1 labor productivity.[/R]
U.S. stock futures advanced Thursday after data showing a bigger-than-expected rise in labor productivity in Q1, and lower-than-anticipated unit labor costs. The Labor Department said that productivity of the U.S. non-farm business sector rose 1.7%, much higher than the expected 0.8% increase. Unit labor costs at an annual rate of 0.6%, well-below expectations of a 2.1% gain.

The well-received economic data managed to offset negative sentiment generated by highly disappointing quarterly results at GM. General Motors ((GM)) lost 1.4% to $32 in the pre-open after it said its Q1 profit dropped to $62 million, with GMAC hurt by the subprime mortgage sector. Among other movers in the sector, Ford Motor ((F)) fell 0.9% and DaimlerChrysler ((DCX)) slid 1.2% in the pre-open.

Among pre-market highlights, office-supply retailer OfficeMax Inc. ((OMX)) said it swung to a Q1 profit, but retail sales fell and results misses analyst expectations. The company posted earnings of $57.5 million, or 76 cents per share, versus a loss of $26.1 million, or 37 cents per share a year ago, missing estimates of 93 cents. Excluding a $1.1 million loss related to the sale of some operations in Mexico, net income was 77 cents per share.

Further in earnings news, RealNetworks ((RNWK)) climbed 7.1% in the pre-open after reporting a 60% profit surge and its board approving a $100 million stock buyback. JDS Uniphase ((JDSU)) dropped 10% after it reported a loss. CBS ((CBS)) reported a profit decline, though its profit topped analyst estimates. S&P 500 futures erased slight earlier losses to trade up 2.90 points at 1,504.00 and Nasdaq 100 futures tacked on 4.75 points to 1,903.50. Dow industrial futures climbed 22 points to 13,270.


[R]8:15AM General Motors Q1 profit tumbled 90%.[/R]
General Motors Corp. ((GM)) announced Thursday a sharp decline in quarterly profit coming in far below analysts'' estimates. The auto maker said its Q1 earnings were $62 million, or 11 cents a share, down from a profit of $602 million, or $1.06 a share a year ago, missing expectations of a profit of 87 cents on revenue of $40.88 billion. Revenue in the quarter slipped to $43.91 billion from $52.38 billion in the same period a year earlier.

The latest results include charges totaling $32 million, or 6 cents a share, largely related to restructuring actions in Europe and Asia Pacific. Excluding special items, GM would have posted Q1 adjusted earnings of $94 million, or 17 cents a share.

The company attributes the disappointing results to its financial services unit''s exposure to the non-prime sector of the residential mortgage business. However, the company said its North America operations posted an adjusted loss of $85 million for Q1, narrower than a year-ago equivalent loss of $251 million. The company''s stock fell 1.6% to $31.90 in premarket trade.


[R]8:00AM NY-7:00PM Mumbai Sensex rallies Thursday on robust earnings from large-caps.[/R]

The Sensex on BSE finished 205.84 points, or 1.48%, higher at 14,078.21.

The market-breadth was strong as there were three gainers for every two decliners. As 1,557 stocks advanced, 1,016 declined and 87 stocks remained unchanged. Of the 30 stocks in the Sensex, 23 advanced, six declined and one remained unchanged. The turnover on BSE was Rs 4,413 crore, higher than Rs 3,282.23 crore on Monday. On NSE, the turnover was Rs 9,326.83 crore, much higher than Rs 7,571.21 crore on Monday.

Economic news

Out of the 60 certified Agri Export Zones, 54 have not been able to achieve forecast export and investments targets since 2001, according to Associated Chambers of Commerce and Industry of India.

Foreign investment companies in sensitive sectors like aviation, petroleum and retail could undergo changes next month when the government reviews the norms on foreign direct investment.

Trading highlights

IFCI was the most-active stock with a turnover of Rs 155 crore followed by Reliance Industries and Network FinCap.

Advancers

Bajaj Auto led the advancers, rallying 4.3% to Rs 2,551. The board meeting of the company is scheduled on May 17 2007, in Mumbai is likely to consider proposal to separate the manufacturing and financial assets. Bajaj Auto continued its downward trend in motorcycle sales for the third straight month this year, with its April numbers, including exports, declined by 13% compared to the same month last year.

Index heavy Reliance Industries surged 4% to Rs 1,623. Reliance will pay over $600 million for hiring deep-sea drilling rigs for developing the gas fields in the prolific KG-D6 block off the east coast. KG-D6 is the world second largest deepwater find last decade.

Ranbaxy soared 3.5% to Rs 384, while Gujarat Ambuja and Hero Honda advanced over 3% each to Rs 122 and Rs 705, respectively. Hero Honda reported a 4.86% increase in vehicle sales during April 2007 at 2,62,544 units compared to a year ago. Hero Honda expects to maintain its growth momentum in the coming years. Bharti Airtel and Larsen & Toubro also settled up 2.7% each to Rs 834 and Rs 1,741, respectively.

Housing finance company HDFC reported 29% jump in net profit to Rs 550.05 crore for the fourth quarter ended March 2007, 15% rise in earnings. The total income surged 40% to Rs 1,732.95 crore compared to a year ago. The stock advanced 0.4% to Rs 1,667 on Thursday.

Decliners

Tata Motors and HDFC Bank led the decliners, dipping over 2% each to Rs 734 and Rs 1,006, respectively. Tata Motors plunged after rallying to a high of Rs 764.50, on posting total sales of 40,486 vehicles for April, a growth of 10.7% compared with 36,574 vehicles sold in April 2006.

Other leading decliners included Hindustan Lever shedding 1.8% to Rs 196, and Reliance Communications losing 1% to Rs 472.


[R]6:30AM European shares declined Thursday on weak earnings reports from UBS and BMW.[/R]
European markets declined in mid-morning trade on Thursday. National benchmarks fell in 10 of the 17 western European markets that were open.

The German DAX Xetra 30 index lost 0.2% at 7,442.43 and the French CAC-40 index slipped 0.1% at 5,987.37. However, the U.K. FTSE 100 index rose 0.4% to 6,507.30.

Advancers

Royal Dutch Shell advanced 1.6% after saying that its first-quarter profit rose 6% to $7.28 billion, with improving profit in its gas and power, oil products and chemicals units countering declining profits at its largest arm, exploration and production. Competitor BP rose 1.5% in London, while Total climbed 0.8%.

Unilever rose 5.1%. It posted an unexpected increase in first-quarter profit, as cost savings and strong sales volumes outweighed currency effects and higher raw material prices. Dutch supermarket chain Ahold shares rose 2.8% in Amsterdam, after it agreed to sell its U.S. Foodservices business to private equity firms for $7.1 billion.

Decliners

Automaker BMW led the car making sector lower. Its shares declined 2.6% after the first-quarter profit of the company slipped just below analyst expectations and it reported a weaker margin. In IT news, Infineon Technologies lost 1.4%.

UBS fell the most in six months after the biggest Swiss bank reported a third straight decline in quarterly profit. UBS sank 2.7%. Shares in UBS competitor Credit Suisse lost 2.4%, also in Switzerland.

Sanofi-Aventis shares also lost ground. The first-quarter sales of the company grew 2% to 7.12 billion euros, or up 7% on a comparable basis; slightly lower than analyst estimates. Combined with lack of news on the status of a U.S. review of its weight-loss drug, Acomplia, Sanofi shares slipped 1.3%.

Commodities

Crude oil advanced after rebels attacked an oil facility for the third time this week in Nigeria, where unrest has cut about a quarter of the output of the country. Crude oil for June delivery rose 32 cents, or 0.5%, to $64 a barrel on the New York Mercantile Exchange, and traded for $63.88 early in London. Brent crude for June settlement gained 45 cents, or 0.7%, to $66.70 a barrel on London ICE Futures exchange.

Gold gained for the first time this week after Gold Fields Ltd., the world fourth-biggest producer of the metal, announced output declined at seven of its eight mines. Silver also increased. Gold for immediate delivery rose $2.85, or 0.4%, to $676 an ounce, after declining $8.40 in the first three days of this week. Silver rose 11.5 cents to $13.33 an ounce, its first gain this week.

Currencies

The dollar was mostly lower against other major currencies in European trading Wednesday. The euro traded at $1.3609, up from $1.3598 late Wednesday in New York. The British pound traded at $1.9924, up from $1.9896. The dollar fetched 120.12 Japanese yen, unchanged.