Numico, Antofagasta Lead European Gainers

Elena
09 Jul, 2007
New York City

European stock markets closed in the positive on Monday, boosted by strength among resource companies,food and beverage shares, as well as telephone companies. Miners led advancers, with Antofagasta and Kazakhmys rising more than 2.7%. BHP climbed 1.8%. Sugar maker Tate & Lyle jumped 4.7% on upgrade by Credit Suisse. The German DAX Xetra 30 added 0.4%, the U.K.''s FTSE 100 gained 0.3%, and the French CAC-40 finished virtually flat at 6,104.66.

[R]1:00PM NY, 5:00 PM Frankfurt European markets closed higher, led by miners, telecoms, and food companies.[/R]

European stock markets closed in the positive on Monday, boosted by strength among resource companies. Deal-related gains among food and beverage shares also contributed to the upward move, followed by rallying telephone companies. Indexes rose in all of the 18 western European markets, except Spain and Ireland. The German DAX Xetra 30 added 0.4% at 8,077.39, the U.K.''s FTSE 100 gained 0.3% at 6,712.70 and the French CAC-40 finished virtually flat at 6,104.66.

Shares of Dutch baby-food group Numico surged 10% on speculations that Groupe Danone may launch a buyout bid. Danone said it will offer 55 euros a share in cash for the company, or 12.3 billion euros. Again in Amsterdam, Univar soared 36% after the chemicals company agreed to be bought by CVC Capital for 53.50 euros a share, or 1.52 billion euros.

In Frankfurt Metro''s shares lost 0.4% after Lehman Brothers downgraded the German retailer to underweight from equal-weight. A higher profit forecast from Telekom Austria AG sent its stock up 3.1%, sparking a rally in the telephone sector.

In Paris early gains came as a result of speculation that French yogurt maker Danone will use proceeds from the sale of its biscuit unit to Kraft Foods to buy Numico. Danone declined 3.3%. On the side of the gainers, steelmaker Arcelor-Mittal advanced 2.8% amid strength in the sector across regional markets.

In London miners led advancers, with Antofagasta and Kazakhmys rising more than 2.7%. BHP climbed 1.8%. Shares of British engine maker Rolls-Royce rose 2.5% after the company said International Lease Finance will use its engines in 40 of the 74 Boeing 787 Dreamliners it has on order. Among other stocks in focus, Bovis Homes dropped 10.9%, due to rate hikes. At the same time, sugar maker Tate & Lyle, jumped 4.7% after Credit Suisse raised its rating on the stock to outperform.


[R]11:30AM U.S. market averages turned mixed. Tech stocks weighed on the Nasdaq.[/R]

U.S. market averages turned in a lackluster performance, losing direction after the initial gains. The downward move by the Nasdaq was due to weakness in the tech sector, following a profit warning from Lexmark ((LXK)). The stock dropped 6%. Strong gains by General Motors ((GM)) and Boeing ((BA)), respectively 2% and 1.2%, helped keep the Dow above the flat line.

Housing, health care provider, and retail stocks posted strength, while hardware and telecoms stocks declined. Significant strength emerged in the semiconductor sector, led by Advanced Micro Devices ((AMD)), KLA-Tencor ((KLAC)), and Xilinx (XLNX), each rising 2%. Gold stocks continued to post strong gains.

Takeover activity was again in the spotlight, as after Hexion Specialty Chemicals Inc. raised its acquisition bid for chemical company Huntsman Corp. ((HUN)) by 2.8% to $10.5 billion. In other corporate news, FedEx ((FDX)) rose 3.7% on speculations that the package delivery company could become a target for private equity buyers because of its modest valuation and turnaround potential.

In mid-afternoon trading, the Dow Jones industrials rose 24.06, or 0.18%, to 13,635.74. The Standard & Poor''s 500 index fell 0.74, or 0.05%, to 1,529.70, and the Nasdaq composite index rose 0.67, or 0.03%, to 2,667.18. The yield on the benchmark 10-year Treasury note dipped to 5.16% from 5.18% on Friday.


[R]9:45AM Wall Street opened higher on falling bond yields.[/R]

Wall Street opened in the positive territory Monday amid investor optimism that Q2 corporate earnings will be solid and will help give the market some direction. Alcoa will traditionally kick off the season after the closing bell. Falling bond yields and fresh merger deals also generated positive sentiment.

The blue-chip average was led higher by Boeing Co. ((BA)). Company’s shares rose 2% after it unveiled its 787 Dreamliner and announced new orders for the plane. Home Depot ((HD)) was another gainer on the Dow. It gained 1% following an upgrade to buy at Goldman Sachs, with the broker citing changes in management an improved capital structure. Aluminum producer ((AA)) is expected to report a profit of 83 cents per share. Its shares added 0.6%.

On the deal news front, investors in the Chicago Board of Trade ((BOT)) are due to vote on whether to accept an improved offer from the Chicago Mercantile Exchange ((CME)) or not. Further in M&A action, Carlyle agreed to buy Sequa in a deal worth $2.7 billion. First Indiana ((FINB)) surged 41% after Marshall & Ilsey ((MI)) agreed to buy it $32 a share.

Among the most notable movers, Lexmark ((LXK)) fell 11% after it warned over Q2 and Q3 earnings, due to weaker-than-forecast sales of inkjet supplies and pricing. Alnylam Pharmaceuticals ((ALNY)) jumped over 50% after news it will receive payments of $331 million upfront and up to $1 billion in milestones from Roche Holdings.

In the first few minutes of trading, the Dow Jones industrials rose 40.57, or 0.30%, to 13,652.25. The Standard & Poor''s 500 index added 2.96, or 0.19%, to 1,533.40, and the Nasdaq composite index rose 4.79, or 0.18%, to 2,671.30. The yield on the benchmark 10-year Treasury note dipped to 5.15% from 5.18% on Friday.


[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]9:00AM U.S. stock futures pointed slightly higher ahead of Q2 earnings season.[/R]

U.S. stock futures moved slightly higher on Monday ahead of the second-quarter earnings season, with Alcoa ((AA)) reporting first after market close. The aluminum producer is expected to post strong results on demand in the aerospace sector.

Among pre-market highlights, Lexmark ((LXK)) fell 12% after it warned over Q2 and Q3 earnings, due to weaker-than-forecast sales of inkjet supplies and pricing. The company projected earnings of 64 cents to 69 cents per share, or 62 cents to 67 cents per share excluding restructuring-related benefits. Lexmark previously expected to earn 82 cents to 92 cents per share for the June quarter.

In deal news, Hexion Specialty Chemicals improved its acquisition offer for Huntsman Corp. ((HUN)) to $10.5 billion, or $29 a share in cash. Further in M&A action, Carlyle agreed to buy Sequa in a deal worth $2.7 billion. Positive analyst comments helped Home Depot ((HD)) gain 1.2% in the pre-open. Its stock was upgraded to buy from neutral at Goldman Sachs.

Oil futures and bond yields were also in the spotlight. Crude oil futures fell 42 cents to $72.39 a barrel in electronic trading. S&P 500 futures rose 2 points at 1,544.50 and Nasdaq 100 futures rose 2 points at 2,011.00. Dow industrial futures rose 22 points. Yields on 10-year Treasury bonds on Monday drifted a bit lower to 5.17% in early action.


[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]8:15AM Hexion Specialty Chemicals raised its bid for Huntsman to $10.5 billion.[/R]

Hexion Specialty Chemicals, an Apollo Management L.P on Monday improved its acquisition offer for Huntsman Corp. ((HUN)) to $28 a share, or $10.5 billion, up from an earlier bid of $27.25 a share. Shares of Huntsman added 1.6% in pre-market trading.

Diversified industrial manufacturing firm Sequa Corp. ((SQA.A)) agreed Monday to be bought by the Carlyle Group in a deal worth $2.7 billion. Under the terms of the agreement, Carlyle will acquire all of the outstanding Class A and Class B shares of Sequa for $175.00 per share in cash. The transaction is a premium of 54% to the closing prices of Sequa''''s Class A and Class B shares on July 6.


[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. On the broader market, 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, adding 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 hydrocarbon field 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 and expects to complete the project in five years.

The prospect of the Reserve Bank of India reducing the cash reserve ratio for banks in near future lifted banks. 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 list three more companies, operating in infrastructure, information technology, and finance, to reorganize its corporate structure. Other gainers included Bharti Airtel with a rise of 1.7% to Rs 881.

IT stocks surged on a rally in ADR trading in New York, on Friday previous week, and ahead of first quarter results. Infosys advanced 1% to Rs 1,993, Wipro added 1.1% to Rs 524, and TCS increased 1.5% to Rs 1,177. Infosys reports its first-quarter ending in June 2007 results on Wednesday, July 11.

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.

In Sensex, Mahindra & Mahindra replaced Hero Honda Motors but stock fell 1% to Rs 779. Index heavy Reliance Industries edged 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.