Merger Deals Lift FTSE

Ivaylo
15 May, 2007
New York City

Merger and acquisition activity kept boosting the FTSE 100 on Tuesday. Reuters was higher in view of its merger deals with Thomson Corp. The deal, support by the Reuters Founders Share Company, still needs regulatory clearance and shareholder approval. Hansen also got a lift after an agreement with HeidelbelgCement of an $8bn takeover offer. In mid-day trading, the FTSE 100 was up 6.6 points at 6,562.1.

[R]9:30AM The FTSE 100 is higher Tuesday on takeover activity.[/R]

The FTSE 100 was up 6.6 points at 6,562.1 in mid-day trade.

Advancers

Reuters advanced 3.7% as Thomson Corp agreed an 8.7 billion pounds deal to buy the media and information group. Hanson also rose 3.3% after it agreed to an 8 billion pounds takeover offer from HeidelbergCement of Germany. The recommended offer at 11 pounds per share should create the second-largest construction material company in the world.

Pub operator Enterprise Inns was in focus, as it gained 5.9% after announcing it was exploring whether it could meet the qualifying criteria for admission as a Reit, or real estate investment trust, without the need for material restructuring of its business.
The news gave a boost to the leisure sector with Punch Taverns up 4.1% and Mitchells & Butlers up 1.3%.

Homeserve rose 8.9% as UBS raised its stance on the providers of home assistance services from neutral to buy and predicted an expansion into the US would be a success.

Decliners

Miners continued to fall on the back of a decline in base metal prices and fading bid hopes. Rio Tinto lost 1.6%. Anglo-American was down 0.4%.

[R]9:00AM Asian markets finish lower across the region with China, Japan leading downfall.[/R]

Asian markets finished lower on Tuesday. Japanese Nikkei 225 settled down 0.9% to 17,512.98. Stocks fell after the Japanese government released the core machinery orders figure falling 4.5%. Fanuc, the largest industrial-robot maker in the world, declined 1%. Steelmaker JFE Holdings lost 1.5%. Mitsubishi Electric, which makes factory machinery and robots, dipped 3.8%.

Automaker bucked the trend and gained. Shares of Toyota Motor rose 0.7%, while Honda Motor was up 0.7% and Nissan Motor added 0.9%. Suzuki Motor climbed 2.8%.

Shanghai Composite index plunged 3.6% to 3,899.17. Sharp declines in large-capitalized stocks drove the benchmark share index lower. Investors took profits on several large-cap stocks. China Minsheng Banking dipped 6.3%, wiping out its gains in the past two sessions.

Elsewhere around the region, Hong Kong Hang Seng index, which gained in early trading, closed in negative territory, down 0.5% at 20,868.15. South Korean Kospi settled down 1% at 1,589.37. Australian S&P/ASX 200 shed 0.8% to finish at 6291.20. The Singapore Straits Times Index lost 0.7% to 3,475.08 and Weighted index in Taipei declined 0.7% to 7,975.03.

[R]8:00AM NY-7:00PM Mumbai Sensex edges lower with IT and oil & gas stocks leading decliners.[/R]

The Sensex on BSE finished 36.53 points, or 0.26%, lower at 13,929.33.

The market-breadth was slightly positive as there were 1,330 stocks which advanced, 1,271 stocks, which declined, and 78 stocks which remained unchanged. Of the 30 stocks in the Sensex, 15 advanced, while the rest declined. The turnover on BSE was Rs 4,131 crore, almost unchanged from Rs 4,136.23 crore on Monday. On NSE, the turnover was Rs 9,135.04 crore, higher than Rs 8,472.51 crore on Monday.

Economic news

The rupee continued its advance and was quoted at 40.83 against the US dollar in late morning deals supported by weak dollar overseas and sustained dollar selling by exporters, despite capital outflows.

The finance ministry announced today that the government is not intending to raise rates on small savings scheme. Prevailing interest rates on small savings are within the range of 3.5% for the post office saving account and 8% under the post office monthly income account. Rates for Public Provident Fund and Senior Citizen savings scheme are 8% and 9% respectively.

The unavailability of spectrum has affected the telecom industry so sharply that the Department of Telecom is about to limit the number of operators in each service area to maintain a minimum quality of service. There are 23 telecom circles in the country.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 131.20 crore followed by SBI and Reliance Natural.

Advancers

BHEL led the gainers, surging 2.5% to Rs 2,519. BHEL intends to enhance its manufacturing capacity to 15,000 MW per annum with total investment of around Rs 3,200 crore during the Eleventh Plan, spread over the period 2007-2012.

Banking and financial stocks also rallied on fresh buying interest and on market talk that CRR, or cash reserve ratio, may be cut down by 50 basis points shortly. ICICI Bank rallied 2% to Rs 887. SBI advanced 1.7% to Rs 1,227, and HDFC Bank added 1.4% to Rs 1,010.

Other stocks which advanced included Hero Honda, up 1.4%, at Rs 700. Bharti Airtel, Dr.Reddy and ACC advanced around 1% each at Rs 833, Rs 657 and Rs 875, respectively.

Decliners

IT large-caps led the decliners on a stronger rupee against the dollar as any advance in the rupee directly influences revenue and profit of IT companies. Satyam shed 2% at Rs 452. Wipro dropped 1.8% to Rs 534. Infosys slipped 1.5% to Rs 1,973, and TCS was down 1% at Rs 1,237.

ONGC declined 1.8% to Rs 890. Index heavy Reliance Industries slipped 1.4% to Rs 1,598. Reliance was off from a high of Rs 1623.25 tracking reports that it has got a tax benefit of Rs 376.17 crore in 2002-03 because of unreasonable concessions due to under-assessment by tax authorities.

The other major decliners were Reliance Communications dropping 1.4% to Rs 475 and Bajaj Auto losing 1.2% at Rs 2,635.

[R]6:30AM European markets inch lower Tuesday in subdued trading.[/R]

National benchmarks declined in 10 of 18 markets in western Europe. The U.K. FTSE 100 index rose 0.1% at 6,562.50 and the German DAX Xetra 30 index inched up less than 0.1% to 7,461.36. The French CAC-40 index slipped 0.2% at 6,015.82.

Advancers

Nokia led the gainers, up 3.9% on Monday, firming up as the world top mobile handsetmaker, after the groupannounced it was winning greater market share. Nokia envisages having more than 36% of the global cellphone market in the second quarter, benefiting from strong growth in emerging markets.

DaimlerChrysler gained 1.8% after the German carmaker sold 80.1% of its loss-making Chrysler unit for $7.4 billion to Cerberus, the private equity group. DaimlerChrysler strength lifted Renault, up 2.5%.

More talk about consolidation in the Italian banking sector pushed Capitalia up 1.4% on talks of an imminent bid from rival UniCredit, 0.9% higher.

Decliners

Atos Origin dropped 13.8% as the French IT company stated that all discussions regarding a possible sale of the business had been terminated. Atos will continue with its restructuring plans, moving more staff offshore. The group is expected to look for Asian acquisitions.

Alstom announced better-than-expected full-year results with net income up by 152% to 448 million euros. But the French transport and power group dipped 1.7% amid disappointment with guidance on future profit margins.

Endemol slipped 0.6% after Telefonica sold its remaining 75% stake in the television production company which makes Big Brother for 2.63 billion euros to a consortium which include Mediaset.

Deutsche Postbank fell 1.1% amid disappointment at its first-quarter results which came in below consensus expectations.

Merck KGaA eased 0.7% after agreeing to sell its generics division to Mylan Laboratories of the US for 4.9 billion euros.

Commodities

Gold for immediate delivery shed $1.20, or 0.2%, to $668.55 an ounce, while silver for immediate delivery lost 3 cents, or 0.2%, to $13.13 an ounce. Aluminum for immediate delivery in London yesterday fell 1.9%, copper fell 3.1 %, lead, 0.6%, nickel, 2.6%, and zinc, 2.6%.

Crude oil for June delivery advanced 9 cents to $62.55 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June settlement fell 20 cents to $66.63 a barrel in electronic trading on the ICE Futures exchange. Gasoline for June delivery fell for the second day and was trading at $2.2816 a gallon, down 1.96 cents in New York.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Tuesday morning. The euro traded at $1.3533, down from $1.3541 late Monday in New York. The British pound traded at $1.9758, up from $1.9732. The dollar fetched 120.41 Japanese yen, up from 120.29.

[R]5:00AM Gold and copper declined Monday, while energy shares ended modestly higher.[/R]

The most active July copper contract ended 10.7 cents lower at $3.4970 per pound, while July platinum shed $12.40 to $1,329.30 an ounce. June gold finished down, $2.20 lower at $670.10 an ounce, July silver was off 7 cents at $13.235 an ounce, and June palladium shed $7.95 to $360.70 an ounce.

The June crude oil advanced 9 cents to $62.46 a barrel after rallying to $63.07 a barrel. June gasoline futures slipped 5.09 cents to settle at $2.3012 a gallon, and June heating oil dipped 1.55 cents to finish at $1.8668 a gallon. Natural gas for June delivery were supported by fund buying and closed 5.3 cents higher at $7.952 a million British thermal units Monday, after hitting a high of $8.112 in earlier trading.

July soybeans climbed 8.75 cents to $7.7050 a bushel, and November soybeans ended 8.75 cents stronger at $7.9950 a bushel. July wheat finished 3.5 cents higher at $4.9650 per bushel, while July corn declined 6 cents to $3.6325 a bushel.

Arabica coffee was aided by technical buying that sent the July contracts 1.15 cents higher at $1.0685 a pound and the September contracts 1.20 cents stronger at $1.0970 a pound. July raw sugar ended 0.18 cents lower at 9.11 cents a pound, while October sugar closed 0.14 cents weaker at 9.41 cents a pound.