London stocks Up, Housing Prices Drop

123jump.com Staff
13 Sep, 2007
New York City

Stocks in London closed higher onrecord oil price and firm metals prices in international markets. FTSE 100 index added 0.9% to close at 6,363.90 lifted by mining and energy stocks. Of the index stocks, 69 closed higher and 39 dropped. The Bank of England lent 4.4 billion pounds to banks to stem the liquidity crunch in the credit market. UK housing market survey reported first decline in home prices since 2005. The prices are likely to drop further.

[R]2:30PM New York, 7:30PM London - UK shares extended gains helped by firm oil stocks, as international crude oil prices hit record levels. Bank of England lent 4.4 billion pounds, as liquidity support to unnamed banks.[/R]

London stocks closed higher 0.9% extending two day rally. Of 102 FTSE 100 index stocks, 69 shares recorded gains, 39 dropped while a single share remained unchanged.

In London trading FTSE 100 finished up 0.9% at 6,363.90 as mining and oil stocks surged after global crude oil traded at record level.

Oil continued to trade near record level of $80 per barrel. Oil stocks helped protect the market from steeper losses as they rallied in the mid session. But losses were limited on concerns that another drop in U.S. crude stockpile is likely and the prospect of even tighter oil supplies should Hurricane Humberto damage energy facilities.

New York''s main futures contract, light sweet crude for delivery in October fell 16 cents to 79.75 dollars per barrel. New York crude had struck a record intra-day close of $80.18 Wednesday. On Thursday, the price of Brent North Sea crude for October delivery dropped 37 cents to $77.32 dollars per barrel in London.

Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in a bid to calm the money markets. The Bank hopes to flood the market with sterling and bring overnight interest rates back down towards the official rate of 5.75%. For the past month, overnight interest rates have been hovering around 5.9% during well above their usual level. Overnight rates are normally around 0.03% above the official rate. The London Bank signaled its latest move last week when it expressed concern on why commercial banks had not asked for a greater increase in their cash balances.

The Bank said it had taken the action it foreshadowed last week because secured overnight rates had fallen, but remained higher than normal relative to the official rate. Mervyn King, the Bank''s governor, argued on Wednesday that it may be that the banks may, at the start of the current maintenance period, have underestimated their demand for reserves, and the additional reserves would help to bring the overnight rate into line with the official rate.

Of the FTSE 100 index shares, mining companies dominated the top five gainers. Cable & Wireless led the gainers with a rise of 4.5% followed by increases in Lonmin of 3.66%, in Anglo America of 3.27%, in BT Group of 2.90%, and in BHP of 2.61%.

Oil companies recorded gains on firming oil prices. BP gained 0.8%. Royal Dutch Shell rose 1.8% to close at 2,037 pence.

Mortgage Bank, Northern Rock led the FTSE 100 stocks with a loss of 4.91% followed by ITV with a decline of 4.14%, and Alliance and Leicester fell below 2.70%, Shire fell 2.50% while British Land retreated 1.88%.

[R]1:30PM New York, 2:30AM Sydney - The Australian market closed slightly higher today on record crude oil price lifting energy stocks after Wall Street provided little direction.[/R]

In Sydney trading ASX 200 Index gained 0.17% or 10.3 to 6,230.60. The Aussie dollar retreated from one-month highs against the U.S. dollar on Thursday on a bout of profit taking following gains of over 2.5% in the past two sessions. A cautious return of appetite for riskier higher yielding currencies influenced by calmer stock markets helped the Aussie dollar to a peak at $0.8435 in international trading.

The oil price provided the only sources of news on quiet day of news. The U.S. crude oil futures shot to a record high above $80 a barrel on Wednesday in a rally fuelled by government data showing a bigger than expected crude oil draw down last week. Overnight, U.S. stocks finished little changed as gains in energy stocks, buoyed by a rising oil price, were offset by concerns about profits in the technology sector triggered by a disappointing outlook from chip maker Texas Instruments.

Of the Sydney ASX 200 shares, Boom Logistics led the gainer with a rise of 5.36% followed by Insurance Australia at 4.64% higher, Flight Centre rose 4.69% with Jubilee Mines and Alumina Ltd surging 3.8% and 3.2% respectively. Mining giant BHP Billiton closed up 0.39% and rival Rio Tinto fell by 0.23%. Companies lifted by higher oil price included Santos up 2.43%, Woodside up 1.72% and Oil Search, up 1.64%. Consolidated Minerals was up 2.89%, with the long-running take-over battle for the company set to continue after one suitor raised its total offer for the manganese miner to $1.03 billion.

Of the ASX 200 index stocks, Southern CR Broadcasting fell 2.80% followed by Corp Express down 2.83%, MFS Ltd sank 3.70 % followed by Compass Resource down 3.74% and CSR Ltd lost 6.92%.

Sugar producer and building materials company CSR Ltd declined after a trading halt was lifted following its equity raising and acquisition announcement yesterday for glass maker Don Mathieson.

[R]10:00AM New York - 7:30PM Mumbai – Suzlon plan to double its production in three years. Reliance and government agree on natural gas price.[/R]

Sensex in Mumbai trading gained 109.08 or 0.70% to close at 15,614.44. CNX Nifty gained 0.7% or 32.10 to close at 4,528.95. Rupee recovered to 40.60 against dollar from 40.65 in Friday trading. Market indexes opened higher at the opening but closed lower in a familiar pattern in the last three months of trading. Political worries dogged traders.

Of the stocks trading on BSE, 1,647 gained, 1,123 declined, and 66 closed unchanged. Daily turnover on the exchange declined to 5,257 crore rupees compared to 5,391 crore rupees a day ago. In trading on National Stock Exchange volume increased to 11,075 crore rupees from 10,835 crore rupees a day ago. Oil price at record level lifted stocks of sugar companies.

Of the 30 stocks in the Sensex 20 rose and 10 fell. Maruti Suzuki led the gainers with a rise of 3.7% to 891 rupees. Hindustan Lever led the decliners with a fall of 1.0% to 215 rupees.

Reliance Industries and a group of ministers appointed by the Government of India agreed on natural gas purchase price of $4.20 Mbtu for five years. The natural gas from Krishna Godavari basin will be distributed by government agencies. Reliance had asked for $4.33 Mbtu and negotiations between the government and the company had dragged for more than a year. Reliance in trading increased 0.6% to 2,025 rupees on 6.2 lakhs shares trading volume.

Jindal Steel & Power surged 8% to 4,690 rupees on the enthusiasm that the Bolivian iron ore mining project will receive government approval. Suzlon Energy jumped 3% to 1,379 rupees after the company said that it plans to invest 1 billion euros to double its wind turbine production capacity to 5,700 mw from 2,700 mw.

Western India Shipyard jumped 5% to 19 rupees after a deal with ABG Shipyard. The secured lenders committee and ABG are looking for ways to revive the ailing Western India Shipyard.

Auto stocks jumped higher led by 1.3% increase in Mahindra & Mahindra to 707 rupees and Tata Motors to 694 rupees, and 1.1% gain in Baja Auto to 2,418 rupees.

Reliance Communications jumped 1.9% to 552 rupees after the news that the company is selected to provide super high speed Internet data bandwidth between Tata Institute of Fundamental Research in Mumbai and CERN, European Organization for Nuclear Research in Geneva, Switzerland.

Software export companies rebounded after two weeks of slump. Tata Consultancy Services increased 1.36% to 1,030 rupees, followed by Satyam Computers gaining 1.27% to 434 rupees, and Wipro up 1.2% to 458 rupees. Infosys Technologies added 0.7% to 1,833 rupees. Of the smaller companies Mphasis led the gainers with a rise of 4% to 295 rupees and Tech Mahindra advanced 2.2% to 1,309 rupees.

August shipment data suggested strong rise in shipments for cement companies. ACC, Ambuja Cements, and Grasim added 2% or more.

Unitech, real estate company, jumped 7.8% to 285 rupees, the company will replace IPCL in CNX Nifty index on October 5th. Other real estate companies advanced on the news as well. Omaxe added 4% to 333 rupees, Orbit Corporation increased 2.6% to 512 rupees, and DLF jumped 1.6% to 645 rupees.

Ajanta Pharmaceuticals surged 10% to 110 rupees after the company entered in marketing collaboration with Canadian company Prollenium Medical to sell skin products in India.

Local subsidiary of Honda Motor Company jumped 2% to 665 rupees on the news that the company is planning to release new motorcycle products. Batliboi, machinery group, surged 10% to 168 rupees. The company will split stock face value from 10 rupees to 5 rupees on Oct 4tth.

[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks rebound from Wednesday’s slump led by commodities and pharmaceuticals stocks on record oil price. Japans five-year government note plummeted.[/R]

Japanese stocks rebounded led by commodity stocks as oil price soared to record highs at $80 per barrel. Pharmaceuticals stocks also rallied as Japan closed up 0.2%. Of the 225 Nikkei index stocks, 109 gained, 105 declined, while 11 traded unchanged. Engineering firms and technology stocks fell sharply on rising steel prices and falling demand. Of the index stocks, ten closed more than 3%. 13 slipped more than 2%.

In Tokyo trading the Nikkei 225 edged up 0.15%, or 23.59 to 15,821.19. Investors opted for the attractive stock in oil and drug manufacturing companies, shunning buying debt as yields on the Japanese five-year government notes slipped. The notes fell as yields reach their lowest since March 2006. Ten-year bond futures for December delivery fell 0.14 to 136.19. Bonds surged on Wednesday after the resignation of Prime Minister Shinzo Abe stocked expectations that the Bank of Japan will keep interest rates on hold next week. Bank of Japan’s base rate at 0.5% is the lowest among industrialized countries.

Japanese Ministry of Finance revealed today that the Japanese investors’ bond purchases rose to a two-year high. Weekly bond sale increased by 1,391.5 billion-yen than during the week ended September 8th. Higher yen is likely to draw investors into international mutual funds to channel investment into overseas assets.

Of the index shares, diversified pharmaceuticals and construction company paced gainers, climbing 4.29%, followed by Nippon Mining House at 4.20%. Dainippon Sumitomo Pharmaceuticals added 4.11%, while Eisai Co and Kyowa Hakko Kog swelled 3.72% and 3.66% respectively.

Engineering and construction firms led the decliners shedding 5.46% and 4.80% respectively. Toshiba Corporation slipped 3.86% on news of sluggish demand of PCs and a 11% shrink in the price of flash memory chips. Advantest Corp and Canon anchored the top five losers dropping 3.86% and 3.74 respectively.

It is forecasted that pharmaceuticals companies will continue on the upside after predictions that Japan’s four largest drug-makers will probably spend more on share buy-backs this year.

Takeda pharmaceuticals rose 1.92% after it was projected that the drug maker will increase expenditure on share buy backs to132.5 billion yen by the end of the year.