European Stocks Inch Higher

123jump.com Staff
24 Dec, 2007
New York City

European stocks closed higher led by a rise in FTSE 100 in London trading of 0.7%. Intensa Sanpaolo agreed to a settlement of 420 million euros with Parmalat over its 14 billion debt fraud and subsequent bankruptcy filing. Capgemini rose 11% after news report that India based wipro may bid for the consulting company. Miners and defense stocks rallied in London. All-business class airline MAXjet filed for bankruptcy protection in the wake of competition from American Air and higher fule cost.

[R]4:00PM New York, 10:00PM Frankfurt – U.S. market averages gained after financial and brokerages stocks rallied on investment in Merrill Lynch and retail stocks edged higher on optimistic outlook for holiday sales.[/R]

In London FTSE 100 Index up by 45.20 or 0.70% to 6,479.30, in Paris CAC 40 Index increased 11.51 or 0.21% to close at 5,614.28, Market in Switzerland, Italy, Spain, Sweden, and Germany were closed today.

Dow Jones Industrial Average closed up 98.68 or 0.73% to a close of 13,549.33, S&P 500 edged higher 11.99 or 0.81% to 1,496.45, and Nasdaq Composite Index traded up 21.51 or 0.80% to a close of 2,713.50. In Toronto TSX Composite gained 98.75 or 0.73% to close at 13,694.84.

Of the 30 stocks in Dow Jones Industrial Average, 25 closed higher, 5 closed lower, and none was unchanged.

AIG led the gainers in the index for the second day in a row with a rise of 2.83% followed by increases in American Express of 2.5%, in Citigroup of 2.4%, in Alcoa of 1.8%, and in JP Morgan Chase of 1.6%. General Motors led the decliners in the index with a loss of 0.4% followed by losses in du Pont of 026%, in Johnson & Johnson of 0.24%, in Proctor & Gamble of 0.19%, and in Caterpillar of 0.04%.

Of the stocks in S&P 500, 392 closed higher, 104 fell, and 4 were unchanged.

Three stocks fell more than 3% and thirty seven stocks rose more than 3%.

SLM Corp led the gainers with a rise of 11% followed by increases in Office Depot of 6.65%, in Freddie Mac of 6.4%, in Manitowoc of 6.14%, in General Growth Properties of 6%, and in Apartment Invest of 5.3%. First Horizon led the decliners in the index with a loss of 6.1% followed by losses in Boston Scientific of 3%, in Wyeth of 3%, in Merrill Lynch of 2.95%, and in CME Group of 2.4%.

In Latin America Argentina, Brazil, and Peru were closed. Mexico led the gainers with a rise of 0.73% followed by increases in Colombia of 0.71% and Venezuela of 0.4%. Chile lost 0.2%.

Markets in Japan, Thailand, and Indonesia were closed.

In Hong Kong Hang Seng index closed up 501.88 or 1.82% to 28,128.80 and in Australia ASX 200 increased by 78.60 or 1.25% to close 6,388.00.

In South Korea Kospi Index increased 41.15 or 2.35% to close at 1,919.47. In India Sensex Index surged 691.55 or 3.61% to close 19,854.12.

Bond Yields increased on 10-year U.S. bonds to 4.21% and 30-year bonds to 4.61%.

[R]Commodities, Metals, and Currencies[/R]

Crude oil increased $0.70 to close at $94.01 per barrel, natural gas down by 19 cents to $7.00 per mBtu, and gasoline futures inched higher by 0.35 cents to close at 238.30 cents per gallon.

Gold added by $1.10 in New York trading to close at $816.50 per ounce, silver closed up by 17 cents to $14.66 per ounce, and copper for front month delivery up 5.60 cents to 315.35 cents per pound. Trading in London metals market was closed today.

Dollar edged lower against euro to $1.4399 and higher to 114.395 yen.

[R]10:30AM New York – Merrill Lynch rises after selling its commercial finance business and receiving investment from Singapore and Davis Fund.[/R]

Dow Jones Industrial Average jumped 91 to 13,452, Nasdaq increased 15.87 to 2,707, and S&P 500 added 10.71 to 1,495.18.

Merrill Lynch ((MER)) after a recent string of losses in sub-prime loans is forced to sell assets and raise capital from new investors. Merrill jumped 4% to $57.80 today on the news of fresh investment from Singapore government controlled fund and from a mutual fund company Davis Selected Advisors based in Tucson, Arizona.

Separately, Merrill sold its commercial finance business to General Electric with assets of more than $10 billion.

GE Capital has agreed to purchase most of Chicago-based Merrill Lynch Capital, Merrill Lynch and Co., Inc.’s wholly owned middle-market commercial finance business according to a statement on Merrill web site.

Financial terms were not disclosed.

The acquisition, expected to close in the first quarter of 2008, will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance’s base of $260 billion.

Temasek, sovereign fund controlled by Singapore agreed to invest $5 billion according to sources in Singapore. Davis Selected Advisors P agreed to buy stocks worth $1.2 billion in Merrill Lynch according to news report on Bloomberg. Calls to Davis Funds were not returned seeking information on the purchase.

Temasek Holdings will invest $4.4 billion in Merrill Lynch common stock and has the option to purchase an additional $600 million of Merrill Lynch common stock by March 28, 2008. Its ownership position will at all times represent less than 10 percent of Merrill Lynch''s outstanding common stock.

Davis Selected Advisors will be making a long-term investment of $1.2 billion in common equity. Both Temasek Holdings and Davis Selected Advisors will be passive investors and will not have any rights of control and have no role in the governance of Merrill Lynch.

According to the term sheet released on Merrill Lynch web site, Temasek has agreed to a lock up period of one year for the investment. Temasek has agreed to pay $48 per share for a total of $4.4 billion.

Wachovia revised its earnings target for the fourth quarter and for the full year for Merrill Lynch. Wachovia now estimates that the broker will lose $3.87 per share and for the year will earn $6.03 per share lower from the previous forecast of $8.05. The broker also hinted that the earnings may be revised in the next two quarters if the current weakness in the credit markets persists.

Target ((TGT)) increases by $1.16 to $51.84 after an activist investor William Ackman increases his fund stake in the company to 10% from 9.6% according to a filing with SEC.

Asian markets closed sharply higher led by a surge in India, Shanghai, and Hong Kong.

European markets at mid-day traded higher led by advance in Norway and UK.


[R]7:30AM New York – Asian Markets closed higher led by a surge in India, Hong Kong, and Shanghai.[/R]

Asian markets closed higher ahead of the holiday week.

The talks of continued weakness in the U.S. economy and probable weakness in the interest rate lifted property stocks in Hong Kong. Mining stocks closed higher in Australia. India closed higher as investors supported the rising market on the higher close in the U.S. on Friday.

Markets in Japan, Thailand, and Indonesia were closed.

In Hong Kong Hang Seng index closed up 501.88 or 1.82% to 28,128.80 and in Australia ASX 200 increased by 78.60 or 1.25% to close 6,388.00.

In South Korea Kospi Index increased 41.15 or 2.35% to close at 1,919.47. In India Sensex Index surged 691.55 or 3.61% to close 19,854.12.

Brokerage stocks lifted Chinese stocks. Shanghai Composite Index jumped 2.6% to 5,234.26. Citic Securities rose 5.3% and Northeast Securities soared 7.3%.

Investors in China have been pouring money into real estate and stock market as banks pay interest rate less than the prevailing inflation. The recent surge in stock market indexes and real estate prices in urban areas is a reflection of current account surplus and rising trade surplus. The macro picture for stock markets and real estate is not likely to change unless the trade surplus declines dramatically.

PetroChina closed higher by 5%.

Sensex in India surged 3.6% to close at 19,854.12 after Gujarat State election returned pro-business BJP party with a higher margin and just short of two-thirds majority.

Banks led the gainers in the session. HDFC, the housing finance company soared 6%. Software exporters gained led by a 6% rise in Wipro. GAIL, Gas Authority of India soared 9% and ONGC added 4.8%.