London Higher on Vodafone Earnings

Ivaylo
29 May, 2007
New York City

London stocks were higher in morning trade on Tuesday after an prolonged bank holiday weekend. Banks were in demand on further bid news while Vodafone reported strong annual results. British Airways also posted strong gains. The FTSE 100 rose 26.8 points, 0.4%, at 6,597.3, in mid-day trade.

[R]9:30AM FTSE 100 is higher on Tuesday morning with Vodafone in focus.[/R]

The UK benchmark FTSE 100 is higher in mid-day trading on Tuesday. The FTSE 100 rose 26.8 points, 0.4%, at 6,597.3.

Advancers

Vodafone Group led the advancers after it announced an upbeat outlook statement and reported an 11.4% rise in adjusted basic earnings per share. The mobile phone company added that while it hoped operating conditions to continue to be challenging in Europe, group revenue was expected to be in the range of 33.3 billion pounds to 34.1 billion pounds. Vodafone jumped 4.8%.

Satellite TV provider BSkyB advanced 3% after UBS upped its price target, reiterating its buy rating. IMI, the engineering group, led mid-cap advancers after Citigroup hiked its rating from hold to buy. The group traded up 6.3%.

Airliner British Airways, 4.8% higher, was also reporting strong gains on reports that US investment bank Goldman Sachs has suspended its rating on the shares. Last week, Goldmans raised its stake in BA to over 5%.

Decliners

Royal Bank of Scotland fell 1.6% after the bank and its partners, Fortis and Santander, came with their long-awaited formal offer to acquire ABN Amro in a deal that values the Dutch bank at 71.1 billion euros, with 79 % of the payment in cash.

iSoft Group plunged 19.2% after it received notification from Computer Sciences Corporation that it does not intend to give consent to the change of control in iSoft that is a condition of IBA offer.

Biodegradable packaging group Stanelco plummeted 45.7%, admitting that its Greenseal technology is unlikely to lead to any commercial sales.

[R]8:30AM Asian markets finish mostly higher Tuesday with Japan leadeng the advance.[/R]

Asian markets ended mostly higher on Tuesday. In Tokyo, the Nikkei 225 Average finished 0.5% higher to 17,672.56. Data released before the market opened showed that Japan jobless rate fell to 3.8% in April from 4% in March. Mizuho Financial were up 2%, leading a broad advance in banking stocks on growing expectations consumer spending will help support the economy. Advantest gained 0.4%, Softbank rose 1.9% and Toyota Motor gained 0.8%. Sanyo Electric surged 10% after the company posted a narrower group net loss for the current fiscal year.

Hong Kong Hang Seng Index closed 0.3% lower at 20,469.59. South Korean Kospi Index rose 0.2% to 1,661.80, while Chinese Shanghai Composite rallied 1.5% to end at 4,334.92. In Seoul, LG.Philips LCD gained 2.9% after a brokerage report said the company will post an operating profit in the current quarter, compared with a loss in the year-earlier period.

Singapore Straits Times Index traded little changed and Taiwan Weighted Price Index advanced 0.3% to end at 8,181.49. Australian S&P/ASX 200 ended 1.1% higher at 6,317.60. BHP Billiton in Australia advanced 1.2% on higher metals prices and talk of takeover activity within the industry. BHP is one of several companies interested in bidding for Montreal aluminum producer Alcan.

[R]7:30AM NY-6:30PM Mumbai Sensex rallies Tuesday on strong Reliance Industries.[/R]

The Sensex finished 110.32 points, or 0.77%, higher at 14,508.21.

The market-breadth was positive as 1,357 stocks advanced, while 1,213 stocks declined and only 102 stocks remained unchanged. Of the 30 stocks in the Sensex, 22 advanced, while the rest declined, Turnover on BSE was Rs 4,573 crore, slightly higher than Rs 4,241 crore on Monday. On NSE, the turnover was Rs 9,340.58 crore, almost unchanged from Rs 9,320.08 crore on Monday.

Economic news

The government today announced that it was considering a scheme to refund the local taxes and levies to labor-intensive industries with little import component to counter the impact of the soaring rupee, which hit a nine-year high yesterday.

Prime Minister Manmohan Singh, concerned about the slowdown of the agriculture sector, has told the Chief Ministers that the government is willing to support their plans for enhancing productivity in the segment.

The annual monsoon rains, vital for the economy of the country, hit Kerala, four days ahead of the normal date of June 1.

Trading highlights

Orbit Corp was the most-active stock with a turnover of Rs 208.40 crore followed by Unitech and Reliance Industries. New issue, real estate company Orbit Corporation, surged 15.13% to Rs 252.60 on huge volumes of 84.38 lakh shares.

Advancers

BHEL and Cipla soared nearly 5% each to Rs 2,856 and Rs 219, respectively. Pharmaceutical large-cap Cipla was in focus today and enjoyed strong buying momentum, after it was hit in the past few weeks, for posting poor fourth-quarter fiscal 2007 results. BHEL had struck a record high of Rs 2,889.90 in intra-day trade. The company had reported 32.54% increase in net profit in the fourth-quarter of fiscal 2007 to Rs 1,150.37 crore from Rs 867.95 crore in the comparable period a year earlier, after trading hours on May 25 2007.

Larsen & Toubro surged 4% to Rs 1,857. L&T reported 50% rise in net profit in fourth-quarter of fiscal 2007 to Rs 701 crore from Rs 467 crore a year earlier. Ranbaxy and Reliance Communications rallied over 2% each to Rs 390 and Rs 521, respectively. Ranbaxy Laboratories, the wholly owned subsidiary of Ranbaxy Laboratories, acquired the U.S. rights to a group of 13 dermatology brands from Bristol-Myers Squibb Co for $26 million on Monday, May 28 2007.

Reliance and HDFC Bank advanced 1.8% each to Rs 1,755 and Rs 1,145, respectively. Reliance was highly volatility, as it traded in a range of Rs 1,711.95 to Rs 1,765.80. SBI, Grasim, Hindustan Lever, Tata Motors and Reliance Energy advanced around 1% each at Rs 1,322, Rs 2,509, Rs 203, Rs 741 and Rs 555, respectively.

Decliners

HDFC shed 1.7% to Rs 1,813. Gujarat Ambuja and NTPC declined 1% each at Rs 115 and Rs 161, respectively. Bajaj Auto was down 0.5% to Rs 2,192, NTPC was off almost 1% to Rs 161, and ITC shed 0.7% to Rs 165.

[R]6:30AM European stocks inch higher Tuesday on Vodafone and deal offers.[/R]

European markets were mostly higher Tuesday. The U.K. FTSE 100 index advanced 0.2% at 6,581.20 while the German DAX Xetra 30 index increased 0.1% at 7,745.68 as British and German investors returned from a long holiday weekend. The French CAC-40 index inched down 0.1% at 6,063.66. National benchmarks rose in 10 of the 17 western European markets that were open.

Advancers

Mobile phone company Vodafone Group posted strong share gains in early trading as investors welcomed the company announcement that its fiscal-year loss narrowed to 5.3 billion pounds, from 21.8 billion pounds a year ago, in part on much lower impairment losses. Vodafone climbed 4%.

France Telecom gained 0.2%, adding to recent strong gains made amid growing speculation that it is on the verge of selling its Orange Netherlands division, most likely to Deutsche Telekom, which shares rose 0.8%.

Philips gained 1.2% as it was added to Lehman Brothers European Recommended Portfolio.

Decliners

Bid target ABN Amro declined 0.6% after a consortium led by Royal Bank of Scotland officially launched its offer for the bank, bidding 71.1 billion euros, or $95.5 billion for the firm.

Shares in Royal Bank of Scotland fell 1.2% while its consortium partners put in a mixed performance, with Fortis shares down 1%.

Commodities

Crude oil for March delivery was at $64.35 a barrel in after- hours electronic trading on the New York Mercantile Exchange, down 85 cents from the closing price on May 25. Brent crude oil traded little changed in London on expectations of higher gasoline demand in the U.S.

Gold advanced in London as a decline in the dollar against the euro revived demand for the metal as an alternative investment. Gold for immediate delivery rose $2.25, or 0.3%, to $657.80 an ounce, after falling 45 cents yesterday. Silver gained 7 cents to $13.01 an ounce.

Currencies

The U.S. dollar was mostly down against most major currencies in European trading Tuesday. The euro traded at $1.3483, up from $1.3451 late Monday in New York. The British pound traded at $1.9874, up from $1.9834. The dollar bought 121.41 Japanese yen, down from 121.68.