Freenet,Debitel Merge; EU Growth Lowered

123jump.com Staff
28 Apr, 2008
New York City

Germany reported lower inflation in April but estimates of economic growth in the 15-countries that use euro was revised lower to 1.7% from 1.8% and 1.5% in 2009. In merger news, Freenet, mobile telecom operator agreed to purchase Debitel AG in Germany for 1.6 billion euros from a private equity group Permira. Metals, banks and energy stocks gained in the region.

[R]10:00PM Frankfurt, 4:00PM New York, 8:00AM Sydney – Elevated prices of energy and investors speculation on bank stocks lifted broader market averages in Europe.[/R]

Global Markets Update

Germany reported April consumer price index fell 0.2% from March. Price index in April rose at 2.4% from the previous year after surging at 3.1% in March.

European markets closed higher on rising stocks in banking, metals and energy sectors. Crude oil traded near record high after the strike in BP refinery in Scotland continued for the second day and may extend for the rest of the week. Banks rose after JP Morgan said that the majority of write down related to credit market losses are behind us. However, former World Bank President James Wolfensohn said at a conference in London that credit market losses may reach as high as $1 trillion echoing earlier estimate from the IMF of $945 billion. So far banks and financial institutions have reported total write downs or losses of $305 billion.

Royal Bank of Scotland edged higher after media reports suggested that the bank may cut 25% of its workforce.

StatoilHydro edged higher as crude oil and natural gas prices rose in the region but Eni, BP and Total SA fell.

Xstrata, Antofagasta and Vedanta Resources edged higher on rising prices of base metals. Gold and silver also closed higher in the region on weak dollar and expectations of another interest rate cut in the U.S. on the Wednesday of this week.

Freenet AG agreed to buy the rival mobile telephone operator Debitel AG for 1.63 billion euros from the buyout group Permira. Freenet will issue 32 million shares or 25% of the stake in a new merged company. The merged company is likely to generate 450 million euros before interests, depreciation and taxes. The private equity group, Permira paid 640 million euros for Debitel in 2004.

Wrigley has agreed to be acquired by Mars for $80 per share or $23 billion. The deal will be partly financed by Goldman Sachs and Berkshire Hathaway. Wrigley offer is 28% premium from Friday closing price. On the earnings front Humana reported revenue and earnings rise of 12%. RadioShack first quarter sales declined 4% and earnings fell to 30 cents per share. Royal Bank of Scotland is likely to eliminate 25% of its staff.

Verizon reported first quarter revenue rise of 5% to $23.8 billion and operating income gain of 14% to 57 cents per share. The company added 1.5 million net customers and churn rate in the quarter was 1.19%. Medical Insurer, Humana rose 12% to $6.96 billion and earnings per share gained 12% to 47 cents. Mexico based Femsa SA reported revenue rise of 8.4% and robust volume rise of 7%.

Visa Inc, the recently listed credit card processing reported second quarter earnings rose 28% to $314 million on revenue gain of 21% to $1.45 billion compared to $1.19 billion or $246 million. Earnings per share were 39 cents per class A share.

Visa ((V)) fell $3 in the after-hours trading to $72.63 cents and in the regular hours traded as high as $77.29 but settled 53 cents higher at $75.63. Visa priced its offering at $44 per share on March 18.

UK home prices fell 0.6% in April from March and dropped 0.9% from a year ago. The prices in London fell 0.7% in the month. UK refinery strike continues for the second day. The Office of Fair Trade is likely to expand its investigation of price fixing between consumer companies and consumer products manufacturers. Several retailers including WM Morrison, Asda and Sainsbury are likely to be contacted by the OFT.

March retail sales in Japan rose 1.1% from a year earlier and added 0.5% from February. Local media report suggested that Matsushita Electric may take a stake in Sanyo Electric and purchase 300 billion yen of preferred stocks from Goldman Sachs at a discount. Stocks in Japan gained on the speculation that credit market related losses are not likely to rise after UBS upgraded its opinion on U.S. banks. Yahoo Japan fell 10% and led decliners in the Nikkei 225 index.

China Life Insurance reported first quarter earnings declined 61% on recent weakness in stock market volatility. Earnings in the quarter fell to 3.47 billion yuan from 8.89 billion yuan on 5.5 billion yuan loss in its investment portfolio. China Life relies on the stock market gains for most of its portfolio and Shanghai market has lost nearly 33% of its value in the quarter. Gross premium in the quarter rose 39.5% to 101.5 billion yuan. Bank of China earnings rose 85%.

European Markets indexes

In London FTSE 100 Index closed lower 1.00 or 0.02% to 6,090.40, in Paris CAC 40 Index increased 34.54 or 0.69% to close at 5,012.75 and in Frankfurt DAX index higher 28.75 or 0.42% to close at 6,925.33. In Zurich trading SMI increased 40.66 or 0.54% to close at 7,550.14.

North American Markets indexes

Dow Jones Industrial Average lost 20.11 or 0.16% to a close of 12,871.75, S&P 500 closed down 1.47 or 0.11% to 1,396.37, and Nasdaq Composite Index increased 1.47 or 0.11% to close at 2,424.40. In Toronto TSX Composite closed down 18.02 or 0.13% to 14,085.85.

Of the 30 stocks in Dow Jones Industrial Average, 21 closed higher, 14 closed lower, and none was unchanged.

General Motors led gainers in the Dow Jones index with a rise of 2.6% followed by gains in Verizon Communications of 2.46%, in Merck of 1.77% and in Caterpillar of 0.95%.

Microsoft led decliners in the Dow Jones with a loss of 2.8% followed by losses in DuPont of 1.4%, in IBM of 1.13%, in AIG of 1.03%, and in Pfizer of 0.98%.

Of the stocks in S&P 500 index, 241 stocks increased, 251 declined, and 8 were unchanged. Of the stocks in the index, 11 stocks fell more than 3% and 65 gained more than 3%.

RadioShack led decliners in the S&P 500 index with a loss of 14% followed by losses in Goodyear of 6%, in Loews of 5.3%, and in Broadcom Corporation of 4.3%.

Wrigley led gainers in the index with a rise of 23% followed by gainers in the S&P 500 index of Ford Motor of 9.5%, in Sysco of 8.5%, in Tenet Healthcare of 8.2%, and in Ambac Financial of 7.77%.

South American Markets Indexes

Brazil led gainers in the South American trading with a rise of 0.75% followed by increases in Colombia of 0.56% and in Argentina of 0.42%. Mexico led decliners in the region with a loss of 1.24% followed by declines in Chile of 0.43%, in Venezuela of 0.64% and in Peru of 0.37%.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 30.90 or 0.22% to 13,894.37, in Hong Kong Hang Seng index increased 149.51 or 0.59% closed to 25,666.29. In Australia ASX 200 index higher 15.40 or 0.28% to close 5,602.70. In Malaysia KL Composite index increased 7.23 or 0.56% closed to 1,295.31.

In South Korea Kospi Index decreased 1.51 or 0.08% to close at 1,823.17, in Thailand SET index closed higher 4.23 or 0.51% to 836.42 and Indonesia JSE Index edged increased 13.73 or 0.61% to 2,254.31. Sensex index in India decreased 110.02 or 0.64% to 17,015.96.

Commodities, Metals, and Currencies

Crude oil increased $0.33 to close at $118.85 a barrel for a front month contract, natural gas increased 13 cent to $11.23 per mBtu, and gasoline futures increased 3.19 cents to close at 305.05 cents per gallon.

Gold increased $5.80 in New York trading to close at $895.50 per ounce, silver closed up $0.19 cents to $16.78 per ounce, and copper for front month delivery decreased 2.55 cents to $3.87 per pound.

Wheat futures decreased 8.50 cents in Chicago trading and closed at $8.15 per bushel. Sugar decreased 4 cent to $12.25 per pound. Soybean future closed down 24.00 cents to $13.37 a bushel.

Dollar edged lower and traded near record low against euro to $1.656 and edged higher against yen to 104.14.

Yields on U.S. bonds decreased to 3.50% with 10 years of maturities and decreased 4.38% with 30-year of maturities.