London Recoups Morning Losses

Ivaylo
11 May, 2007
New York City

The FTSE rebounded from sharp early losses to trade higher on Friday afternoon.The index declined more than 1% in morning trade after a weak finish on U.S. markets overnight. A number of takeover speculation, though, and a surge in the mining sector sent shares higher by mid-day. By early afternoon, the FTSE 100 was was up 7.6 points at 6,531.7.

[R]9:30AM FTSE 100 recovers on Friday afternoon from initial losses.[/R]

The UK market is trading higher on Friday afternoon. By early afternoon, the FTSE 100 was was up 7.6 points at 6,531.7.

Advancers

Standard Chartered, the bank focused on Asia, led the advancers in large-cap stocks, up 4.2 per cent amid bid talk. Northern Rock gained 4.3 per cent as the mortgage bank was buoyed by positive comments from Cazenove.

The main talking point, though, was Rio Tinto, which advanced 3.8 per cent as bid speculation would not die down. Other mining stocks also advanced in sympathy. Antofagasta rose 2.3 per cent.

Among mid-caps, chemical firm Elementis, up 10.1%, announced it is to sell its global pigments business to Rockwood Specialties for $140 million in cash. It expects to post a pre-tax gain of 20 million pounds from the sale of the business, which makes synthetic iron oxides.

Lehman Brothers is helping Standard Chartered, 4.5% higher, with a rise in its price target and an overweight stance.

Decliners

Property stocks lost ground as some of the bid speculation that had pushed the sector higher in the previous session faded. Hammerson, linked to a possible bid from KKR, fell 1 per cent.

Friends Provident also retreated 1 per cent despite reports that Axa of France and JC Flowers of the US were mulling a bid for the life assurer.

In the mid-caps, Autonomy lost 3.4 per cent as UBS stated it was seeking to place up to 9.5 million shares in the search technology group.

[R]9:00 AM Asian markets finished lower Friday with Japan ending down on export-oriented stocks.[/R]

Asian markets finished lower on Friday. The 225-issue Nikkei Average ended 1.3% lower at 17,553.72. Canon eased 2%, while Sony gave up 1.8%. Nikon dropped 2.3% after the company announced Thursday that its net profit increased to 54.82 billion yen in the fiscal year through March, nearly double that of the previous year. Konica Minolta shed 7.2% on profit-taking tracking recent share price advances and a brokerage downgrade from Mizuho Securities. Automakers bucked the downtrend, with Toyota Motor adding 1.4% while Nissan Motor gaining 1.1%.

Hong Kong Hang Seng Index ended 1.3% lower at 20,468.21. Mobile operator China Mobile declined 2% and in China, the Shanghai Composite Index closed down 0.7% at 4,021.67, easing from a record close in the previous session.

Australian S&P/ASX 200 closed down 0.9% at 6,297.40. Mining stocks were lower, pulled down by drops in natural-resource prices and increasing skepticism of an imminent takeover bid by BHP Billiton for Rio Tinto. Shares of BHP Billiton shed 2.9%, while Rio Tinto fell 1.4%.

Elsewhere around the region, South Korea bucked the trend and advanced. The benchmark index, Kospi, edged up 0.2% to close at 1,603.56. Taiwan leading index, the Weighted Price Index, ended down 0.8% at 8,031.54.

[R]8:00AM NY-7:00PM Mumbai Sensex ends higher in volatile trading. Bajaj Auto surges.[/R]

The Sensex on BSE finished 24.93 points, or 0.18%, higher at 13,796.16.

The session was extremely volatile as the index traded within a range of 301.23 points. The market-breadth ended almost even, as 1,268 stocks advanced while 1,276 declined and only 82 remained unchanged. Of the 30 stocks in the Sensex, 11 advanced, while the rest declined. The turnover on BSE was Rs 4,429 crore, slightly higher than Rs 4,304.80 crore on Thursday. On NSE, the turnover was Rs 9,404.94 crore, compared with Rs 9,225.37 crore on Thursday.

Economic news

Mayawati-led Bahujan Samaj Party has a great lead over the ruling Samajwadi Party and the Bharatiya Janata Party as the latest trends in the 403-member Uttar Pradesh assembly polls suggested. Out of 304 seat vote counting available at the state election headquarters, BSP was leading in 145 seats while the SP and BJP followed with 70 and 45, respectively. UP elections are keenly watched for voter preferences and indicator of national trend.

Wholesale inflation rate in India slowed for a second week as prices of fruits, vegetables and spices declined. The key wholesale price index was 5.66% in the week ended April 28, from 5.77% in the previous week. Analysts forecast inflation at 5.75%.

A government report showed that industrial production in India advanced 12.9% annually in March 2007, from a year earlier, higher than the annual growth of 10.8% in February on strong manufacturing output. Analysts had forecast annual industrial output growth of 10.40%.

Trading highlights

Page Industries was the most-active stock with a turnover of Rs 300 crore followed by Reliance Industries and Reliance Communications.

Advancers

Bajaj Auto soared over 4% to Rs 2,719 ahead of the board meet on May 17 to consider a proposal for demerger. Transferring some of the Rs 6,500 crore cash will improve the finance and insurance businesses, chariman Rahul Bajaj had announced earlier.

Reliance Communications surged nearly 3% to Rs 478 and NTPC rallied 2.5% to Rs 155.
SBI and TCS advanced around 2% each to Rs 1,149 and Rs 1,253, respectively.
Infosys and Ranbaxy were up over 1% each at Rs 2,000 and Rs 391, respectively.

Index heavy Reliance Industries rose 0.6% to Rs1,590, after rebounding from its low of Rs 1,555.05. On BSE, a high 13.25 lakh shares were traded.

Decliners

ACC led the decliners, plunging 4% to Rs 840. Grasim and Hindustan Lever dropped around 2.5% each to Rs 2,425 and Rs 185, respectively. Hindalco Industries lost 1.02% to Rs 145.10, after Novelis said its shareholders have approved acquisition by Indian aluminum producer.

Maruti Udyog slipped 0.20% to Rs 793. The government sold its remaining stake in Maruti for Rs 2,360 crore to a number of financial institutions led by Life Insurance Corporation. The government had offered 2.96 crore shares in the company, representing 10.27% stake.

Gujarat Ambuja, Cipla, and HDFC slipped around 1.5% each to Rs 119, Rs 205, and Rs 1,656, respectively. Tata Steel ended 1.3 lower at Rs 569, while Reliance Energy and Wipro were down over 1% each to Rs 509 and Rs 546, respectively.

[R]6:30AM European markets decline Friday on weak banking stocks.[/R]

European markets were lower on Friday. National benchmarks decreased in all of the 17 western European markets that were open. By mid morning, Frankfurt Xetra Dax shed 1.2% to 7,330.17, the CAC 40 in Paris lost 1.2% to 5,938.62 and London FTSE 100 slid 0.9% to 6,467.4.

Advancers

Bucking the negative trend Capitalia of Italy, which gained 1.3% after chief executive Matteo Arpe announced his bank would not stand still during the wave of consolidation in the banking sector.

German utility RWE raliied 5.5% on rumours French rival Electricite de France was interested in a takeover. RWE said it had not received an offer. Shares in EdF gained 0.6%.

B shares of Volvo, the Swedish truckmaker, added 3.9% after topping forecasts with its first-quarter net profit.

Decliners

Banks led the decliners. Shares in Fortis fell 3%, while Santander eased 0.3% and RBS lost 1.2%. ABN shares fell 0.3%.

U.S. export-oriented companies dropped. ABB fell for the first time in three days, shedding 2.1%. The Americas accounts for about a quarter of ABB revenue.

Shares of BASF slipped 1.5%. North America is the second-biggest market for BASF. Oil company BP, which generated more than a third of its sales in the U.S. in 2006, slid 1.4%.

Commodities

Crude oil gained on concern the U.S. supply of gasoline would be threatened by refinery halts and latest disruptions of production in Africa. Crude oil for June delivery rose 37 cents, or 0.6%, to $62.18 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June settlement rose 62 cents, or 0.9%, to $66.41 a barrel in electronic trading on the ICE Futures exchange.

Gold advanced in London after some investors judged that prices, which ended at a five-week low yesterday, no longer reflect expectations for a third consecutive year of declining supply. Gold for immediate delivery gained $2.38, or 0.4%, to $668.03 an ounce. Silver dropped 2 cents to $13.015 an ounce, heading for a fourth weekly decline.

Currencies

The euro and the pound retreated from recent highs against the dollar in morning trading Friday, as lack of surprise over interest rate moves in Britain, Europe and the United States boosted the U.S. currency. The euro bought $1.3477 in morning European trading, compared with the $1.3508 it bought in New York late Thursday. The British pound slipped to $1.9784 from $1.9823 the night before even though the Bank of England lifted its key interest rate by a quarter of a per cent to 5.5%. The dollar rose to 119.86 Japanese yen from 120.44 yen the night before.

[R]5:00AM Copper declines Thursday, while gold and silver plunge and copper dips.[/R]
The most-active July copper contract lost 11.25 cents to end at $3.5665 per pound on the New York Mercantile Exchange. June gold dipped $15.50 to end at $667 a troy ounce as the dollar advanced. July silver settled down 33 cents at $13.14. July platinum finished down $15.30 at $1,324.20 an ounce, while June palladium also slid $6.65 to close at $363.75 an ounce.

The June crude oil contract gained 26 cents to stop at $61.81 a barrel after reaching $62.50. June gasoline settled up 9.54 cents at $2.3261 a gallon. June heating oil closed up 4.67 cents to $1.8625 a gallon. June natural gas added 0.6 cents to finish at $7.726 per million British thermal units.

On the New York Board of Trade, July Arabica coffee futures ended up 0.35 cent at $1.0660 a pound. Most-active July cocoa shed $7 to settle at $1,922 a metric ton. Futures on raw sugar in foreign ports for July lost 0.05 cent to end lower at 9.26 cents a pound.

May corn settled down 11.50 cents at $3.4575 per bushel, July fell 11.75 cents $3.5450, and December declined 9.50 cents to $3.5650. July soybeans finished down 1.25 cents at $7.4625, and November soybeans settled 1.75 cents lower at $7.7550 a bushel.