Banks in Europe Gain; Pound Rises

123jump.com Staff
14 Apr, 2009
New York City

UK stocks dropped as much as 1.1% and pound strengthened on a steady fall in interbank loans. Mining companies rose after copper prices increased. Poland the second nation after Mexico is seeking IMF assistance to support its currency.

[R]8:30PM London, 3:20 PM New York – UK stocks dropped as much as 1.1% and pound strengthened on a steady fall in interbank loans. Mining companies rose after copper prices increased. Poland the second nation after Mexico is seeking IMF assistance to support its currency.[/R]

UK and European financial stocks and rebounded after Goldman Sachs reported better than expected earnings. Banks in Germany, France and Switzerland gained.

Poland is likely to receive $20 billion from IMF to support its currency zloty. Finance minister in a press conference welcomed the news that supported the central bank efforts to arrange the funding with the IMF. The Zloty rose to as high as 4.3 euros and is expected to gain more.

Barclays ((BCS)) jumped 10% to 195.50 pence after Sunday Telegraph reported that the company may try to sell asset management unit and seek higher than $4.4 billion price agreed with Colony Capital. The agreement allows company to seek higher price before the deal is closed.

HSBC Holdings Plc increased 1.5% to 481.35 pence and Lloyd Banking Group Plc surged 11% to 87.90 pence. Allied Irish Banks Plc fell 7cents or 6.3% to 1.05 euros after it cautioned that lending remains difficult.

Man Group Plc, Friends Provident Plc, Prudential Plc and Old Mutual Plc gained more than 5%.

A rally in copper lifted mining companies on the hopes that China will sustain its import and drain the current inventory in the industry.

Rio Tinto Plc ((RTP)) surged 5.9% to 2,500 pence, Vedanta Resources soared 15% to 1,008 pence and Xstrata Plc added 7.2% to 613.50 pence. Antofagasta added 6% to 33 pence and Anglo American increased 3.4%.

Ratings revisions lifted stocks of BlueBay Asset Management and Inchcape Plc.

BlueBay Asset Management Plc surged 25% to 161.50 pence after Citigroup lifted rating on the fixed income asset manager to “buy.”

Inchcape Plc jumped 15% or 2 pence to 15.25 after Morgan Stanley upgraded auto dealer to “overweight” from “equal weight” on recent management efforts to cut cost and reduce debt.

UK Pound Rises

The UK pound strengthened as markets recover in European and U.S. trading. The interbank lending rate has been steadily dropping as bankers regain footing and confidence returns to the bond and equity markets.

The pound gained 0.9% to 89.1334 pence per euro near close in London trading and rose 0.4% to $1.49103.

UK Treasury Auction

The Bank of England is pursuing its plan to buy bonds from the UK government and this week plans to purchase 6.5 billion pounds bonds. In the last three weeks the central bank has purchase bonds of 6 billion pounds or less.

The UK Treasury will conduct an auction to sell 500 million pounds of inflation linked bonds and 4 billion pounds of 2.25% five year notes on April 16.

UK Gainers & Losers

Of the stocks in FTSE 100 index, 46 increased, 54 declined and 2 were unchanged.

BAT led gainers in FTSE 100 index with a rise of 4.8% followed by gains in BAE Systems Plc of 4.2%, in Inmarsat Plc of 3.7%, in Reed Elsvier Plc of 3.2% and in Imperial Tobacco of 3.25%.

Vedanta Resources led gainers in FTSE 100 index with a rise of 15.4% followed by increases in ICAP Plc of 13.2%, in Legal & General Group of 11.7%, in Lloyds Banking of 10.5%, in Kazakhmys Plc of 10.2% and in Barclays Plc of 10.1%.

German Banks Rise

Banks in Germany closed higher after a rally in banks and financial services. Goldman Sachs reported rise in earnings and a plan to raise $5 billion to return part of $10 billion to the U.S. Treasury.

Deutsche Bank added 4.7% or 1.74 euros to 38.96 euros, Postbank increased 7.1% or 97 cents to 14.57 euros and Commerzbank surged 13% or 5.02 euros.

Broker comments dragged shares of Bieresdorf and Henkel. Credit Suisse lowered its rating on Bieresdorf to “underperform” and estimated that first quarter results will be weaker than anticipated. The news was first reported on Bloomberg News.

Henkel AG & Company declined 3.5% to 19.54 euros After JP Morgan Chase lowered its price target to 15 euros. Earlier, Moody’s Investors put its debt on watch with a negative outlook. Henkel stock has fallen from 39.58 euros on December 5, 2007 to below 20 euros today.

German Gainers & Losers

Of the stocks in DAX index, 19 increased and 11 declined.

Henkel AG led decliners in the index with a loss of 3.5% followed by losses in Merck KgaA of 2.2%, in Beiersdorf AG of 2%, in E.On AG of 1.8% and in BMW of 1.1%.

Commerzbank led gainers with a rise of 12.3% followed by gains in Deutsche Boerse of 7.2%, in Salzgitter AG of 5.7%, in Thyssenkrupp AG of 5.5%, in MAN AG of 4.73% and in Volkswagen AG of 3.2%.