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05th of September 2010
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September 1, 2010    

Cable & Wireless Worldwide, TUI Travel up on sale rumors

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by Elaine Frei
Cable & Wireless Worldwide, TUI Travel up on sale rumors

European equities markets saw significant gains Wednesday as investors ignored disappointing news in the region in favor of better news from around the world as purchasing managers indexes in the US and China were higher in August.

In the US, the Institute for Supply Management said its manufacturing index was at 56.3 in August, up from 55.5 in July and against an expected decline to 52.8, while China’s Federation of Logistics and Purchasing said its Purchasing Managers Index rose to 51.7 in August from 51.2 in July, while UK manufacturing activity reportedly grew at its slowest pace in nine months in August, while the Eurozone PMI fell to a six-month low of 55.1 in August.

Additionally, German retail sales were reported down 0.3 percent in July from June.

The FTSE 100 added 2.7 percent to 5,366.41 in London, while the FTSE 250 was 2.4 percent higher to 10,060.89.

The two biggest gainers on the 100 were higher on mergers and acquisitions rumors as Cable & Wireless Worldwide (LSE: CW) added 7.71 percent on rumors that AT&T (NYSE: T) is getting a bid ready, while TUI Travel (LSE: TT) was up 7.5 percent on the possibility that its German parent company, TUI AG (FWB: TUI) will buy the shares in the travel agent that it does not already own.

There were only 2 decliners on the 100 as utility National Grid (LSE: NG) fell 0.18 percent as the only loser in its sector, while Randgold Resources (LSE: RRS) dropped 1.15 percent to 1.15 percent.

Only one other miner saw a decline, as Gem Diamonds (LSE: GEMD) fell 1.01 percent, while Kazakh (LSE: KAZ) led gains in the mining sector as it added 6.75 percent, followed by a gain of 6.15 percent for Rio Tinto (LSE: RIO).

Over on the 250, home builder Redrow (LSE: RDW) led its sector and was the best performer in London as it added 10.37 percent, while the biggest decline came from financial products price comparison website Moneysupermarket.com (LSE: MONY), which fell 2.79 percent and was the only decliner in the media sector.

Directories publisher Yell Group (LSE: YELL) had the best day in the media sector as it added 8.64 percent.

Other major gainers on the 250 included facilities manager Connaught (LSE: CNT), which was up 7.83 percent, while insulation and roofing specialist SIG (LSE: SHI) gained 6.66 percent.

The FTSE Eurofirst 300 was up 2.7 percent to 1,054.1 while the Dax added 2.68 percent to 6.083.9, the IBEX was 3.51 percent higher to 10,544.8 and the CAC-40 gained 3.81 percent to 3,623.84.

There were no decliners on either the Dax or the CAC-40.

Most markets in the Asia-Pacific region saw gains Wednesday, but the Shanghai Composite was down 0.6 percent to 2,622.88 despite a report from the Federation of Logistics and Purchasing that showed China’s Purchasing Managers Index was up to 51.7 in August from 51.2 in July.

The declines for the index came as many small and mid-sized companies lost ground and after the property sector was down on the possibility that the government there will introduce more measures to slow the rise of house prices.

Gemdale Corp (SSE: 600383) fell 1.1 percent, while Poly Real Estate (SSE: 600048) dropped 1.3 percent on the session, bringing its decline in the past five sessions to 5 percent.

The Nikkei 225 was down 1.17 percent to 8,927.02 in Tokyo, while the Topix index fell 0.84 percent to 811.4 and the Mothers market dropped 1.19 percent to 368.07.

Tokyo Gas (TYO: 9531) added 1 percent on its announcement that it will buy a 1.5 percent stake in Mitsui OSK’s liquefied natural gas transport operations.

Hitachi (TYO: 6501) was up 2.4 percent on reports that it is planning an initial public offering for Hitachi Global Storage Technologies, its US hard-drive unit.

While some exporters were higher, a few saw declines on persistent concerns about the impact of a strong yen on earnings,

Toyota Motor (TYO: 7203) was down 0.1 percent, while Sharp Corp (TYO: 6753) fell 0.9 percent, Toshiba (TYO: 6502) was 2 percent lower as Mizuho Securities cut its recommendation on the company from “outperform” to “neutral”, and Mazda Motor (TYO: 7261) dropped 2.1 percent.

Companies with ties to China did well, with Komatsu (TYO: 6301) up 1.2 percent while Hitachi Construction (TYO: 6305) added 1.9 percent.

Elsewhere in the region, the Hang Seng was up 0.43 percent to 20,623.83 in Hong Kong, Taiwan’s Taiex added 0.68 percent to 7,668.25, the Straits Times Index was 1.1 percent higher to 2,982.83 in Singapore, South Korea’s Kospi gained 1.26 percent to 1,764.69 and the Sensex was up 1.31 percent to 18,205.87 in India.

Australia’s markets were higher on new data showing that its GDP was up 1.2 percent in the second quarter from the first quarter and was 3.3 percent higher from the same quarter last year, with the Sydney Ordinaries adding 1.98 percent to 4,526.8 while the S&P/ASX200 gained 2.08 percent to 4,495.7.

New York markets were also higher in midday trade as the Dow Jones Industrial Average added 2.29 percent while the S&P 500 and the Nasdaq Composite were each up 2.61 percent, to 1,076.7 and 2,169.25 respectively.

Crude oil prices were higher in New York at midday, with West Texas Intermediate trading almost $2 per barrel higher than Tuesday’s close, while in metals markets gold and silver were slightly below Tuesday’s levels but copper was up 10 cents per pound in New York.

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