Lonmin Pulls FTSE Lower

Ivaylo
16 Jul, 2007
New York City

London fell for the first time in three days, led by Lonmin after the mining company announced it will delay the sale of as much as 90,000 ounces of platinum. Barclays led the advancers after Royal Bank of Scotland improved its offer for ABN Amro. In broker news, Royal Dutch Shell fell Monday as HSBC cut its rating on the stock. The benchmark FTSE 100 Index lost 0.3% at mid-day in London.

[R]9:30AM London is lower at mid-day as Lonmin leads mining stocks lower.[/R]

In London, the benchmark FTSE 100 Index lost 19.10, or 0.3%, to 6,697.60 at mid-day.

Advancers of the Day

Barclays gained 1.2% after Royal Bank sweetened its offer for ABN Amro, in an attempt to outbid Barclays in the world biggest banking takeover.

In broker news, GlaxoSmithKline, the second-largest drugmaker in the world, increased 1.5% after JPMorgan raised its recommendation for the stock to neutral from underweight.

BT Group also climbed 1.2% after Merrill Lynch upped its recommendation for the largest phone company in the U.K. to buy from sell.

Building supplies group Wolseley gained 1.2% as it announced underlying profit for the 11 months to 30 June 2007 dipped around 5% than the comparable period in the prior year.

Decliners of the Day

Lonmin, the world third-biggest platinum maker, dropped 6.6% as the mining company said it will delay the sale of the metal until its next financial year because of a breakdown at one of its plants. Full-year sales will range between 820,000 ounces and 840,000 ounces and costs will increase. Citigroup reduced its recommendation for the stock to hold from buy.

BHP Billiton, the largest mining company in the world, dropped 1.2% and Xstrata, the fourth-largest copper producer in the world, slid 1.3%.

Royal Dutch Shell declined 1.2%, after HSBC cut its recommendation for the largest oil company by market value in Europe to underweight from neutral.

Engineer Metalrax tumbled 12.3%, having issued a warning that profits will miss targets this year as sorting out its problem businesses is taking longer than expected.

[R]8:30AM Asian markets decline, Hong Kong slips from record high, South Korea loses on U.S. subprime rate.[/R]

Asian markets finished broadly lower Monday.

The Japanese market was closed for a public holiday.

In Hong Kong, the Hang Seng Index shed 0.6% to close at 22,953.94. China Mobile and Cheung Kong lost, as investors took profit. China Mobile dipped 1% after closing at record highs in the last two sessions. Conglomerate Cheung Kong declined 2%.

In South Korea, the Kospi Index slipped 0.7% to 1,949.51. Samsung Electronics, the world biggest computer-memory producer, tumbled 5.4 %, offsetting the 15% advance this month on a decline in its second-quarter net profits. Financial stocks were hurt also as their U.S. investments suffered losses resulting from the weakness in the U.S. mortgage market. Woori Finance Holdings lost 4.4% and Shinhan Financial Group dipped 1.5%.

In Taiwan, Taipei closed 0.6% lower at 9,417.32 as South Korea and Taiwan are the markets with the highest technology weightings in Asia. The Dramexchange Index, tracking prices of the most widely used computer memory chips, declined 0.5% to 3,332.79 in Taiwan on July 13.

In Australia, the S&P/ASX 200 Index lost 0.1% to 6,380.80. Miners fell on worries over takeover deals. Rio Tinto kept slipping as investors are concerned that it is paying too much for Alcan of Canada. Shares of the company dipped 4.2%. BHP Billiton also slid 2.5% on speculation that it could make a bid for U.S-based Alcoa.

Another policy tightening pulled stocks in China down. The Shanghai Composite Index shed 2.4% to 3,821.91. Financial led the decliners with Shenzhen Development Bank losing 6.4%, Hua Xia Bank shedding 4.8% and Citic Securities dipping 5%.

[R]7:30AM NY – 6:30 PM Mumbai Sensex finishes 38 points higher with Reliance Energy surging.[/R]

The Sensex on BSE finished Monday 38.50 points higher, or 0.25%, to 15,311.22.

Intra-day high and low

The benchmark index opened 22 points higher at 15,295, and soon touched record high of 15,341. Then, profit-taking at higher levels weighed the index down to a low of 15,239 - down 102 points from the peak.

The market-breadth was positive as out of 2,753 stocks traded on BSE, 1,485 advanced, 1,210 declined and 58 were unchanged. Of the 30 stocks in the Sensex, 12 advanced, while the rest declined.

The turnover on BSE was Rs 5,270 crore, compared with Rs 6,752 crore on Friday. On NSE, turnover was Rs 11,519 crore, lower than Rs 14,883 crore on Friday.

Economic news

The biggest builder of dams in India, Jaiprakash Associates Ltd engaged Barclays Capital to sell $400 million of convertible bonds to boost cement production. Jaiprakash will also use proceeds from the debt sale to build a new thermal power plant and for capital expenditure.

The rupee kept rising against the US dollar and passed 40.40 during morning trading, boosted by exporters and banks selling dollars as well as by the weakness of the dollar in the overseas markets.

Trading highlights

GMR Infrastructure was the most active stock with a turnover of Rs 248 crore followed by Reliance Communications and Indiabulls Real Estate.

Advancers of the Day

Reliance Energy rallied 4.5% to Rs 706. Reliance Energy is planning to secure at least two ultra mega power projects of 4,000 MW each worth nearly Rs 40,000 crore. Other strong gainers were State Bank of India which advanced 3.8% to Rs 1,614 and Bajaj Auto which gained 3.7% to Rs 2,255.

SBI Mutual Fund on Thursday, July 12 2007 announced it accumulated Rs 2,536 crore from Infrastructure Fund Series-I, which closed for subscription in June 2007.

Reliance Communications rallied 3.5% to Rs 574. There are reports that it had signed an agreement to acquire US-based Yipes for $300 million. Hindalco surged 3.5% to Rs 180. ONGC moved up 1.6% to Rs 915, and Grasim added 1% to Rs 2,900.

ACC surged 2% to Rs 1,118, leading cement producers higher on speculation they will post strong earnings as prices of the building material climbed. Ambuja Cements rallied 3.4% to Rs 133.

Index heavy Reliance Industries advanced around 0.5% to Rs 1,777.

Decliners of the Day

Wipro and Satyam led the decliners. Both companies were around 2.3% lower. Wipro finished at Rs 501, while Satyam dipped to Rs 482. Trading in IT large-caps was subdued throughout the day. TCS was down 0.8% to Rs 1,128 and Infosys lost 0.3% to Rs 1,934.

Ranbaxy slipped over 2% Rs 346. Other pharma stocks also declined weighed down by the stronger rupee.. Cipla lost 1.3% to Rs 209 and Dr. Reddy’s Laboratories declined 0.9% to Rs 662.

Hindustan Unilever shed 2.2% to Rs 185. BHEL and NTPC lost 1.5% each to Rs 1,659 and Rs 155, respectively.

[R]6:30AM European shares gain Monday on a sweetened offer by Royal Bank of Scotland for ABN Amro.[/R]

National benchmarks climbed in 12 of the 17 western European markets that were open. The U.K. FTSE 100 index rose less than 0.1% to trade at 6,718.50, the German DAX 30 index climbed 0.1% at 8,099.60 while the French CAC-40 index gained 0.1% at 6,122.46.

In focus

ABN Amro, the Dutch lender, rallied 3.8% after Royal Bank of Scotland, the second-largest bank in the U.K., improved its offer for ABN Amro, in an attempt to outbid Barclays in the world biggest banking takeover. Dutch conglomerate Philips Electronics lost 1.5% after its second-quarter net income and sales missed analyst forecasts.

Around Europe

In London, financials were strong as Barclays rose 1.3% and Royal Bank of Scotland added 0.2%. BT increased 1.4% after Merrill Lynch hiked its recommendation for the U.K. largest phone company to buy from sell. Also in broker news, GlaxoSmithKline gained 1.6% as the world second-largest drugmaker was upped to neutral from underweight at JPMorgan.

In Frankfurt, the chief gainers were Deutsche Bank and insurer Allianz. Volkswagen climbed after the carmaker announced it expects to boost sales in China. Deutsche Bank advanced 1.2%. Reportedly, the largest bank in Germany may bid for Abbey Life, the closed life-insurance business of Lloyds TSB Group. Allianz gained 1.1% and Volkswagen added 0.8%.

Also in Germany BASF, the German chemicals group, rose 1.4% as UBS raised its price target on the group while Schneider Electric, also weak of late, rallied 2.4% as Citigroup lifted its recommendation from hold to buy.

In Paris, L’Oreal lost 3.9% as growth in sales at the cosmetics and beauty group failed to impress the market. Also in the news, EADS, struggling with losses caused by the Airbus division A380 plane delays, named Louis Gallois as sole chief executive officer. Total, the largest oil refiner in Europe, announced profit from converting crude oil into gasoline, diesel and other products increased 12% in the second quarter from a year earlier.

Currencies

The U.S. dollar was lower against other major currencies in European trading Friday morning. The euro traded at $1.3797, up from $1.3789 late Friday. The British pound traded at $2.0392, up from $2.0336. The dollar bought 121.61 Japanese yen, down from 122.03.

Gold traded in London at $667.25 per troy ounce, up from $665.30 late Friday.

Brent crude oil traded above $78 a barrel in London for the first time since Aug. 9 as field maintenance limited North Sea supplies.

Crude oil in New York for August delivery gained 51 cents, or 0.7%, to $74.44 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

[R]5:30AM Gold dips, copper advances, oil finishes higher, corn ends higher.[/R]

August gold lost $1 to end at $667.30 an ounce on the Nymex, while September silver dipped 7 cents to $13.11 an ounce.

Copper advanced nearly 1% on the LME and added 1.2 cents to finish at $3.593 a pound on the New York Mercantile Exchange.

Nymex crude oil, which has ended 10 straight trading sessions above $70 a barrel, gained $1.43 to close at $73.93 a barrel after briefly hitting $74.

Hopes for continuing builds in gasoline inventories weighed pressure futures down 4.15 cents to end at $2.2248 a gallon.

In Chicago, agriculture futures oscillated throughout the day. December corn gained 3.25 cents to $3.685 a bushel, while November soybeans advanced 7.25 cents a bushel to $9.4875.

Wheat futures closed down 0.75 cent to $6.2075.