FTSE Higher, Shrugs Off Bond Scare

Ivaylo
14 Jun, 2007
New York City

The market in London is buoyant at mid-day Thursday as investors considered that global bond selling is an overreaction to worries about interest rate hikes. Bradford & Bingley led the market higher on an upgrade from Credit Suisse, while miners are higher tracking stronger demand for metals and manufactured goods. At mid-day, the FTSE 100 was 0.8% higher at 6,610, notching a gain of 50.5 points.

[R]9:30AM London is higher at mid-day Thursday on renewed buying interests in large-cap stocks.[/R]

At mid-day Thursday, the FTSE 100 in London was 0.8% higher at 6,610, gaining of 50.5 points.

Advancers

Bradford & Bingley was the leading advancer in the FTSE. The mortgage bank gained 5.2% after Credit Suisse upgraded the stock to neutral and added that the bank would return 500 million pounds of excess capital to shareholders.

The mining sector surged in light of positive US economic data which showed a growing demand for metals and manufactured goods. Copper large-cap Rio Tinto advanced 1.7%, supported by the settlement of a decade-long tax dispute in Australia. BHP Billiton added 1.3%.

Centrica, the gas distributing company, a bid target of Russian Gazprom, gained a further 3.8% after Citigroup raised its rating on the shares to buy from hold and hiked its price target on the stock.

Man Group, the largest publically traded hedge fund in the world, gained 1.4% after news that it anticipated assets under management in Asia to grow by 10% to 15% over the next year or 18 months.

Shares in Punch Taverns rose 1.6% after it said it would redeem 460 million pounds worth of outstanding bonds and pay down debt by issuing up to 825 million pounds worth of floating rate notes.

Decliners

CardioMag Imaging was the only decliner at mid-day, plunging 90%. It lost more than 75% of its value this morning after the non-invasive heart disease testing group warned that full year operating losses will top $5 million.

[R]8:30AM Asian markets advance Thursday, led higher by South Korea, China dips.[/R]

Asian markets finished higher on Thursday. In South Korea, strong program buying connected with expiry of futures and options in late session helped shares to end at a record high, with securities, shipbuilders and information-technology stocks in the forefront of advance. Kospi Index rallied 2.7% to 1,769. Gainers included Woori Investment & Securities which advanced 7% and shipbuilders Hyundai Heavy Industries up 5.9% and Samsung Heavy Industries rising 6.5%, supported by higher vessel prices.

In Tokyo, the Nikkei 225 Average ended the session 0.6% higher at 17,842. News that Nippon Steel will increase its stake in Godo Steel supported stocks in the steel sector, while the increase of the dollar to a four-and-a-half-year high versus the yen buoyed exporters. Nissan Motor gained 1.4% and tech stock Toshiba soared 2.2%.

Hong Kong Hang Seng Index advanced 1.4% to close at 20,867. Commodities firms were in focus, led by Chalco, which surged 11%. Among telecom stocks, China Mobile gained 1.8% and China Unicom was up 2.9%. In China, however, the benchmark Shanghai Composite Index bucked the uptrend and fell 1.5% to end at 4115. Among property developers, China Vanke dropped 3.1% and Financial Street fell 3.7%.

Australian S&P/ASX 200 also rose 1.3% to 6,261. Mining company BHP Billiton gained 3.4% and rival Rio Tinto added 4.2% after similarly strong gains offshore. Woodside Petroleum was up 4.3% on discussion of a possible merger with British Gas. Taiwan ended 1.3% higher at 8,451

[R]7:30AM NY-6:30PM Mumbai Sensex surges 201 points in a broad-based rally Thursday.[/R]

The Sensex on BSE finished 200.69 points, or 1.43%, higher Thursday, at 14,203.72.

The market-breadth was very strong as there were more than two advancers for every decliner. For 1,692 stocks which advanced, 781 stocks declined and only 88 stocks were unchanged. Of the 30 stocks in the Sensex, only four declined, while all the rest advanced. The turnover on BSE was Rs 4,402 crore, higher than Rs 4,189 crore on Wednesday.

Economic news

The strike at Indian, a state-run airline, was called off on Thursday after it continued for three-day. An agreement between the union of ground staff and the management was arrived at, making it possible for the resumption of normal flight operations.

The government may help exported hurt by the rise of the rupee. The government is to offer a special relief package which would include duty exemption pass book credit rates from service rates, a cut in insurance premium and lower export credit rates.

Trading highlights

Time Technoplast was the most-active stock with a turnover of Rs 248 crore followed by ICRA and Unitech.

Advancers

HDFC led the advancers, surging 4.2% to Rs 1,825. The stock advanced as the chairman of the bank hinted at possible increase in interest rates after two to three months. Reportedly, HDFC realty fund has bought 10% equity of Pune based housing and construction company Paranjape Schemes for a total value of Rs 74 crore.

Cement stocks surged on a report that the cement shortage that is troubling India will not be solved any sooner than 2009, which fact contributes to the high prices of cement. Cement large-cap ACC gained 3.4% to Rs 825, while Grasim rose 3% to Rs 2,432.

Tata Steel rallied 3.2% to Rs 614 and BHEL surged 2.9% to Rs 1,349. IT stocks advanced on steady buying. Satyam Computers gained 0.4% to Rs 488, Infosys added 1.9% to Rs 2,020, Wipro rose 0.4% to Rs 532 and TCS advanced 0.1% to Rs 1,204.

Engineering & Construction major L&T advanced 2.8% to Rs 1,923 on news that it intends to unite all its businesses under 15 divisions from the present 6 business divisions. Other gainers included Hindalco which settled up 2.3% at Rs 164. Dr.Reddy''s and SBI gained around 2% each to Rs 640 and Rs 1,314, respectively. Gujarat Ambuja and Ranbaxy added 1.7% each to Rs 111 and Rs 370.

Index heavy Reliance Industries gained 1.4% to Rs 1,696 on 5.79 lakh shares. Reliance announced yesterday, June 13 2007, that its Jamnagar refinery was functioning normally and output was as planned.

Decliners

Hero Honda led the few decliners, slipping 1.7% to Rs 684. Hero Honda has been on the decline since news that it has reduced production as demand was waning in light of interest rates advancing to five-year-high.

ICICI Bank lost 0.8% to Rs 906. ICICI Bank announced today that it would come up with a share sale next week to subsidize the strong demand for loans in the rapidly expanding economy of India.

The other two decliners were Tata Motors, off 0.5% to Rs 643 and ITC, 0.2% lower to Rs 152.

[R]6:30AM European markets advance Thursday on stronger exporters and miners.[/R]

European markets advanced on Thursday. By mid-day, Germany Xetra DAX added 1.4%. France CAC 40 and the U.K. FTSE 100 both rose 1%. National benchmarks rose in all 17 western European markets that were open.

Advancers

Michelin, the world second-biggest tiremaker, surged 1.9%. The company makes more than a third of its sales in North America.. Siemens, Europe largest engineering company, gained 2.8%. The U.S. accounted for 20% of the revenue of the company last year.

ABB Ltd. added 2.3%. The world biggest maker of power networks generated 24% of its sales in the Americas in 2006.

Miners rallied on a surge in copper prices. Rio Tinto added 2%, BHP Billiton Ltd., the world largest mining company, rose 1.3%

Decliners

Sanofi-Aventis plummeted 7.9%. A U.S. panel rejected the French drugmaker Zimulti weight-loss pill, saying the company did not show that its health benefits outweighed risks such as suicide.

Oil and gold

Crude oil rose after a U.S. government report showed refineries cut their operating rates, raising concern fuel supplies may fall short of demand this summer. Crude oil for July delivery rose as much as 28 cents, or 0.4%, to $66.54 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for August settlement was at $70.38 a barrel, up 43 cents, on the London-based ICE Futures exchange. Gasoline for July delivery rose 0.97 cents to $2.165 a gallon in New York, after gaining 1% to $2.1553 yesterday.

Gold for immediate delivery fell as much as $1.75, or 0.3%, to $650.00 an ounce, and traded at $650.63. Silver for immediate delivery fell 1 cent to $13.10 an ounce. Copper for delivery in three months on the London Metal Exchange gained $32, or 0.4%, to $7,327 a metric ton.

Currencies

The dollar edged higher against the euro in trading Thursday, but European currency was holding steady on a forecast of more growth in Germany. The euro bought $1.3308 in late morning trading in Frankfurt, down from the $1.3310 it bought in New York late Wednesday. The British pound declined to $1.9704 from $1.9734 the night before despite a release showing that May retail sales gained slightly more than expected to 3.9% from a year ago. The dollar rose against the Japanese yen, climbing to 122.96 yen from 122.61 yen

[R]5:30AM Oil prices surge Wednesday on depletion of supplies, gold, silver sink.[/R]

Crude oil for July delivery surged 91 cents to close at $66.26 a barrel on the New York Mercantile Exchange. July gasoline rose 2.03 cents to finish at $2.1553 a gallon. The EIA posted a slight decrease in use of the refineries to 89.2 %, down from 89.6 % in the prior week and 91.1 % three weeks ago.

Gold for August delivery settled lower, shedding 40 cents to $652.70 an ounce. The U.S. dollar gyrated in early trading, then later advanced against most major world currencies, including the euro and yen, which put pressure on gold. Silver for July slipped 3 cents to finish at $13.06 an ounce. Nymex copper prices rose 2.6 cents to end at $3.313 a pound.

July soybeans slipped as low as $8.15 a bushel then recovered somewhat to settle down a fraction of a penny at $8.256 on the Chicago Board of Trade. July corn rose jumped 11 cents to settle at $4.044 a bushel on forecasts for persistently dry weather in the eastern Corn Belt, which badly needs rain. Wheat, which is at the start of harvest season and has suffered rain damage, rallied 24.4 cents to end at $5.894 a bushel.