London Rides Higher on Rolls Royce, Tate & Lyle

Ivaylo
09 Jul, 2007
New York City

The UK market continues to trade higher at mid-day Monday on upbeat broker news and bid talk offset poor performance among the housebuilders after a disappointing update from Bovis Homes. Rolls Royce was also higher lifted by news that International Lease Finance Corporation selected the company to power 40 of the 74 Boeing 787 Dreamliners. The benchmark FTSE 100 in London is 0.29% higher at mid-day and is trading at 6,710.

[R]9:30AM London trades higher on broker upgrades and deal news.[/R]

London equities are trading higher on Monday as Tate & Lyle boosted the market after Credit Suisse upgraded the stock and after Rolls Royce have been selected by International Lease Finance Corporation to power 40 of the 74 Boeing 787 Dreamliners in a deal worth $ 1.3 billion. The FTSE 100 is trading 0.29% higher at mid-day at 6,710.

Economic news

Official data posted today showed a larger than expected rise in UK factory gate inflation in June, although higher oil prices have ensured costs stay high. It is the second straight month that the figure has missed forecasts, with a 0.2% increase in output prices last month after a 0.4% gain in May. Analysts had forecast a 0.3% increase.

Gainers of the Day

Sugar and sweeteners company Tate & Lyle surged 4.8% after a Credit Suisse upgrade to outperform from neutral with price target lifted to 640p from 630p. Rolls Royce’s Trent 1000 engines have been chosen by International Lease Finance Corporation to power 40 of the 74 Boeing 787 Dreamliners it has on order in a deal worth $1.3bn. Rolls Royce advanced 2%. Hedge company Absolute Capital has shrugged off recent problems for the sector in the US and forecast interim profits would be ahead of forecasts. Absolute rallied almost 13%.

Decliners of the Day

Housebuilders plunged although Bovis Homes'' trading statement was upbeat today. The housebuilder posted good interim pre-tax profit growth matching the group internal expectations, but added that recently it has seen a slowdown in both visitor rates and in reservation rates. Bovis dipped 8.8% and Persimmon, Taylor Wimpey and Redrow are down in sympathy. Persimmon lost 3.5%, Taylor Wimpey shed 2.6% and Redrow was off 4.9%.

[R]8:30AM Asia finishes higher in a broad rally with Japan rallying on strong economic growth.[/R]

Asian markets ended higher Monday. In Japan, the Nikkei Average ended at its highest level in seven years as a much stronger-than-forecast machinery-orders data and firmer oil prices boosted energy stocks as well as precision-equipment makers such as Nikon, up 3.7% The Nikkei 225 Average ended 0.7% higher at 18,262. Machinery orders in May advanced a seasonally adjusted 5.9% from the previous month. Komatsu, the second-largest maker of earthmoving equipment in the world, added 1.9%.

Hong Kong Hang Seng Index also spurted 1.3% to settle at 22,817. Buying into large-cap laggards, like Hutchison Whampoa, lifted the Hang Seng Index up to a record close for a fifth straight session. Cheung Kong, the biggest developer in Hong Kong, also added 0.9% and Hutchison Whampoa soared 4.1%, while insurance firm China Life, which had only risen around 15% in the past year, surged 6.3%.

South Korean Kospi Index advanced 1.2% to 1,884. The commerce ministry on Seoul stated that exports will increase 12.8% this year to $367 billion, topping an earlier forecast for 10.6% growth. Lehman Brothers upped its forecast for South Korean 2007 economic growth to 4.5% from 4.3%. Company-wise, Posco, the fourth-largest steelmaker by output in the world, gained 2.6% on hopes of solid earnings before the second-quarter results, while Korea Electric Power rose 4.4%. Samsung, the largest memory chipmaker in the world which accounted for about 16% of exports in the country last year, jumped 2.6%.

The benchmark Shanghai Composite Index in China rallied 2.7% to end at 3,883. Chinese regulators set restrictions late Friday on the sale of state-owned shares in listed companies. Coal firms rallied on surging domestic demand for energy. Sichuan Shengda Industrial soared by the daily 10% limit, Shanxi Xishan Coal & Electricity Power rose 9.7% and Shanxi Guoyang New Energy gained 8.9%.

Australian S&P/ASX 200 rose 0.8% to 6,401. BHP Billiton, the largest diversified miner in the world, finished 3.4% higher, lifted by higher oil prices. Rio Tinto also ended 1.3% higher. The market in Taiwan finished 2% higher at 9,370.

[R]7:30AM NY-6:30PM Mumbai Sensex settles at record high on rally in banking, IT stocks.[/R]

The Sensex on BSE finished 81.61 points higher, or 0.55%, at 15,045.73.

The market-breadth was very strong as there were more than three advancers for every two decliners. As 1,610 stocks advanced, 1,055 declined and only 72 were unchanged. Of the 30 stocks in the Sensex, 21 advanced, while the rest declined. The turnover on BSE was Rs 4,551 crore as compared to Rs 5,878 on Friday. On NSE, the turnover amounted to Rs 9,762 crore, also much lower than 12,038 crore on Friday.

Economic news

India, which is the second largest producer of sugar in the world, is considering doubling the amount of sugar export in 2008 on domestic surplus, putting further pressure on domestic prices. India may export as much as 3 million tons next year.

The rupee was little changed today, already hovering at near nine-year highs, triggering speculation on the market that the Reserve Bank of India may intervene through state-owned banks to stop a drop in exports. The IT sector is the most vulnerable to the rupee’s rise.

Premier Oil, a U.K. explorer, made a discovery of either oil or gas in India''s northeastern state of Assam. The find is in the Cachar area, 320 kilometers from the state''s main city Guwahati, The company did not disclose the size of the discovery or whether it found oil or gas.

Trading highlights

New issue Roman Tarmat was the most active stock on the market with a turnover of Rs 269 crore followed by Vishal Retail and Divi''s Labs.

Advancers

Reliance Energy soared 3% to Rs 616. Reportedly Reliance Energy headed a consortium which won the Rs 6,400 crore business district project proposed in Hyderabad by the state-owned Andhra Pradesh Industrial Infrastructure Corporation. Reliance holds 66% in the project, to be completed in five years.

The prospect of the Reserve Bank of India reducing the cash reserve ratio in near future boosted banking shares. Union Bank of India rallied 12.1% to Rs 145.60, State Bank of India was up 1.5% to Rs 1,573, HDFC Bank gained 1.6% to Rs 1,171, and Bank of India rose 3.6% to Rs 230.

Larsen & Toubro and ONGC rallied around 2% each to Rs 2,416 and Rs 896, respectively. L&T intends to take three more companies, operating in infratech, infotech and finance, to the primary market in an effort to reorganize its corporate structure. Other gainers included Bharti Airtel which finished up 1.7% to Rs 881.

IT stocks surged on a rally in their ADRs on Friday, July 6 J 2007, and ahead of Q1 June 2007 results. Infosys Technologies advanced 1% to Rs 1,993, Wipro also added 1.1% to Rs 524, and TCS was up 1.5% to Rs 1,177. Infosys reports its first-quarter June 2007 results on Wednesday, July 11 2007.

Decliners

Hindustan Unilever led the decliners, plunging over 2.3% to Rs 195 on profit taking. ICICI Bank also dipped over 1.1% to Rs 970. The bank continued to be under heavy selling pressure for the second straight day. The stock lost after it reduced home loans rates under Rs 20 lakh for new customers by 50 basis points.

Mahindra & Mahindra shed 1% to Rs 779, replacing Hero Honda Motors in BSE Sensex from today. Index heavy Relance Industries finished virtually flat, down 0.03% to Rs 1,711.

[R]6:30AM European stocks markets gain on miners, Numico, Rolls-Royce.[/R]

European markets were higher in mid-day on Monday. The U.K. FTSE 100 index rose 0.4% at 6,719.40, the German DAX Xetra 30 index advanced 0.6% at 8,098.43 and the French CAC-40 index inched up 0.3% at 6,121.22. National benchmarks advanced in all of the 17 western European markets that were open, except Spain.

Advancers

Numico, Dutch baby foods group, soared to a six-year high amid reports that Danone of France was mulling a bid. PepsiCo was another name in the frame. Numico shares were up 11.4% in late morning trade. Univar NV, the largest distributor of chemicals in the U.S., surged 36 % to 53 euros after CVC Capital Partners offered to buy the company.

BHP, the world biggest mining company, climbed 1.1%. ThyssenKrupp AG advanced 1.8%. Deutsche Bank upped its price projection on shares of the largest steelmaker in Germany to 54 euros from 45.

Telekom Austria jumped 4.3%. The phone company improved its profit forecast through 2010, on higher earnings at its international mobile unit and cost cuts to compensate for European Union regulations.

Decliners

Bovis Homes Group sank 7.4%. The U.K. homebuilder may reduce its full-year sales target as higher interest rates and mortgage costs led to a decline in the number of potential buyers visiting sites.

In broker news, shares in U.K. clothing retailer Next lost 1.1% after it was downgraded to underweight from neutral by HSBC.

Commodities

Crude oil declined from near a 10-month high in New York. Crude oil for August delivery shed 80 cents, or 1.1%, to $72.01 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for August settlement fell as much as 71 cents, or 0.9%, to $74.91 a barrel on the ICE Futures exchange.

Gold rose in London on speculation higher prices may revive demand for the metal as a hedge against inflation. Gold for immediate delivery gained $1.08, or 0.2%, to $656.97 an ounce. Silver added 2 cents to $12.75 an ounce.

Copper rose to the highest in almost two months as workers at Dona Ines de Collahuasi, third- largest mine in Chile that produces the metal, plan to go on strike. Copper for delivery in three months gained $85, or 1.1%, to $7,945 a metric ton on the London Metal Exchange.

Currencies

The U.S. dollar was lower against other major currencies in European trading Monday morning. The euro traded at $1.3631, up from $1.3621 late Friday. The British pound traded at $2.0140, up from $2.0106. The dollar bought 123.29 Japanese yen, down from 123.40.

[R]5:30AM Gold gains Friday as dollar weakens, oil surges on Nigeria turmoil.[/R]

August gold advanced to $654.80, up $4.20 an ounce on the New York Mercantile Exchange. September silver settled at $12.757, up 17.7 cents an ounce and September copper finished at $3.5945, up 0.1 cent a pound. Copper prices retreated from early gains tracking reports of decreasing inventories held by both the London Metal Exchange and Shanghai Futures Exchange, which posted a third-straight week of declines. Nickel prices lost 2.2% on the London Metal Exchange, while the other industrial metals edged higher.

Crude prices reached $72.94 a barrel in intraday trading on the Nymex over worries about renewed violence in Nigeria. Crude oil for August delivery gained $1 to settle at $72.81. Gasoline futures rallied 2.53 cents to end at $2.3096 a gallon, while a flooded refinery in Coffeyville, Kan., remained closed.

On the Chicago Board of Trade, weather forecasts for hotter, drier weather in the western Corn Belt supported corn prices in its recovery from the tumble of recent weeks. December corn advanced 9.4 cents a bushel to end at $3.52. November soybeans rose 9.4 cents to close at $8.96 a bushel. September wheat gained 6 cents to settle at $6.10 a bushel.