US & World Daily Markets Financial Briefing 13-03-2006

U.S. stocks rise, buoyed by merger deals

NEW YORK - U.S. stocks gained ground Monday, buoyed by a number of deals led by Capital One's $14.6 billion takeover of North Fork Bancorp, with reports swirling that the NYSE Group Inc. may make an offer for the London Stock Exchange.
   
A bid from the NYSE, which only went public last week, would be seen as an attempt to block a potential takeover of Europe's biggest exchange by the Nasdaq Stock Exchange.
   
The Dow Jones Industrial Average rose 33 points to 11,109, building on Friday's triple-digit gain.
   
The Nasdaq Composite Index was up 18 points at 2,279 while the S&P 500 Index gained 5 points to 1,287.
   
"We're moving up on M&A, not only here in the States but abroad as well," said Peter Cardillo, chief market analyst at S.W. Bach. "But we have a slew of economic data later in the week that is likely to focus the market, especially those reports dealing with inflation".
   
On the broad market for equities, advancers outpaced decliners by 3 to 1 on the New York Stock Exchange and by more than 2 to 1 on the Nasdaq.
   
By sector, networkers, airlines, oil services and energy put in some of the most solid gains.

Merger Monday lives up to its name
   
A number of companies hit the acquisition trail over the weekend.
   
Shares in North Fork Bancorp surged 17% to $29.76 after Capital One Financial Corp. agreed to buy the bank for $14.6 billion in cash and stock. The price represents a 23% premium to North Fork's closing share price on Friday. Capital One shares fell 5.7% to $84.80.
   
The banking sector, in general, is in focus as some of the nation's largest financial institutions prepare to report quarterly results, including Goldman Sachs, Lehman Bros. and Bear Stearns.
   
Knight-Ridder Inc. was up 81 cents at $65.81 after it announced that McClatchy Newspapers Inc. had won an auction to buy the company, with a $6.5 billion, or $67.25 a share, offer. The deal includes the assumption of $2 billion in debt. McClatchy shares were up a penny at $53.07.
   
And Watson Pharmaceuticals Inc. agreed to buy Andrx Corp for $1.9 billion, or $25 a share. Andrx shares soared 10.2% to $23.80 in morning trading.
   
Abroad, the London Stock Exchange soared nearly 30% as shareholders reacted favorably to a $4.2 billion buyout offer from the Nasdaq Stock Exchange and reports the NYSE Group Inc. also be interested in taking over Europe's largest stock exchange. NYSE shares were up 6% at $79 while Nasdaq shares fell 2.5% to $42.49.
   
Also, Germany's Schering AG rejected a hostile $17.4 billion cash offer for the company from Merck KgaA. Neither drug makers are related to the U.S. pharmaceutical companies of the same name.
   
Other stock standouts
   
Boeing Co. shares tacked on 1.1% to $75.58 after weekly financial newspaper Barron's said the company is in the midst of a turnaround against European rival
Airbus.
   
Shares in Apple Computer Inc. rose 4.4% to $65.93 after Citigroup upgraded the maker of the iPod to buy from hold. The broker believes product launches around the company's 30th anniversary in early April will provide a positive catalyst starting in the second quarter.
   
But shares in Advanced Micro Devices Inc. dropped 4.4% to $35.01 in morning trading after ThinkEquity downgraded the shares to a sell.

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Dollar mixed against rivals to start the week

NEW YORK - The dollar slipped against the euro but moved narrowly higher against the yen early Monday, as traders consolidated gains after the greenback's recent rally.
   
With no major economic reports on tap to start the week, currency traders are looking ahead to market-moving releases later this week, including readings on monthly foreign capital flows, the consumer price index and housing starts, and keeping an eye out for further clues about the U.S. interest-rate outlook.

In New York trading, the dollar was last quoted at 119.15 yen, up 0.01%. A one-month high of 119.12 yen was set on Friday after a robust February employment report reinforced expectations for further rate hikes.
   
The euro edged up 0.1% to $1.1921, building on Friday's modest gains.
   
Sentiment toward the euro improved following news that the central bank of United Arab Emirates was looking to increase its euro portion of reserves, traders said.
   
In Asian trading overnight, the yen found modest support after Bank of Japan policy board member Atsushi Mizuno said monetary policy should be forward looking, describing the risks of deflation and another asset-price bubble as equal at this point.
   
"We should monitor the risk of excessive economic expectations and overheating in asset prices," he said Monday.
   
The yield on Japan's five-year government bonds gained 7.5 basis points, to 1.185%, its highest level since November 2000, as traders interpreted the comments as a signal of higher rates on the near horizon.
   
"The yen may start to find a better footing after recent declines, with BoJ's Mizuno having warned against excessive zero rate expectations and with 5-year JGB yields, for instance, making fresh five-year highs," according to research firm Action Economics.
   
Elsewhere, growth in the Japanese economy's gross domestic product expanded 1.3% in the October-to-December period, a downward revision from an original estimate of 1.4%, but government economists said the downward revision could be explained by trimming the final capital-expenditure figure to account for slightly lower levels of corporate investment.

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London shares strong, near highs midafternoon; M&A talk dominant

At 15.14 GMT, the FTSE 100 index was 46.8 points stronger at 5,954.7, just
below the day's high of 5,955.6. All the broader FTSE indices were firmer as well, aside from the techMARK 100, with the FTSE 250 index up 134.1 points at 9,565.0.

London Stock Exchange shares surged 261 pence higher to 1,141, a rise of over 29 pct on the bid speculation. In reaction, Exane BNP Paribas upgraded the LSE to 'outperform' from 'neutral' and lifted its target price to 1,050 pence from 900 previously, citing the possibility of a takeover battle emerging between Nasdaq and the NYSE.
   
Numis was even more positive, upgrading to 'buy' from 'hold', and lifting the price target to 1,100 pence from 875 previously.
   
Elsewhere on the M&A front in London, banking issues were excited by the fresh consolidation moves in the US and talk of further takeovers in Europe, with Societe Generale seen as a possible target for Citigroup, and Credit Agricole suggested as a possible suitor for Alliance & Leicester.
   
In response, A&L shares took on 35 pence at 1,104-1/2, while Barclays added 6-1/2 pence at 666-1/2, HBOS gained 13 pence at 1,012-1/2 - shrugging aside a Credit Suisse downgrade to 'underperform' -- and on the second line Bradford & Bingley -- a recent takeover candidate -- took on 26-1/4 pence at 512.    
   
Meanwhile Vodafone topped the FTSE 100 leaders board, adding 5-3/4 pence at 130-1/2 as the market reacted to vague bid speculation and to a boardroom shake-up which saw the departure of life president Sir Christopher Gent, the group's former chief executive.

On the downside with blue chips, copper miner Antofagasta topped the blue chip fallers board, losing 39 pence at 1,981 as commodity prices retreated again, and ahead of full year results due tomorrow.
   
Other mining issues also suffered, with Xstrata down 21 pence at 1,682, while Rio Tinto shed 18 pence at 2,650, and Anglo-American fell back 12 pence to 1,966. 

Frankfurt

German shares still higher midafternoon as US seen up, M&A news boosts sentiment

At 14.36 GMT, the DAX 30 index was 35.91 points or 0.62 pct higher at 5,840.83, having moved between 5,807.61-5,857.95 so far this session.
   
The MDAX was at 8,434.19, up 83.22 points or 1.00 pct, while the TecDAX was at 729.83, up 7.65 points or 1.06 pct. The DAX futures contract was at 5,843.50, up 25.00 points or 0.43 pct, while bund futures were at 117.70, down 0.14 point.

Schering led large-caps higher, gaining 16.39 eur or 24.51 pct to 83.25 and racing past the 77 eur per share price offered by Merck KGaA this morning, as the market gambled the move could spark a counterbid.
 
News of the bid lifted the German pharmaceuticals sector as a whole, with Bayer adding 0.45 to 33.13 and Altana -- seen as another likely takeover target -- rising 1.09 to 48.15. MDAX-listed peers Stada and Schwarz Pharma rose 1.29 to 33.39 and 2.39 to 58.78 respectively.
   
Deutsche Boerse was in focus on M&A speculation too, soaring 6.20 to 110.25, after Nasdaq's pre-conditional 950 pence per share takeover proposal for the London Stock Exchange on Friday night revived speculation of a tie-up with the New York Stock Exchange or Euronext.

Bucking the trend, Linde dropped 1.26 eur or 1.74 pct to 71.05, having posted solid gains recently.
   
DaimlerChrysler slid 0.36 to 46.87, while MAN dropped 0.41 to 53.62.

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Paris shares higher late afternoon, in line with Wall St; banks
 
At 4.09 pm, the CAC-40 was up 41.73 points or 0.82 pct at 5,111.00 on volume of 2.94 bln eur. On the Matif, March futures contracts were trading 41.5 points or 0.82 pct higher at 5,114.0.

Natexis surged 11.30 eur or 5.89 pct to 203.00, after it confirmed that talks are underway to merge it with investment banking rival Ixis, forming a company worth at least 20 bln eur.
   
The deal "has a strong rationale", Eric Hazart and Patrick Leclerc of Exane BNP Paribas said, raising their target price on Natexis to 194 eur from 175 and maintaining an 'outperform' recommendation.

Elsewhere in the banking sector, Societe Generale was up 3.30 eur and 2.75 pct at 123.30 extending Friday's gains, which were triggered by press reports that Citigroup is considering launching a takeover bid for it.
   
BNP Paribas was up 1.35 eur or 1.83 pct at 75.10, and Credit Agricole was up 0.18 eur or 0.57 pct at 31.72.
   
Vinci rose 2.60 eur or 3.48 pct at 77.30, amid investor enthusiasm for its acquisition on Friday of the French government's 50.3 pct stake in Autoroutes du Sud de la France (ASF) at 51 eur per share, giving it a total stake of 73.4 pct of the toll highway operator, dealers said.

Among the losers was Veolia Environnement, down 0.79 eur or 1.74 pct at 44.71, after disappointing investors on its full-year net profit, which came in at 623 mln eur against analyst forecasts of 640-678 mln eur.

Amsterdam

Amsterdam shares up on positive US futures; Boskalis higher
 
At 12.54 pm, the AEX was up 1.89 point or 0.41 pct at 460.48, after opening at 460.76, and reaching a high of 461.46. Government bonds were flat to lower, while the euro traded at 1.1930 usd,  from 1.1884 usd late Friday.
   
Vopak led gainers, up 5.12 pct to 28.52 but Boskalis provided the results of the day, advancing 3.48 pct to 54.95 eur after the company came out with good full year results with positive prospects. Many analysts put their target price and recommendations on review pending a conference call and analyst meeting expected later today.
   
TomTom added 2.13 pct at 28.80 eur after the company closed a deal with Ford Spain, offering its navigation system free with every new Ford Fiesta sold. SNS Securities maintained its 'reduce' rating, saying that TomTom's increased efforts to woo car manufacturers is further evidence that the long term future of such devices is uncertain, and that in-car and mobile phone systems will eventually dominate.
   
Chemical sector company DSM added 1.87 pct at 36.45 eur and Akzo Nobel was up 1.46 pct to 43.74 after competitor Merck made a 77 eur per share bid for Shering. SNS Securities said the bid implies a 3-4 eur upside on its 47.50 eur
target price for Akzo Nobel and reiterated its 'add' rating.

Ordina led decliners, falling 1.43 pct to 16.60, with Hagemeyer and Getronics following suit, down 1.24 pct to 3.94 and 1.21 pct lower to 9.82 respectively.
   
TNT lost 0.80 pct to 27.43 eur after the company bought the remaining 49 pct stake in its Italian joint venture TNT Arvil.

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Asian shares close higher buoyed by Wall St gains

HONG KONG - Share prices across the Asia-Pacific region closed higher, with most bourses tracking gains on US markets, dealers said.
   
Tokyo finished the session sharply higher, with the benchmark Nikkei 225 index at a one-month high, helped by Wall St's rise and a weaker yen which supported exporters, dealers said.
   
The minor revision in the GDP data for the three months to December which showed the economy is continuing to recover, also boosted investor sentiment, they said, along with the Bank of Japan's decision last week to scrap an easy credit policy that had been in place for five years.
   
Offshore investors, who placed pre-opening net buy orders today for the first time in four trading days, supported the buying momentum.
   
The Nikkei 225 Stock Average closed up 245.88 points or 1.5 pct at 16,361.51, slightly off its day-best of 16,379.47. It was the index's highest closing level since Feb 9 when it settled at 16,439.67.
   
The broader-based TOPIX index of all first-section shares gained 27.39 points or 1.7 pct to 1,674.66, just off the intraday high of 1,674.69.
   
Tokai Tokyo Research Center chief strategist Hiroyuki Nakai said share prices got a lift from the rally in New York markets Friday after the release of upbeat non-farm payroll data which also strengthened the dollar near one-month highs against the yen.
   
"Market bias appeared to be basically positive given there is no longer uncertainty about the prospect of interest rates here," Nakai said.
   
Share prices in Australia also closed higher as investor sentiment lifted following a stronger Wall Street, dealers said.
   
They said index leading resources companies BHP Billiton and Rio Tinto posted solid gains after metal prices rebounded on Friday.
   
Dealers said Patrick Corp was the outstanding trade for investors, surging after the competition regulator dropped its opposition to Toll Holdings' 4.6 bln aud takeover bid for the port operator.
   
The S&P/ASX 200 jumped 63.2 points or 1.29 pct to close at 4,951.3 but still off the record high of 4,956.7 set on Feb 1.
   
Share prices in Hong Kong were trading higher in the afternoon, also tracking Wall Street's gains, dealers said.
   
A rally on the Japanese stock market and news of robust sales of new apartments over the weekend also provided support, they said.
   
At 3:38 pm, the Hang Seng Index was up 78.16 points or 0.51 pct at 15,523.21.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on bargain-hunting after a recent consolidation with property developers and petrochemical producers snapped up, dealers said.
   
The Shanghai A-share Index rose 14.47 points to 1,321.23 on turnover of 6.61 bln yuan and the Shenzhen A-share Index was up 3.21 points at 317.19 on turnover of 3.89 bln yuan.
   
In Seoul, share prices finished higher for a second session, with Samsung Electronics, banks and POSCO leading the advance, dealers said.
   
Wall Street's rise and easing oil prices brought on a firm start, sustained through the session thanks to strong foreign investor interest and sharp gains in Tokyo shares.
   
The KOSPI index closed up 18.21 points or 1.38 pct at 1,338.28.

Asian Bourse Round-Up

For a full list of closing prices, click here

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Crude-futures held around $60 a barrel as traders continued to weigh news that domestic oil inventories were close to a seven-year high. The benchmark April contract was last up 14 cents at $60.05 a barrel.
   
Gold futures rebounded after Friday closing at their lowest level in over two months. The benchmark April contract was up $2.90 at $544.20 an ounce.
   
On the bond market, long-term Treasury prices fell, sending yields higher. The benchmark 10-year note was down 4/32 at 97 27/32, with its yield at 4.78%.

Precious Metals Summary - London, 1530 GMT

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