London Up, Early Gains Lost

123jump.com Staff
27 Aug, 2007
New York City

FTSE 100 in London trading closed higher in Friday trading but lost most of its early gains by the end of the day. Investors remain concerned that the credit market malaise, inflicated by the U.S. mortgage market problems, are likely to last longer than anticipated and are expected to get worst in the months to come. Northen Rock jumped 4% on buyout rumors. Homebuilders fell.

[R]12:00PM New York, 6:00PM London - Bank shares dropped sharply, as metal stocks helped UK rise mildly, as investor worries over US mortgage market losses calmed down. Rio Tinto-Alcan deal approved. India’s Tata may bid for stakes in Jaguar and Land Rover. New investor eyes Nasdaq’s 31% London Stock Exchange stake.[/R]

Mining shares helped carry the day in London, as bank stocks dropped on speculation the European Central Bank may lift rates. London gained 0.37% at close paring earlier volatility. Of the 102 FTSE 100 shares, 65 gained, 36 declined while 1 remained unchanged.

In London trading FTSE 100 finished marginally higher 0.37% at 6,220.10 thanks to a late surge in metal stocks. Financial shares crumbled under Europe interest rates uncertainty. ECB president Jean Claude Trichet has remained unclear over rates direction going forward, preferring, instead, a cautious wait and see attitude. Speculation abound ECB may lift rates on Sept 6 to stem borrowing.

Press reports over the weekend indicated a new investor may be coming to purchase Nasdaq’s 31% stake in LSE. Several names including Singapore firm, Temasek and German exchange, Deutsche Bourse, have been linked with the deal. Nasdaq is selling the LSE stake to concentrate on other investments after failing to gain control of the London market. The stake is valued at nearly 800 million pounds.

Of the FTSE 100 stocks, mining and consumer shares rose. SAGE Group rose fastest up 3.21% followed by BG Group plc adding 2.74% and Wolselely plc rising 2.64%. Rio Tinto lifted higher 2.36% after the U.S. authorities consented to the $38.1 billion take-over bid of Alcan, a Canadian aluminum firm. Rio Tinto will pay $101 for every Alcan shares. Sainbury plc gained 2.16%. Metal shares Xstrata, BHP Billiton plc and Anglo American rose 1.79%, 1.48% and 1.2% respectively. Kingfisher and Marks & Spencer gained over 1.4% each.

Of the stocks in FTSE 100 index, financial stocks paced decliners on concern the European Central Bank may lift rates. Standard Chartered led the decliners with 4.90% followed by 3i Group plc falling 4.26%. British Energy lost 2.67%, Barclays plc fell 2.63% while Man Group plc shed 2.55%. Northern Rock eased 2.31% with HBOS plc and Old Mutual dropping 1.5% and 1.03% respectively. British Airways fell on similar concerns, that borrowing cost will increase a at the time when airfares are likely to drop. The airliner lost 2.4%. It said earlier today its 3.4 billion euro joint bid for Spanish airline Iberia Lineas Aereas de Espana SA may be revised downwards.

Tata Group chairman, Ratan Tata announced today that it may be interested in British carmakers, Jaguar and Land Rover from parent firm, Ford. Ford is contemplating to sell 50% of the units. Tata Motors relies on the Indian market for more than 90% of its sales. Tata wants to increase its global market foot print.


[R]11:00AM New York, 8:30PM Mumbai – Traders in Mumbai focused on local news and lifted the index.[/R]

Sensex soared 2.89% or 417.51 to 14,842.38 after sharp rise in Asian market. In Mumbai, as in the rest of Asia, indexes rebounded on the optimism sparked by the housing report in the U.S. Weak credit markets in the U.S. led to volatility in the global markets and sharp declines in market averages around the world. CNX Nifty advanced 112.45 or 2.68% to 4,302.60.

Of the stocks traded on the Bombay Stock Exchange, 2,050 stocks gained, 629 declined, and 54 were unchanged. Daily turnover declined to 3,489 crore rupees from 3,632 crore rupees. The turnover on the NSE rose to 8,896 crore rupees from 8,133 crore rupees. Of the 30 stocks in the index 28 gained and two stocks declined.


Offerings

The initial public offering of Take Solutions jumped 27% to 926 rupees from its price of 730 rupees. The 57 times oversubscribed IPO opened at 876 rupees and quickly reached its high for the day to 943 rupees.

Mecator Lines increased 2.3% to 54.75 rupees on the news that it plans to sell 30% stake in its Singapore subsidiary.

Gainers

State Bank of India led the gainers in the index with a rise of 6.6% to 1,563 rupees. The bank has agreed to acquire one of its seven affiliated banks State Bank of Saurashtra. ICICI Bank jumped 6% to 883 rupees. Smaller banks participated in the market rally as well. Federal Bank jumped 5.4% to 323.80 rupees and Kotak Mahindra increased 4.8% to 680 rupees. Indian Bank jumped 15% to 151 rupees.

Tata Steel jumped 3.7% to 604 rupees on the news that it plans to increase its steel production by 35 million tons to 61 million by the year 2015. L&T increased 3.9% to 2,539 rupees after the board approved international offering to raise $700 million.

Bajaj Auto jumped 2.8% to 2,295 rupees. The company plans to shift its production to Waluj from Akurdi location to take advantage of lower operating costs and sales tax. Tata Motors increased 3.4% to 680 rupees after the company Chairman Ratan Tata confirmed its interest in purchasing Jaguar and Land Rover divisions from Ford. Maruti Udyog jumped nearly 6% in the rally to 835 rupees.

NTPC added 2.4% to 167 rupees on the news that the company plans to sell 4.75% of its stake and increase public float of the company. Reliance Industries jumped 3.4% to 1,835 rupees. GMR infrastructure jumped 4% to 749 rupees after its subsidiary received order to build power project in Himachal Pradesh.

Real estate stocks jumped after trading volatile in the last two weeks. Parsvnath Developers gained 4.8% to 293 rupees after winning land development order for BEST, the local bus transportation operator in Mumbai.

Indiabulls Real Estate soared 11.5% to 497 rupees, Peninsula Land increased 11% to 464 rupees, and Unitech added 7.6% to 491 rupees.
[R]7:00AM New York, 8:00PM Tokyo-Japanese shares rose on fresh economic growth prospects. New finance minister is appointed. Japan debt jumps to 836,521 billion yen. Mitsubishi UFJ units to buy Australia firm, Challenger Financial Services Group Ltd.[/R]

Japanese shares moved higher marginally after US reports indicated subprime mortgage market worries had not stopped home sales gaining 2.8% in July. At close Tokyo climbed 0.32% after early gains of over 1.5% with exporters leading. Of the 225 Nikkei index stocks, 109 gained, 94 dropped and 22 were unchanged. Ten stocks rose above 2% while bottom 30 dropped over 1%.

In Tokyo trading Nikkei 225 advanced 0.32% or 52.42 to 16,301.39 pushed firmer by motor, electric and energy stocks. Shares rose after July new home sales rose in the face of tightening credit market. The yen firmed marginally to 116.26 per one American dollar from 116.46 last week, as exporting firms bought. The Finance Ministry said Japan’s debt swelled to 836,521.3 billion yen in the period of June 30, up 2,143 billion yen at the end of March 31. Of the total, government bonds stood at 671,797.5 billion yen, down 2,324.6 billion yen from three months earlier.

Prime Minister Shinzo Abe announced Monday appointment of Fukushiro Nukaga, as new finance minister. The Financial Services Agency said today it’s intensifying monitoring high-risk bank investments to guard against losses in derivative and leveraged loans markets. Hedge and private investment funds will be closely monitored, the Agency said. Several key Japanese financial firms have invested large amounts of money into U.S. and European securities, in which a variety of securities using mortgages as collateral are incorporated.

Of the Nikkei 225 stocks, exporters, electric and energy and related shares rose. Japan Airlines led the gainers rising 4.74%, helped too by easing global oil prices. Nikon Corp followed gaining 4.45 % and NTT Docomo Inc up 3.51% while Yahoo Japan added 3.5%. Credit Saison rose 3.45%. Japan Tobacco, Honda Motor Co, Mitsumi Electrical, Tokyo Electron all rose over 2% against a firming yen. Of the stocks, G Yuasa Corp led decliners losing 3.04% followed by AEON Co Ltd down 2.84% and Mitsui $ Co fell 2.78%. Sojitz Corp and Nisshin Oil dropped 2.7% and 2.52% respectively.

Australian asset manager, Challenger Financial Services Group Ltd announced Monday Mitsubishi UFJ Ltd. and Mitsubishi UFJ Securities Co. subsidiaries to Mitsubishi UFJ will buy some 40 million Challenger shares at A$5.20. Bank of Tokyo has also been offered shares, as the Australian company seeks to spread influence in Asia. Mitsubishi UFJ shares closed unchanged at 1.3 million yen in Tokyo.

Japan Post said today some 26,000 ATMs would be de-activated by September 30 to pave way for privatisation, which commences October 1. All postal ATMs installed at post offices and other locations across Japan need to be suspended so as to confirm the amount of cash Japan Post holds on the last day as a public corporation, it said. ATMs operated by financial institutions and convenience stores tied up with Japan Post will not be affected.