Finance Markets

December 15, 2006

FTSE 250 finds new closing high

Permalink: FTSE 250 finds new closing high

Filed under: Equities, Economy, UK

The FTSE 100 closed at its highest level in nearly six years on Friday, ending at 6,260, a gain of 0.5 percent on the day and 1.7 percent higher than it began the week. The FTSE 250 added 0.3 percent on the day to close at a record high of 11,086, a gain of 1.1 percent on the week.

Defense aerospace company BAE Systems saw a gain of 6.9 percent to 424½p after the Serious Fraud Office ended an investigation into Al Yamamah arms deals with Saudi Arabia. The probe, which lasted for two years, was responsible for a delay in the signing of a Saudi order for Eurofighters.

Prudential was 2.1 percent higher to 710½p after rumors that it will free up nearly £10 billion in its orphan estate that is no longer needed to meet obligations and return some of that money to shareholders.

In the telecommunications sector BT Group added 3.3 percent to 315p, its highest share price since September 2001.

British Land gained 2 percent, to £16.62 on talk that an overseas billionaire is looking to buy.

Reckitt Benckiser was 1.6 percent higher to £24.11 after UBS upgraded the household goods group to “buy”, citing growth potential in 2007.

Among losers on the day, Cairn Energy dropped 1.6 percent to £19.14 on rumors that the IPO of Cairn India was not as successful as had been hoped and that shares would be priced at the low end of the stated range.

December 14, 2006

Most government bond prices fall

Permalink: Most government bond prices fall

Filed under: Bonds, Economy, US, Europe, UK, Japan

Prices on US Treasury bonds dropped and yields rose on Thursday after unemployment claims were reported to be down last week and as import prices were up. Prices on imported goods were up 0.2 percent in November, the first rise in three months. Meanwhile, new jobless claims were down by 20,000 in the week ending December 9, a drop that was fivefold higher than had been expected.

At midday in New York, two-year Treasury bonds were 1.3 basis points higher to 4.717 percent, while ten-year issues had added 0.3 basis points to a yield of 4.580.

Yields were also up on Eurozone bonds after two European Central Bank officials made comments that were read to mean that more interest rate hikes are soon to come. The two-year Schatz added 2.1 basis points to 3.781,while the ten-year Bund gained 2.4 basis pints to yield 3.777 percent.

In the UK, strong retail sales data lent more fuel to the fire of rate hike expectations and sent prices on gilts down for the seventh session in a row. The two-year gilt added 3.5 basis points to yield 5.108 percent, while the ten-year gilt was 6.1 basis points higher to 4.688 percent.

In Japan, meanwhile, ten-year government bonds added 1.5 basis points to a yield of 1.630 percent. Shorter-dated bonds, however, dropped 0.5 basis points, to yield 0.795 percent.

December 12, 2006

Japan five-year bond sale success

Permalink: Japan five-year bond sale success

Filed under: Bonds, Economy, US, Europe, UK, Japan

The US Federal Reserve held interest rates at 5.25 percent on Tuesday, as expected. The statement that accompanied the decision said that economic growth in the United States is expected to moderate, citing a substantial cooling of the housing market, but that some risk of inflation remains.

Before the interest rate announcement came, prices on US Treasury bonds were slightly higher on the news that the US trade deficit had been substantially reduced in October, a possible indication that fourth-quarter economic growth could turn out to be stronger than predicted. At midday in New York, two-year Treasury bond yields were at 4.658 percent, a drop of 1.3 basis points, while ten-year bonds were 0.6 basis points lower to 4.516 percent.

In the UK, gilts prices were lower and yields higher after new data showed that consumer prices in November were up 0.3 percent and that they had risen 2.7 percent so far this year, providing a surprise gain in UK inflation. Two-year gilts added 4 basis points to 5.042 percent, while ten-year gilts were 1.6 basis points higher to 4.612 percent.

Yields on Eurozone bonds were mixed. The ZEW index of German sentiment was at -19 in December, up from November’s reading of -28.5 and better than the predicted -25. The new figures prompted only a small sell-off as investors waited for the US interest rate decision. The two-year Schatz was up 0.3 basis points to 3.740 percent, while the ten-year bund dropped 0.8 basis points to 3.731.

In Japan, a sale of ¥2,000 billion in five-year government bonds was a success, with demand at nearly three times the supply. Five-year yields were down by 2.5 basis points to 1.215 percent, while two-year bonds were 2 basis points lower to 0.815 percent.

December 8, 2006

Miners decline in UK

Permalink: Miners decline in UK

Filed under: Equities, Economy, UK

Both the FTSE 100 and the FTSE 250 ended the session and the week higher in London on Friday. The 100 added 0.3 percent on the session, for its fifth gain in a row, and gained 2.2 percent on the week when it closed at 6,152.4. The 250 was up 0.5 percent on Friday and added 2.3 percent for the week to close at an all-time high of 10,944.

Premier Oil added 3.3 percent on Friday to €12.45 on an upgrade to “buy” from UBS despite having declined 10.5 percent on Thursday after bids talks were ended. Other gainers included chemicals group ICI, which added 2.4 percent to 426p on continuing rumors that Akzo Nobel is interested. Corus was 0.6 percent higher to 500p on speculation that a bid from CSN of Brazil is imminent. EMI gained 3.2 percent to 295¾p on talk that it could soon receive an offer from a private equity group.

There were declines on the day, as well. Tobacco company Gallaher, up recently on bids rumors, dropped 1.5 percent to £11.72 after UBS said it thinks that the bid, said to be coming from Japan Tobacco, will be £11.50 per share at the highest.

The mining sector was down after Merrill Lynch cut the entire sector to “neutral”, using as its pretext questions about the prices of base metals. Rio Tinto dropped 1.8 percent to £27.54, while BHP Billiton fell 2.8 percent to 945p. Kazakhmys was 3 percent lower to £11.60, Xstrata declined 3.2 percent to £23.37, and Antofagasta dropped 4.2 percent to 517½p.

December 7, 2006

ECB raises interest rates, while BofE holds steady

Permalink: ECB raises interest rates, while BofE holds steady

Filed under: Economy, Europe, UK

The European Central Bank raised interest rates on Thursday for the sixth time since last December. The rate hike, which was expected, sent Eurozone internet rates up by 25 basis points to 3.5 percent.

In the remarks which came along with the announcement, ECB president Jean-Claude Trichet said that inflation remains a danger. Mr Trichet’s comments came even though inflation remained within the ECB’s 2 percent target in November, at 1.8 percent.

In the UK, meanwhile, the Bank of England also fulfilled expectations by deciding to retain the present interest rate of 5 percent for the time being. Analysts were divided recently, however, on if or when another rate hike will come.

A recent Reuters poll had one-third of the 50 economists surveyed saying that rates will rise to 5.25 percent by March. The other two-thirds said they believe rates will remain at 5 percent until at least the middle of 2007. Since that poll was taken, however, new data on house prices have shown that average prices were up 1.7 percent in November, more than had been expected. In addition, retail sales and manufacturing reports have been lower than hoped. All this could alter the outlook for interest rates in the UK as 2007 begins.

December 6, 2006

Yields higher on US Treasury bonds

Permalink: Yields higher on US Treasury bonds

Filed under: Bonds, Economy, US, Europe, UK, Japan

Prices were down and yields higher on US Treasury bonds on new data showing that job growth in the private sector was better than expected in November. While reports from ADP Employer Services are not always an accurate gauge of non-farm payrolls, their report of 158,000 new jobs in the private sector, substantially higher than the 110,000 rise in non-farm new jobs expected when the Labor Department reports on Friday caught the attention of investors.

At midday in New York on Wednesday, two-year Treasury bonds were 5 basis points higher to a yield of 4,570 percent, while ten-year issues had added 2.9 basis points to 4.475 percent.

In the UK, gilts were mixed ahead of a new interest rate decision by the Bank of England, due Thursday. Investors didn’t pay as much attention to a report from the UK Treasury that reduced the expected issuance of new gilts in the fiscal year that ends next April by around £500 million. While two-year gilts were 1.3 basis points lower to 4.924 percent, ten-year gilts added 1.3 basis points to a yield of 4.506 percent.

Yields on Eurozone bonds were up ahead of an expected hike in interest rates by the European Central Bank on Thursday. The two-year Schatz was 2.6 basis points higher to 3.663 percent, while the ten-year Bund gained 1.9 basis points to 3.688 percent.

In Japan, the two-year Japanese government bond added 3 basis points to a yield of 0.840 percent, while five year-yields also gained 3 basis points to 1.230 percent. The ten-year JGB held steady at 1.650 percent.

December 5, 2006

UK oil sector higher on broker comments

Permalink: UK oil sector higher on broker comments

Filed under: Equities, Economy, UK

The London equities markets were higher on Tuesday, with the FTSE 100 adding 0.6 percent to 6,086.4 and the FTSE 250 up 0.7 percent to 10,834.1. The oil and mining sectors helped in the gains.

In the telecommunications sector, Carphone Warehouse was 7.6 percent higher to 291¾p after its chief executive told Merrill Lynch Monday night that it has gotten back some contract business from Vodafone.

Premier Foods added 6.9 percent to 301½p as rumors circulated that the private equity owners of United Biscuits would be interested in a takeover attempt. Most analysts did not credit the possibility, however, and put the gains more to the recent bid by Premier for rival RHM, which gained 5.7 percent to 377¾p. If the Premier/RHM deal goes through the company created will be the UK’s leading food producer.

In the oil sector, BP was 1.8 percent higher to 578p when UBS named it one of its top picks for next year. Meanwhile, Royal Dutch Shell added 2 percent to £18.25 after ABN Amro raised its recommendation to “buy”.

Among miners, Anglo American was up 3.2 percent to £24.55 on talk that Larry Yung was interested in further building his stake in the company. Higher copper prices sent both Kazakhmys and Antofagasta higher as well. Kazakhmys added 3.1 percent to £12.17, while Antofagasta gained 4.6 percent to 530p.

In the tobacco sector, Gallaher was 3 percent higher to 986½p on expectations of consolidation within the sector. However, SG Securities reiterated its “sell” recommendation on the tobacco company on the basis that it was an unlikely takeover target.

December 4, 2006

Eurozone bonds mixed ahead of ECB meeting

Permalink: Eurozone bonds mixed ahead of ECB meeting

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields on US Treasury bonds were up at midday in New York, trying to recover from last week when yields fell to near their lowest point this year. Yields were already so low, some analysts felt, that investors barely paid attention to new data from the National Association of Realtors that showed pending home sales were down 1.7 percent in October. The two-year Treasury bond was 0.8 basis points higher at noon on Monday, to a yield of 4.537 percent, while the ten-year bond had added 0.2 basis points to 4.440 percent.

In Europe, yields were mixed as some investors took profits and anticipated a meeting later in the week by the European Central Bank, when the Bank is expected by many to raise Eurozone interest rates to 3.5 percent. The two-year Schatz saw yields drop by 1.2 basis points to 3.601 percent, but the ten-year Bund added 0.7 basis points to a yield of 3.669 percent.

Yields on UK gilts, meanwhile, were lower ahead of a Bank of England meeting this week, at which the Bank is expected to keep interest rates at 5 percent. The two-year gilt was 2.3 basis points lower to 4.903 percent, while ten-year gilts were yielding 4.467 percent, a decline of 0.5 basis points.

In Japan, the ten-year Japanese government bond yielded 1.615 percent, a gain of 0.5 basis points ahead of an auction of ¥1,900 billion in ten-year bonds.

December 1, 2006

UK miners gain on broker remarks

Permalink: UK miners gain on broker remarks

Filed under: Equities, Economy, UK

London’s equities markets were mixed on Friday. The FTSE 100 dropped 0.5 percent to close at 6,021.5 after falling as low as 5,985.2 during the day, bringing its decline over the week to 1.6 percent. On the other hand, the FTSE 250 added 0.2 percent on the session and was up by the same amount for the week, to close at 10,698.9.

Miners were higher, with Xstrata 2 percent higher to £23.26 and Antofagtasta adding 3.2 percent to 495p as Goldman Sachs predicted that commodities prices will be going up further. The broker put Xstrata on its “conviction buy” list.

Leisure group Rank dropped 2.9 percent to 270p after a rumored bid was not forthcoming and Citigroup downgraded it to “hold”. Meanwhile, cruise operator Carnival fell 1.9 percent to £24.29 on a reduced recommendation, from “buy” to “hold”, from Merrill Lynch.

In the pharmaceuticals sector, AstraZeneca dropped 2.1 percent to £28.90 as sterling gained ground over the US dollar.

Among insurance companies, Legal & General fell 2.2 percent to 148½p as bids rumors faded.

Construction materials group Hanson was 1.4 percent lower to 719p.

Bucking the trend among the blue-chips, Cairn Energy added 4.4 percent to £20.57. Cairn is preparing to spin off its India unit with an initial public offering in Bombay later this month. That IPO is estimated to be worth as much as $7.5 billion (£3.8 billion). In addition, there was talk that Cairn’s Indian partner, ONGC, might be interested in acquiring Cairn’s assets in Rajasthan.

November 30, 2006

UK pharma down on bids possibilities

Permalink: UK pharma down on bids possibilities

Filed under: Equities, Economy, UK

London’s equities markets were mixed on Thursday as the FTSE 100 dropped 0.6 percent to 6,048.9 but the FTSE 250 added 0.1 percent to 10,673.9.

Miners were mostly up on the session, the exception being Anglo American, which dropped 0.25 percent to £23.62. Rio Tinto added 0.8 percent to £27.15, while Xstrata and BHP Billiton gained 1.1 percent each, to £22.80 and 965p respectively. Analysts at Citigroup issued remarks saying that Billiton should divest itself of its petroleum unit and that Rio Tinto should get rid of its Industrial Minerals division in order to kick-start performance.

The pharmaceuticals sector saw declines. GlaxoSmithKline dropped 1.4 percent to £13.51, while AstraZeneca fell 1.9 percent to £29.50 and Shire was 2.1 percent lower to £10.19. There has been talk lately that GlaxoSmithKline might be interested in AstraZeneca, but some analysts believe that AstraZeneca is more likely to be a bidder, possibly for Shire, than a target of bids.

Building materials group Hanson added 0.5 percent to 729p on rumors that Mexico’s Cemex could be interested in bidding, especially after its bid for an Australian company was rejected earlier in the week. Meanwhile in the leisure sector, casino operator Rank was 2 percent higher to 278p on rumors that it could be a target for bidders.

November 29, 2006

Miners gain as metals prices rise

Permalink: Miners gain as metals prices rise

Filed under: Equities, Economy, UK

The London equities markets were higher on Wednesday in reaction to overnight gains in New York and Tokyo, while the pharmaceuticals sector was higher and financial services gained on bids rumors. The FTSE 100 added 0.6 percent to 6,065.3, while the FTSE 250 gained 1.5 percent to 10,659.1.

Miners were up on higher prices for several metals. BHP Billiton added 1.8 percent to 954p, while Xstrata was 2.1 percent higher to £22.49.

In the pharmaceuticals sector, AstraZeneca was up 2.5 percent to £30.03. Shire added 2.7 percent to £10.34 on an upgrade from “neutral” to “overweight” from HSBC, while GlaxoSmithKline gained 3 percent to £13.71. Gains in the sector were helped by news that Swiss pharma group Novartis is thinking of selling its baby food unit, Gerber Products, to Nestle.

Among financial services groups, Prudential was 2.1 percent higher to 660p on rumors that HSBC could be interested, while Legal & General added 3 percent to 154p on talk that Dutch insurer Aegon was thinking of bidding.

In the software sector, Sage added 6.2 percent to 256p on its report that its pre-tax profits were up 14 percent in the quarter. Meanwhile plumber Wolseley gained 3.8 percent to £11.78 even though its fiscal first quarter profits were up only slightly.

November 28, 2006

FTSE 100 lower for sixth consecutive session

Permalink: FTSE 100 lower for sixth consecutive session

Filed under: Equities, Economy, UK

The FTSE 100 dropped 0.4 percent to 6,025.9 in London on Tuesday, ending lower for the sixth straight session and at its lowest level since the beginning of October. It has fallen 2.9 percent since its current decline began. On the other hand, the FTSE 250 was up slightly to 10,497.2.

Homebuilder Wilson Bowden was 3.7 percent higher on the session to £21.76 and Merrill Lynch raised its target share price to £24.50. Also helping the 250 was EMI; the music company added 10.4 percent to 289½p on the news that it has been approached.

The 100 was hurt by losses in the financial services sector, as Old Mutual dropped 5.8 percent to 166p on its third quarter earnings report.

Also seeing declines was ITV, which dropped 1.5 percent to 110¾p on the general opinion that the appointment of a new executive chairman makes any bids unlikely.

In the steel sector, Corus fell 0.3 percent to 498p on rumors that Tata Steel is thinking of increasing its bid. Meanwhile it put off a vote by shareholders to see if CSN of Brazil will up its offer.

Gainers on the session included tobacco company Gallaher, which added 1.7 percent to 952p on talk that Japan Tobacco might be interested. Also higher was yellow pages owner Yell, which was 2.3 percent higher to 570p on positive comments from Goldman Sachs.

November 27, 2006

Clothing retailers lower in London

Permalink: Clothing retailers lower in London

Filed under: Equities, Economy, UK

In London on Monday, the FTSE 100 was 1.2 percent lower to 6,050.1, its lowest close since early October and its largest one day percentage decline since the end of September. Meanwhile, the FTSE 250 also declined, dropping 0.9 percent to 10,493.6.

The retail sector saw declines on slow sales for clothing retailers due to mild weather so far this autumn. Debenhams dropped 1 percent to 194p, while Next fell 2 percent to £17.94. Rumors have underlying sales at Next down by up to 20 percent year-on-year.

In the steel sector, Corus was 1 percent lower to 499½p on worries that pension fund trustees might hold up merger talks with CSN of Brazil. Elsewhere, concerns that the government of Saudi Arabia might pull out of deal to buy 72 Eurofighter planes sent BAE Systems down 3.1 percent to 391p/

The 250 was saved from further declines by advances in the homebuilders sector when Wilson Bowden gained 14.6 percent to £20.98 after it said it has received several takeover inquiries. The mid-caps index was also helped by the news that First Choice Holidays is talking about selling its package tour operations to My Travel. My Travel was 7.1 percent higher to 214p, while First Choice gained 12 percent to 257p.

November 22, 2006

British Airways gains on bids news

Permalink: British Airways gains on bids news

Filed under: Equities, Economy, UK

The London equities markets were lower on Wednesday ahead of the four-day Thanksgiving Day weekend in the United States. The FTSE 100 dropped 0.7 percent to 6,160.3, while the FTSE 250 fell 0.6 percent to 10,687.7.

Ladbrokes was 1.1 percent higher on the session to 397¼p as rumors circulated that private equity might be interested in making a bid for the bookmaker. Also up was British Airways, which added 2 percent to 491p on the news that Qantas Airways of Australia had received a $7.7 billion offer. Specialty chemicals company ICI was 9.3 percent higher to 423p as investors speculated that the sale of its Quest unit leaves it open to bids.

Plumbing and constructions materials company Wolseley fell 1.6 percent to £11.68 ahead of its annual meeting next week. Analysts are worried that the plumber might be forced into a restructuring because of the slowdown in the US housing market.

In the defence sector, BAE Systems dropped 0.4 percent to 414½p amid concerns that Saudi Arabia could cancel the contract for the Al Yamamah 3 fighter plane.

Among media companies, BSkyB was 0.7 percent lower to 531p, while ITV fell 2.2 percent to 109½p on reaction to its rejection of an offer from NTL. In addition, US fund manager Fidelity sold its 11 percent stake in ITV to BSkyB last week and then bought back 58.3 million ITV shares Monday for a much lower price per share; however it appeared that Fidelity had stopped buying shares.

November 21, 2006

Bond yields up ahead of US holiday

Permalink: Bond yields up ahead of US holiday

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields were up on government bonds on Tuesday as trade remained light ahead of the four-day Thanksgiving Day weekend in the United States. US Treasury bonds were nearly unchanged by midday in New York, with the two-year bond adding 0.4 basis points to a yield of 4.783 percent, while ten-year issues were even, yielding 4.599 percent.

In the Eurozone, the two-year Schatz was 4.1 basis points higher, yielding 3.699 percent. The ten-year Bund gained 0.5 basis points to 3.718 percent.

Meanwhile, in the UK, a new manufacturing survey from the Confederation of British Industry showed a stronger than expected recovery in the sector. While the numbers were still in negative territory, order books were up to -6 in November after having been at -20 in October. While some analysts maintained that the recovery was not as strong as it seemed, others see the new data as supporting another rise in UK interest rates.

The two-year gilt added 1.1 basis points to yield 4.974 percent late in the London session. The 10-year gilt was up 1.3 basis points to 4.552 percent.

Yields were also up in Japan after an official of the Bank of Japan was quoted as saying that there is still a possibility of an interest rate hike in December. The two-year Japanese government bond was 2 basis points higher to 0.800 percent.

November 20, 2006

London markets higher on miners, stock exchanges

Permalink: London markets higher on miners, stock exchanges

Filed under: Equities, Economy, UK

The London equities markets were higher on Monday, with the FTSE 100 helped out by a bid for miner Phelps Dodge by Freeport-McMoran that raised hopes of further consolidation in the mining sector. The 100 added 0.2 percent on the session to 6,204.5. Meanwhile, the FTSE 250 gained 0.1 percent to 10,725.9, aided by a bid from Nasdaq for the London Stock Exchange, which was up 6 percent to £24.45 on the news.

The media sector was lower after BSkyB took 18 percent of ITV on Friday, which put a roadblock in the way of efforts of NTL to purchase ITV. BSkyB dropped 0.7 percent to 533p as investors figured that the purchase might be a good deal, while ITV was 1 percent lower to 114¼p.

Ladbrokes fell 1.9 percent to 390¾p on a downgrade from “buy” to “hold” from ABN Amro after an unsatisfactory trading update recently. Elsewhere in the leisure sector, Enterprise Inns added 2.3 percent to £11.67 ahead of its full-year report, due later in the day. Enterprise was expected to continue its share buy-back program instead of making new purchases.

The mining sector was higher after news of the Freeport-McMoran bid for Phelps Dodge. Anglo American added 2 percent to £24.45, while Rio Tinto was 2.4 percent higher to £27.32 despite the fact that there was some expectation that it might make a counter bid for Phelps. Antofagasta gained 4.1 percent to 476½p.

November 14, 2006

UK miners see gains

Permalink: UK miners see gains

Filed under: Equities, Economy, UK

In London on Tuesday, the FTSE 100 dropped 0.12 percent to 6,186.6 but the FTSE 250 added 0.05 percent to 10,718.2, a record high close.

Miners were up on the session. Anglo American added 0.6 percent to £22.40 on rumors that investment bank JP Morgan is attempting to put together a deal for the miner, including that he is talking to Brian Gilbertson, formerly of BHP Billiton but now chairman of Rusal of Russia. Meanwhile, Xstrata was 1 percent higher to £22.14.

Credit check provider Experian gained 2.6 percent to 615p after it was said that private equity was interested, although some analysts were doubtful of the report. Experian reports its quarterly results next week.

Retailers were down as J Sainsbury dropped 1.6 percent to 412½p even though its first half numbers, due today, are said to be positive, and Wm Morrison fell 1.8 percent to 264¼p on the news that half of its board of directors have recently sold shares.

BSkyB was 2.4 percent lower to 537p after its chairman, Rupert Murdoch, made comments that the company’s build-up of its broadband internet business. The comments came in an informal “chat” with investors in Australia.

Wolseley dropped 1.6 percent to £11.90 on rumors that it was about to bid for Dutch firm Hagemeyer. Most traders, however, discounted the talk and said that the decline was due to Home Depot’s worse than anticipated quarterly report in the US.

Government bond prices up in US, UK, Eurozone

Permalink: Government bond prices up in US, UK, Eurozone

Filed under: Bonds, Economy, US, Europe, UK, Japan

Prices for government bonds were up both in the United States and in Europe and the UK on Tuesday as producer price inflation fell more than had been anticipated. Core inflation was down more than in any month since August 1993. Meanwhile, while retail sales were down a bit less than had been expected in October, September’s numbers were revised downward. Both reports led to renewed hopes in some quarters that the Federal Reserve might drop interest rates early in the new year.

Yields on the two-year US Treasury bond dropped 3 basis points to a yield of 4.747 percent, while the ten-year bond was 3.7 basis points lower to 4.575 percent by the middle of the session in New York.

The price gains in the US helped Eurozone bonds. Economic growth in the region has been weaker than had been expected, while business sentiment in German was lower. Late in the day in London, the two-year Schatz had dropped 0.6 basis points to 3.703 percent, while the ten-year Bund was 1.5 basis points lower to a yield of 3.714 percent.

Inflation came in lower than expected in the UK. While October’s inflation was at 2.4 percent on an annualized basis, above what the Bank of England wants, it was less than analysts had thought it would be. The two-year gilt was yielding 4.957 percent, down 4.6 basis points, while the ten-year gilt was down 3.3 basis points to a yield of 4.531 percent.

Bucking the trend, the yield on ten-year Japanese government bonds added 6.5 basis points to yield 1.72 percent. Prices were down on new data that had the Japanese economy growing at more than twice the rate that had been expected in the third quarter.

November 13, 2006

UK miners lower on falling metals prices

Permalink: UK miners lower on falling metals prices

Filed under: Equities, Economy, UK

London equities markets were mixed on Monday. The FTSE 100 was 0.2 percent lower to 6,194.2 as dropping metals prices sent the UK mining sector lower. Meanwhile, the FTSE 250 was 0.5 percent higher, closing at 10,712.8. It was the fifth session in a row that the 250 has done better than the 100.

Homebuilders were mixed on the session. Berkeley Group added 6.8 percent to reach a new high of £17.02 on rumors that a consortium had bid for peer Crest Nicholson. The gain brought Berkeley’s advance over six sessions to 19 percent. Crest Nicholson, on the other hand, was 0.1 percent lower to 615p even though it was believed that its institutional shareholders will wait for a higher offer.

The insurance sector was higher, mainly on Resolution’s announcement that it is discussing deals with several other insurers. The life assurer added 5.1 percent to 667½p. Different analysts suggested different deals, including one with Scottish Widows the life assurance division of Lloyds TSB, with the UK life division of Prudential, or with Friends Provident. The talk sent Lloyds TSB up 1 percent to 561p, while Friends Provident added 1.3 percent to 214½p and Prudential gained 2.1 percent to 651½p.

In the mining sector Rio Tinto was 4 percent lower to £27.65, while Xstrata dropped 4.5 percent to £21.92, Kazakhmys fell 5 percent to £11.40 on lower copper prices, and Antofagasta was 5.3 percent lower to 468¼p.

November 10, 2006

UK pharma sector lower after US elections

Permalink: UK pharma sector lower after US elections

Filed under: Equities, Economy, UK

The FTSE 100 dropped 0.37 percent on Friday to end the week at 6,208.4 in a week where at least some stocks in the UK were affected by the elections in the United States on Tuesday.

The pharmaceuticals sector declined in the wake of the Democratic takeover of both houses of Congress on the concern that drug prices could be affected by legislation promised by House speaker-elect Nancy Pelosi to allow direct governmental negotiation of drug prices for recipients of Medicare. GlaxoSmithKline dropped 1.8 percent to £13.61, while AstraZeneca was 2.8 percent lower to £30.03.

Utilities were lower on speculation about takeovers in the sector after Scottish Power said that it had been approached by Spain’s Iberdrola. International Power dropped 1.6 percent to 338¼p, while Severn Trent was 1.7 percent lower to £14.03.

Among the mid-caps, homebuilder Crest Nicholson was 8.9 percent higher to 622½p after it rejected an offer from a group that included the Bank of Scotland.

Miners were higher on positive broker comments and bids rumors. Anglo American added 2.8 percent to £25.56 after one of the richest men in China bought a 1.1 percent stake in the miner, raising speculation that there could be a bid for the company out of China. Lonmin added 8.6 percent to £33.55 after Morgan Stanley raised its target share price to £40.

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