Reuters Fails to Lift London

Ivaylo
08 May, 2007
New York City

The market in U.K. retreated from a six-year high on Tuesday despite strong gains for Reuters. The news and information group added to the sharp rise on Friday after it gave details of a deal with Thomson Financial of Canada. Also, a mixed mining sector weighed on the market. Having closed at its highest level since September 2000 on Friday, the FTSE 100 shed 36.3 points to 6,567.4 in late morning trade.

[R]9:30AM London equities trade lower Tuesday on weak mining sector.[/R]

The U.K. market was lower in early deals on Tuesday. The FTSE 100 shed 36.3 points to 6,567.4 in late morning trade.

Advancers

Reuters gained as it outlined details of its merger with Canadian peer Thomson to create the biggest global news and financial information provider. The 8.8 billion cash-and-stock offer would value each Reuters share at 697 pence. Having jumped 25% on Friday, Reuters rose a further 4.3%.

The news boosted other publishers on expectations of further consolidation. Reed Elsevier rose 2.7% and Pearson gained 0.65. Music group EMI gained 3.9% on sustained hopes of a takeover after the company said on Friday it had receive a number of preliminary bid approaches.

Arken POP, part of Media Square, has secured a contract with CBS Outdoor to design and manufacture advertising display units for use across the London Underground network. The multi-million pound contract is the largest ever secured by Arken and lifted Media Square, up 8.9%.

Decliners

BHP Billiton, down 1.9%, Anglo American, off 1.6% and Xstrata, also 1.6% lower, headed south as metal prices sank from recent highs. Oil large-caps Royal Dutch Shell and BP also dipped 1.3% and 1.7%, respectively, as oil prices continued to trade below $62 a barrel ahead of US crude inventories report, released tomorrow.

BAE Systems fell 2% after the defence group announced plans to raised 750 million pounds to finance the 2.3 billion pounds acquisition of Armor Holdings of the US.

Insurer Standard Life reported a better than expected 40% rise in first quarter sales Tuesday, with growth being driven by strong UK sales of life and pensions business in the UK. The shares of the company 0.2%.

[R]8:30AM Asian markets decline Tuesday with only China bucking the trend and advancing.[/R]

Asian markets mostly declined Tuesday. The 225-issue Nikkei Average in Japan closed 0.1% lower at 17,656.84. Investors took to profit taking on Honda and other large-cap stocks tracking strong gains in the session on Monday after an extended holiday break. Mitsubishi Heavy Industries advanced 1.6%, while Japanese banking shares gained on a rating upgrade by Moody''s. Mitsubishi UFJ Financial Group added 2.3%, while Mizuho Financial Group and Sumitomo Mitsui Financial Group both advacned 1.9%. Export-related shares were mostly lower, as Sony traded unchanged, and Canon retreated 0.4%. Auto shares dipped with Honda Motor shedding 0.5% and Toyota Motor falling 0.4%.

The Shanghai Composite in China reached 3,950.01 following an extended week-long holiday break. Property developers and retailers were in focus on a rise in revenue during the week-long Labor Day holiday which pushed China shares to a record high. Retailers and property developers gained as sales picked up during long holidays. Property developer China Vanke hit the 10% upside limit and Poly Real Estate also surged 10%.

Australian S&P/ASX 200 set an intraday record of 6,341.1 early in the session, but retreated 0.5% to end at 6,301.00. Shares of Australian carrier Qantas Airwayspulled the market lower, falling 3% after the consortium bidding 11 billion Australian dollars, or $9.08 billion, for Qantas conceded that its bid for the airline had failed. BHP Billiton fell 1.3%, while Rio Tinto declined 1.7%.

Hong Kong Hang Seng Index finished 0.9% lower to 20,706.35, a day after finishing at a record high. South Korean Kospi was little changed, declining 0.1% to end at 1,582.65 and Taiwan Weighted Price Index lost 0.2% to end at 8,095.84.

[R]8:00AM NY-7:00PM Mumbai Sensex finishes lower on weakness in IT, banking stocks.[/R]

The Sensex on BSE finished 113.79 points, or 0.82%, lower at 13,765.46.

The market-breadth was very weak as there were two decliners for each advancer. As 873 stocks advanced, 1,692 stocks declined and 70 stocks remained unchanged. Of the 30 stocks in the Sensex, only four stocks advanced, 25 stocks declined and one remained unchanged. The turnover on BSE was Rs 4,261 crore, compared to Rs 4,497 crore on Monday. On NSE, the turnover was Rs 9,549.68 crore, higher than Rs 8,657.72 crore on Monday.

Economic news

Finance Minister P Chidambaram said on Tuesday that the government has not decided to allow Foreign Direct Investment in retail sector. The Minister added that FDI was only permitted for cash and carry, wholesale and single brand retail.

The Reserve Bank of India, in a notification on late on Monday, ordered all banks to put a limit on their interest rates, as well as on other processing charges. RBI has given them three months time to comply.

Trading highlights

ICRA was the most-active stock with a turnover of Rs 260.70 crore followed by Indiabulls and Tech Mahindra.

Advancers

ACC led the advancers, surging 2.7% to Rs 886 on reports that Holcim bought 60 lakh shares, or 3.5% equity of the company, at approximately Rs 900 per share. Grasim also advanced 0.7% to Rs 2,489 and Tata Steel edged 0.2% higher to Rs 553. L&T gained nearly 0.2% to Rs 1,697.

Decliners

Hero Honda tumbled over 3.5% to Rs 680, while SBI lost 3.4% to Rs 1,082. Other banks also lost. Bank of Baroda dipped 2% to Rs 189, Vijaya Bank lost 2% to Rs 48, Bank of India retreated 2% to Rs 189, and Bank of Baroda was off 1.5% to Rs 237.

Dr.Reddy dropped 1.8% to Rs 691. An overnight decline in the ADRs and a surging rupee affected IT large-cap Infosys. The stock was off 1.8% at Rs 2002. On Monday, Infosys ADR shed 3.6% to $51.92. Other It stocks also plunged. Wipro shed 1.5% to Rs 546, TCS was down 0.7% to Rs 1,268, and Satyam Computer shed 0.8% to Rs 456.

Reliance Energy slipped 1.4% to Rs 506. Auto stocks also lost. Bajaj Auto shed 1.3% to Rs 2,533, Maruti Udyog shed 1% to Rs 797 in volatile trade. Telecom stocks declined on profit-taking. Bharti Airtel shed over 1% to Rs 810 and Reliance Communications lost also over 1% to Rs 460. Index heavy Reliance Industries shed 0.8% to Rs 1,592.

Tech Mahindra slumped 4.6% to Rs 1,550. Tech Mahindra reported consolidated net profit growth of, excluding exceptional items, 120% in fourth quarter of 2007 at Rs 196.1 crore compared with Rs 89.1 crore a year earlier. Revenue advanced 108% to Rs 874.5 crore compared with Rs 421.2 crore in the fourth quarter of the previous year.

[R]6:30AM European markets fall on Tuesday on profit-taking, weak earnings.[/R]
European markets declined on Tuesday. By mid morning, Frankfurt Xetra Dax shed 0.5% to 7,490.63, the CAC 40 in Paris lost 0.4% to 6,047.72 and London FTSE 100 fell 0.4% to 6,578.7. National benchmarks fell in all 17 markets in western Europe that were open except for Denmark.

Decliners

Shares of KPN dropped 2.6%. The company reported that net income fell 18 % to 313 million euros on sales of 2.92 billion euros, down from 3 billion euros a year earlier. KPN had been estimated to report net income of 351 million euros. Sales had been projected at 2.98 billion euros.

Clariant, specialty chemical maker, fell 2%. First-quarter profit slid 10% to 86 million francs or $71 million on increased energy and raw material costs.

Swiss Re lost 1.6%. Premium income increased 23%. That fell short of the 8.56 billion-franc median estimate. Net income rose 54% to 1.33 billion Swiss francs, compared with a 1.3 billion-franc prediction.

Advancers

Reuters Group climbed 4.4%. Thomson is in talks to buy Reuters for 8.77 billion pounds, or $17.5 billion, to gain a global news service.

Shares of William Morrison jumped 3.4% after reports that the fourth-biggest U.K. supermarket company may soon get a 9 billion-pound bid from private equity firms or property specialists.

Commodities

Crude oil rose the most in more than a week after a militant group attacked pipelines in Nigeria, Africa biggest crude producer. Crude oil for June delivery was up 13 cents at $61.60 a barrel on the New York Mercantile Exchange in early trading in London. The contract had advanced as much as 43 cents or 0.7% to $61.90, the biggest gain since April. 27. Brent crude oil for June settlement rose as much as 86 cents, or 1.3 %, to $65.30 a barrel on London ICE Futures exchange.

Platinum for immediate delivery dropped $9.50 to $1,331.50 an ounce, after gaining $55, or 4.3%, since April 30. Palladium rose 50 cents to $377.50 an ounce, the fifth straight gain. Gold fell as a rebound in the dollar against the euro may erode investor demand for precious metals as an alternative investment. Gold dropped $2.45, or 0.4%, to $686.30 an ounce, while silver fell 3 cents to $13.475 an ounce.

Currencies

The dollar was mixed against other major currencies in European trading Tuesday morning. The euro traded at $1.3575, down from $1.3603 late Monday in New York. The British pound traded at $1.9935, up from $1.9931. The dollar fetched 119.90 Japanese yen, down from 120.11.

[R]5:00AM Platinum soars Monday, gold and silver advance, copper declines.[/R]
July platinum surged $22.10 to end at $1,350.90 an ounce on the New York Mercantile Exchange, while June palladium settled up $2.20 at $379.20 an ounce. June gold ended up 70 cents at $690.40 a troy ounce and July silver added 11 cents to finish at $13.64. The most-active July copper contract fell 4.30 cents to settle at $3.7155 per pound.

June crude oil futures lost 46 cents to close at $61.47 a barrel. June heating oil settled down 2.80 cents at $1.8029 a gallon, while June gasoline futures closed down 2.68 cents at $2.1896 a gallon, after trading at $2.2135. June natural gas declined 15.9 cents to end at $7.779 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures for May delivery closed down 1.10 cents at $1.0190 a pound, with July off 1.20 cents at $1.0480. Most-active July cocoa was unchanged from settlement on Friday at $1,873 a metric ton. Futures on raw sugar in foreign ports for July dipped 0.02 cent to finish at 9.32 cents a pound, with October off 0.02 cent at 9.61 cents. May corn ended 11.75 cents lower to $3.6950 per bushel