A market rebound in the U.S. lifted investor sentiment
The FTSE 100 (+0.6%) closed higher Wednesday, helped by mining stocks and gains on Wall Street. Bond yields fell despite strong US retail sales and import prices. £ was weaker at US$1.9731 after UK wage growth slowed. WTI eased to US$65.22/bbl, with US gasoline stocks remaining unchanged. Gold rebounded after hitting a 3-month low.
Miners were supported by a strong update from Antofagasta (+4.81%), which was upbeat on the fiscal 2007 outlook and expected copper prices to remain high. Xstrata (+4.84%) was firm on a bullish Citi note.
Among financials, Alliance & Leicester (+1.18%) said overall performance to date should boost fiscal 2007 core operating profit to around the top of the current range of analyst forecasts of £571 million-£608 million. The bank also promoted finance director David Bennett to CEO, effective 27 July. Barclays (BCS; -0.14%) has drawn up contingency plans to restructure its all-share offer for ABN Amro (ABN) with a significant cash sweetener in case it is forced into a full-blown battle for control of the Dutch lender, the FT wrote. Royal & Sun Alliance (+3.99%) was in focus on talk of a takeover bid by AIG (AIG).
In broker action, Mitchells & Butlers (+1.37%) was in demand on a JP Morgan upgrade. Experian (+2.16%) climbed as Morgan Stanley started coverage with overweight.
The CAC 40 (+0.61%) closed the session comfortably higher while Wall Street trades higher. Treasury yields fell shrugging off an unexpected rise in retail sales.
In Paris, Arcelor Mittal (+2.95%) CEO Lakshmi Mittal said he does not rule out further 'large' acquisitions as the steelmaker seeks to consolidate its position as the industry's largest, Bloomberg wrote. In further news, however, it emerged that Nippon Steel had raised its stake in Godo Steel to 15.5%. Nippon is attempting to block any potential bid from Arcelor-Mittal. EADS (+1.22%) gained as Boeing (BA) raised its forecast of aircraft demand by 5.2% in Asia. Sanofi (SNY) (+0.46%) gained ahead of today's FDA advisory committee meeting regarding obesity drug Acomplia (or Zimulti, as it is marketed in the US). The FDA will decide whether or not the drug should be approved in the US.
Rumours of bid from SocGen on Dexia (+0.38%) continued to boost the share, market sources said. BNP Paribas (+0.34%) said it sees 'no need' to buy a stake in Taiwan Cooperative because an already existing alliance is enough to help it develop a wealth management business on the island. In broker news, STM (STM; +0.64%) gained as JP Morgan upgraded the Semis sector to overweight from underweight. Cheuvreux raised Groupe Flo (+4.98%) target to €14. Kept outperform.
Xetra-Dax was little changed from Tuesday's close as gainers and losers were pretty much balanced. Bayer (BAY; +1.59%) was top of the gainers list in Frankfurt after UBS said a margin upgrade is likely. TUI (-1.00%), meanwhile, was a weak performer. Caisse de Depot et de Gestion lifted its stake in the travel operator to 5% from 1.6%, as planned, the Moroccan state investment vehicle disclosed.
Elsewhere, the market's response to Heidelberg Druck's (-2.64%) earnings outlook is muted. The world's No. 1 manufacturer of printing machinery expects operating profit to rise 10-15% in the current fiscal year ending March and net earnings to increase by roughly 5% of sales from around 4% last time. Meanwhile, it proposed a dividend of €0.95 per share for 2006/07 vs. the €0.65 paid in the previous fiscal year.
Deutsche Telekom (DT; +0.22%) will hold off from expanding in emerging markets and, instead, concentrate on strengthening its position in countries where it already does business, according to Handelsblatt. Also, T-Mobile USA is considered core to DT's long-term growth strategy.
Citigroup sold 2.7 million Karstadt (-0.31%) shares at €24.1 apiece. Following this news, Karsadt has reportedly said it will reach or surpass 2008/2009 targets.