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October 18, 2010    

London up on bid for BlueBay Asset Management

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by Elaine Frei
London up on bid for BlueBay Asset Management

European equities markets were up Monday after the financial services sector got a boost from the news that Royal Bank of Canada (TSX: RY) has made a bid for BlueBay Asset Management (LSE: BBAY), offering £963 million ($1.5 billion) for the group.

BlueBay led gains in London on news of the offer, adding 29.62 percent on the FTSE 250.

The FTSE 100 was up 0.69 percent to 5,742.52 in London, while the 250 was 0.38 percent higher to 10,875.09.

Banks in London were also helped by US-based Citigroup’s (NYSE: C) report that its third-quarter net income was above analyst estimates to $2.17 billion, raising hopes that other banks reporting later in the week will also have positive things to say.

Lloyds Banking Group (LSE: LLOY) led London banks with a gain of 2.88 percent, while the only decliner in the sector was Royal Bank of Scotland Group (LSE: RBS), which dropped 0.19 percent.

The mining sector was down after Australia-based Rio Tinto (LSE: RIO) and BHP Billiton (LSE: BLT) decided not to go forward with a joint-venture that would have created the largest iron-ore exporter in the world.

Rio dropped 1.52 percent while BHP was down 0.64 percent on the news.

There were only three gainers in the mining sector, led by Petropavlovsk (LSE: POG), which was up 0.39 percent, while Kenmare Resources (LSE: KMR) was the worst performer in the sector as it dropped 3.82 percent, followed by a decline of 3.42 percent by Hochschild Mining (LSE: HOC).

Over on the 100, four of the five biggest decliners were in the mining sector, led by Randgold Resources, which fell 2.21 percent.

Other declines in the sector came on broker downgrades as HSBC cut Antofagasta (LSE: ANTO) and Xstrata (LSE: XTA) from “neutral” to “underweight” and reduced its recommendation on Vedanta Resources from “overweight” to “neutral”, with the three miners dropping 1.45 percent, 0.46 percent and 1.53 percent respectively.

The best performance on the 100 came from Autonomy Corporation (LSE: AU), which was up 5.27 percent on analyst comment that the software group could announce a purchase when it reports its third-quarter results later this week.

Gambling company Rank Group (LSE: RNK), which runs both casinos and online gaming sites, was down 3.93 percent to lead declines on the 250.

The FTSE Eurofirst 300 was up 0.28 percent to 1,088.68 while the CAC-40 added 0.19 percent to 3,834.5, the IBEX was 0.27 percent to 10,897.7 and the Dax gained 0.37 percent to 6,516.63.

Most markets in the Asia-Pacific region were lower, but India’s Sensex managed to add 0.22 percent to 20,168.89, while Tokyo’s Topix index was also higher.

The Topix was up 0.5 percent to 830.52, but the Nikkei 225 was 0.02 percent lower to 9,498.49 and the Mothers market dropped 0.44 percent to 344.56.

Computer manufacturer NEC (TYO: 6701) was up 4 percent after Goldman Sachs raised its recommendation on the company from “neutral” to “buy” and Credit Suisse also upgraded it, raising its evaluation on the firm’s shares from “neutral” to “outperform”.

Utilities were higher as Tokyo Electric Power (TYO: 9501) added 1.3 percent, Tokyo Gas (TYO: 9531) was 2.5 percent higher and Kansai Electric Power (TYO: 9503) gained 3.1 percent.

Mazda Motor (TYO: 7261) was 0.9 percent lower on a media report that Ford Motor (NYSE: F) will reduce it’s ownership in the Japanese carmaker.

Elsewhere in the region, the Shanghai Composite fell 0.54 percent to 3,955.23 while Singapore’s Straits Times Index was down 0.72 percent.

In Australia, the Sydney Ordinaries dropped 0.73 percent to 4,725.4 and the S&P/ASX200 was down 0.79 percent to 4,651.9 as miners declined on the decision by Rio Tinto (ASX: RIO) and BHP Billiton (ASX: BHP) not to continue with its planned joint venture.

Also in Australia, Newcrest Mining Ltd (ASX: NCM) dropped 2.4 percent on lower gold prices.

The Hang Seng was 1.21 percent lower to 23,469.38 in Hong Kong, while South Korea’s Kospi fell 1.41 percent to 1,875.42 and Taiwan’s Taiex dropped 1.76 percent to 8,060.54.

New York markets were mixed in midday trade, with the Dow Jones Industrial Average up 0.39 percent to 11,105.54 while the S&P 500 added 0.22 percent to 1,178.82, but the Nasdaq Composite dropped 0.02 percent to 2,468.17.

Crude oil prices were higher, with West Texas Intermediate crude up $83 per barrel, while metals were mixed with silver and copper higher but gold down slightly in midday trade in New York.

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