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Below are the Overnight Brief by J.P. Morgan.
U.S.A. Equities
U.S. stocks slid into the close as market uncertainty overshadowed a deal that will fundamentally alter the landscape of the pharmaceutical industry. Against the recent trend banks held gains as investors hoped for more clarity on the government plan to firm up the financial system, with Fed Chairman Ben Beranke meeting with President Obama.
The Dow Jones Industrial Average lost 79.89 points, or 1.2%, to 6547.05. The S&P 500 gave back 6.85 points, or 1%, to 676.53. The losses were paced by telecoms, utilities and IT. Financials (+2.5%) closed alone in positive territory.The Nasdaq slid 25.21 points, or 2%, to 1268.64.
Volumes totalled 1.38bln shares on the NYSE where decliners beat advancers by 21 to 8. At the Nasdaq 1.96bln shares were exchanged and losers outpaced winners by 19 to 8.
The VIX "fear" gauge added 0.50 to 49.83.
1) M&A: Merck & Co. agreed to buy rival Schering-Plough in a $32.6bln deal. With the move, which would also assume $8.5 billion in debt, Merck is forsaking its traditional reliance on homegrown research and small acquisitions to propel growth. Schering-Plough brings to Merck biotech, consumer-health and animal-health businesses, as well as an expanded presence in high-growth markets outside the U.S. The Merck-Schering deal for cash and stock "is about size, it's about growth of in-line products and it's about diversity from a global standpoint," management said. Some $3.5bln a year in cost savings are anticipated beyond 2011. Schering-Plough is expected to "modestly" add to Merck's earnings, excluding charges related to the deal, in the first year after its completion and "significantly" thereafter. Schering-Plough shareholders
would get 0.5767 share of Merck and $10.50 in cash for each share they own. Based on Friday's closing prices, that values Schering-Plough at $23.61 a share, or a 34% premium. Merck shareholders would own 68% of the combined company. The deal is expected to close in Q4.
The Wall Street Journal reported that the board of Genentech is near a deal to sell the biotech staple to Swiss pharma company Roche for $95 per share, citing people familiar with the matter.
Dow Chemical and Rohm & Haas have reportedly reached a settlement for their $15bln merger.
2) Financials: AIG has pressed the federal government for its fourth bailout (worth $30bln) by warning that the insurer's collapse could set off a chain of events that would leave money-market funds floundering and European banks in disarray, Bloomberg reported, citing a 21-page
draft of the firm's presentation to government officials labeled "strictly confidential." The firm's fate "has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," AIG said in the draft.
Bank of America soared 19% after a Barron's article said the bank can avoid the same fate as Citigroup by tightening up its operations, and could post strong earnings again once the financial crisis has passed. Wells Fargo (+16%)and USB (+15%) also posted sharp gains. General Electric Capital, the finance arm of General Electric (+5%), announced it would be selling guaranteed bank notes via the FDIC's Temporary Liquidity Guarantee Program. GE confirmed that the company was in the market for a benchmark deal under the TLGP but couldn't elaborate on timing or final terms. GE Capital will sell a benchmark-sized offering, meaning at least $500mln for each piece, which will include two- and three-year maturities. The final size has not been determined. Capital One (+5%) became the latest financial to announce a dividend cut, saying it was slashing its yield from 37.5 cents to 5 cents beginning in Q2 and holding into the future. The credit card company said the move will save $500 million annually.
3) Technology: Apple (-2.6%) was hit for a second straight session by an analyst's note suggesting the recession has caught up with the company. Thomas Weisel Partners lowered its price target for Apple shares while also cutting revenue and profit estimates for Apple's FY'09 & FY'10. On Friday, Apple shares fell as much as 6% after JPMorgan analysts did the same thing. "The global economy continues to deteriorate," which will slow sales of Apple's Macintosh computers and its iPhones smartphone, Thomas Weisel' wrote. An Apple spokesman had no comment.
4) Burgers: McDonald's (+0.4%) said its February same-store sales rose .4%. The fast-food chain's U.S. outlets outperformed the rest of the world last month, in contrast to past results showing international strength. U.S. same-store sales rose 2.8%, with McDonald's citing its breakfast offerings and chicken lineup. In contrast, Europe recorded a .2% decline, while the Asia-Pacific, Middle East and Africa region saw 0.7% growth, driven by Australia and Japan. Sales in China were muted in part because Chinese New Year fell in January this year.
5) Energy: In the oil market, fear of economic torpor was overcome by expectations of tightening supplies, as OPEC is expected cut production at a meeting next week in Vienna. The group's secretary general told reporters at an energy conference in Qatar that OPEC will cut its 2009 oil-demand forecast this week. Iraq's oil minister called for higher oil prices, saying the current level is not "profitable and fair" for producing countries, echoing similar remarks by Venezuela. Crude futures for April delivery rallied $1.55 to $47.07 a barrel. Contracts for May
delivery were not rallying as strongly, up $0.34 to $48.06. One floor trader said that narrowing of spreads along the futures curve suggests that the market may be bracing for a sustained run higher, perhaps to $60 in the next few months. "We're not overly glutted with inventories at this point. What you're seeing here is that we're getting back more to pure supply and demand moving this market."
6) Opinion: In one of the bleakest assessments yet, economists at the World Bank predicted that the global economy and the volume of global trade would both shrink this year for the first time since World War II. The World Bank said that the crisis that began with junk mortgages in
the United States was causing havoc for poorer countries that had nothing to do with the original problem. As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well. The bank's assessment for 2009 was grimmer than those of most private forecasters. It did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks. The World Bank warned that the financial disruptions are all but certain to overwhelm the ability of institutions like it and the International Monetary Fund to provide a buffer.
The head of the ECB said the world's economy is still slowing, but suggested a turning point could be near as massive fiscal stimulus packages, low interest rates and cheaper energy prices bolster prospects for growth. "We're approaching a moment where we might have a pickup," said ECB president Jean-Claude Trichet, in his most optimistic assessment to date of tentative signs of stabilisation in some markets. He cited a modest rebound in corporate bond markets as one positive sign. Trichet also suggested investors, who last week drove major U.S. tock indexes to 12-year lows, are underestimating the significance of government efforts. Policy makers worldwide have made "a very, very strong commitment ... not to let any systemic institution go under," Mr. Trichet said. This "may not be fully priced in by the market."
People's Bank of China Vice Governor Yi Gang said the fiscal stimulus
measures announced by China so far are appropriate and already seem to
be working. "At this point, I think the current package of the fiscal
stimulus is sound and it seems already effective," Mr. Yi said. "So at
this point, I think the current stimulus package is fine."
The man who predicted the current financial crisis said the US recession
could drag on for years without drastic action. Among his solutions: fix
the housing market by breaking "every mortgage contract." "We are in the
15th month of a recession," said Nouriel Roubini, a professor at New
York University's Stern School of Business. "Growth is going to be close
to zero and unemployment rate well above 10% into next year." Roubini
said he sees "no hope for the recession ending in 2009 and will more
than likely last into 2010." Roubini told CNBC that the risk of a total
meltdown has been reversed for now but that the economy is going through
"a death by a thousand cuts." He also said that "most of the U.S.
financial institutions are entirely insolvent." "The market friendly
view for the banks is nationalization," said Roubini. "Temporarily take
over the banks, clean them up and get them working again." He said that
while U.S. GDP next year could be zero, global GDP could dip into
negative territory. "We could end up ... with a 36-month recession, that
could be "L-shaped stagnation, or near depression," Roubini said. He
puts the chance of a severe U-shaped recession at 66.7%, and a less
severe L-shaped recession at 33.3%. Finally, while he says there will be
"a light at the end of the tunnel", it'll probably get worse before it
gets better. Those who believe in a second half recovery this year "are
delusional" he says.
Warren Buffett told CNBC that the U.S. economy has "fallen off a cliff."
Buffett said economic developments have been very "close to the worst
case" that he had imagined, although conditions would be far worse if
the Federal Reserve hadn't stepped in last September. Other key points:-
i) the economy "can't turn around on a dime" and a turnaround "won't
happen fast"; ii) five years from now, the economy will be running fine.
The strength of the American system will pull it through, just as it has
many times in the past; iii) Democrats and Republicans should work
together and not try to take advantage of the economic situation to
achieve partisan goals; iv) Inflation has the "potential" to be worse
than the 1970s; v) most banks are in "pretty good shape" and can "earn
their way out" of the current problems given the low cost of funds.
Banks, however, "need to get back to banking"; and vi) it is extremely
important that the government make clear depositors won't lose their
money if banks fail. Obama needs to make a "clear statement" in support
of the banking system.
Treasury Market
Treasurys bowed to supply pressure, pushing bond prices down across the
board. Investors sold bonds ahead of this week's sales of $63bln in
government debt, which kick off Tuesday with $34bln in three-year notes,
followed by $18bln in 10-year notes Wednesday and $11bln in 30-year
bonds Thursday. The two-year note yield added 1bps to 0.955%. The
10-year bond yield closed flat at 2.87%.
European Markets
European shares finished mixed. While most bank shares declined, drug
makers rallied on a large deal in the sector.
The FTSEurofirst 300 index fell 4.83, or 0.7%, to 657.30.
Bank were in sharp focus after Lloyds struck a deal over the weekend
with the British government for the U.K. to insure £250bln in Lloyds
assets and increase its stake in the bank to as much as 77%. Lloyds lost
as much as 14% but eventually closed higher by 4.1%. BNP Paribas gained
1.6% after the French lender signed a deal to buy the majority of Fortis
Bank from the Belgian government, along with an interest in Fortis'
insurance business, in exchange for official guarantees against losses.
Fortis spiked 20.8%. Among other financials Credit Suisse slid 6.2%, UBS
5.3% and Barclays 5.3%.
Insurers, ex-Aviva (+8.4% having lost 44% over the previous two
sessions), remained friendless. AXA sank 5.7%, Generali 4.2%, Zurich
Financial 2.4%, and MunichRe 1.4%.
Europe-listed pharmaceutical shares rallied after Merck said that it
would buy rival Schering-Plough for $41.1bln. AstraZeneca rose 3.5%,
Roche 3.5%, Bayer 2.2%, and Sanofi-Aventis 2%.
Italian Internet provider Tiscali plunged 47.3% after the group said
talks with BSkyB over the sale of its U.K. assets have ended and that it
will miss an interest payment on its debt.
Adidas vaulted 3% after Merrill Lynch added the German apparel maker to
its list of top stock picks in Europe.
Oil producers also gained ground as light, sweet crude-oil futures
pushed through $47.00 a barrel. BP rallied 5.9%, and Royal Dutch Shell
2.8%.
Telecom shares dialled up broad losses. Telecom Italia retreated 4.6%,
BT 3%, France Telecom 2.8%, Vodafone 2.8%, and Telefonica 2.5%.
In London the FTSE 100 tacked on 11.67 points, or 0.3%, to 3542.40.
The benchmark mounted a late-session commodity and drugs stock-led rally
to finish in positive territory, having spent much of the session in a
bank-led slump. Commodity stocks were buoyed by a gain in oil prices,
while drugs groups were given a tonic by merger activity in the sector.
At midday, the FTSE100 had been down as much as 1.6% as the ailing
banking sector once again exerted the most pressure.
Barclays tanked 5.3% after it said it would talk to UK Treasury
officials about its participation in the government scheme.
Mining stocks failed to enjoy the gains made by their oil brethren. Rio
Tinto fell 1.9%, XStrata slumped 8.1% and Anglo American gave back 1.4%.
BHP Billiton bucked the trend to advance 1.3%.
Elsewhere Brambles dipped 0.6%, British Airways slid 2% and BSkyB
declined 1.6%.
In Paris the CAC 40 Index lost 15.16 points, or 0.6%, 2519.29.
In Frankfurt the DAX Index climbed 25.62 points, or 0.7%, to 3692.03.
Commodity News
April crude rallied $1.55 to $47.076 a barrel.
April gold dived $24.70 to $918.00 an ounce.
LME base metal futures closed broadly lower amid conflicting demand
signals. Copper slid 2.9% as traders worried that some of the recent
pick-up in consumption in China could be stock-building. Nickel fell
1.8%, aluminium 0.8%, and zinc 0.4%. The CRB index dipped 1.18 to
208.41.
The Baltic Dry Index hit a fresh five-month high of 2,262, up 1.7% on
the day.
Australian Stocks
London
BXB: Brambles Plc dipped 0.6%, or 1.25p, to 213.25p (A$4.65) to
leave BIL Ltd at a 1% premium. Volume was 11k shares.
BLT: Billiton gained 1.3%, or 15p, to 1171p (A$25.55) which leaves
BHP at a 13.98% premium. Volume was 13.3mln shares.
HGG: Hendersons climbed 1.6%, or 1p, to 65.25p (A$1.4236) from the
Australian close of $1.45. Volume was 2.1mln shares.
RIO: RIO plc dropped 1.9%, or 34p, to 1791p (A$39.08) which
leaves RIO at a 21.56% premium. Volume was 6mln shares.
New York
BHP: In ADR trade BHP lost 2.1% to A$28.77 from the Australian close
of $29.12. Volume was 9.8mln ordinary shares equivalent.
NWS: NWS sank 4.9% to an A$ equivalent of $8.94 from the Australian
close of $9.36. Volume was equivalent to 6mln ordinary shares. The
spread is at $1.04, or 11.68%.
NWSLV: NWSLV tanked 5% to an A$ equivalent of $7.90 from the
Australian close of $8.27. Volume was equivalent to 22.9mln non-voting
shares.
RMD: Resmed slid 4.3% to A$5.38 from the Australian close of $5.62.
Volume was 11.8mln ordinary shares equivalent.
MPEL: Melco PBL Entertainment gained 1.1% to US$2.66. Volume was 457k
ADSs.
Toronto
LGL: Lihir Gold dived 3.9% to C$2.50 (A$3.0451) from the Australian
close of $3.15. Volume was 1,600 ordinary shares equivalent.
SPI Futures
Sycom: The March contract has fallen 15 points to 3134, a 20.5 point
discount to the ASX/S&P 200.
Sources: Bloomberg, Reuters, Dow Jones News Wires, The Wall Street
Journal, TheStreet.com, CNN, CNBC, CBS, The Guardian and the Financial
Times.
U.S.A. Equities
U.S. stocks slid into the close as market uncertainty overshadowed a deal that will fundamentally alter the landscape of the pharmaceutical industry. Against the recent trend banks held gains as investors hoped for more clarity on the government plan to firm up the financial system, with Fed Chairman Ben Beranke meeting with President Obama.
The Dow Jones Industrial Average lost 79.89 points, or 1.2%, to 6547.05. The S&P 500 gave back 6.85 points, or 1%, to 676.53. The losses were paced by telecoms, utilities and IT. Financials (+2.5%) closed alone in positive territory.The Nasdaq slid 25.21 points, or 2%, to 1268.64.
Volumes totalled 1.38bln shares on the NYSE where decliners beat advancers by 21 to 8. At the Nasdaq 1.96bln shares were exchanged and losers outpaced winners by 19 to 8.
The VIX "fear" gauge added 0.50 to 49.83.
1) M&A: Merck & Co. agreed to buy rival Schering-Plough in a $32.6bln deal. With the move, which would also assume $8.5 billion in debt, Merck is forsaking its traditional reliance on homegrown research and small acquisitions to propel growth. Schering-Plough brings to Merck biotech, consumer-health and animal-health businesses, as well as an expanded presence in high-growth markets outside the U.S. The Merck-Schering deal for cash and stock "is about size, it's about growth of in-line products and it's about diversity from a global standpoint," management said. Some $3.5bln a year in cost savings are anticipated beyond 2011. Schering-Plough is expected to "modestly" add to Merck's earnings, excluding charges related to the deal, in the first year after its completion and "significantly" thereafter. Schering-Plough shareholders
would get 0.5767 share of Merck and $10.50 in cash for each share they own. Based on Friday's closing prices, that values Schering-Plough at $23.61 a share, or a 34% premium. Merck shareholders would own 68% of the combined company. The deal is expected to close in Q4.
The Wall Street Journal reported that the board of Genentech is near a deal to sell the biotech staple to Swiss pharma company Roche for $95 per share, citing people familiar with the matter.
Dow Chemical and Rohm & Haas have reportedly reached a settlement for their $15bln merger.
2) Financials: AIG has pressed the federal government for its fourth bailout (worth $30bln) by warning that the insurer's collapse could set off a chain of events that would leave money-market funds floundering and European banks in disarray, Bloomberg reported, citing a 21-page
draft of the firm's presentation to government officials labeled "strictly confidential." The firm's fate "has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," AIG said in the draft.
Bank of America soared 19% after a Barron's article said the bank can avoid the same fate as Citigroup by tightening up its operations, and could post strong earnings again once the financial crisis has passed. Wells Fargo (+16%)and USB (+15%) also posted sharp gains. General Electric Capital, the finance arm of General Electric (+5%), announced it would be selling guaranteed bank notes via the FDIC's Temporary Liquidity Guarantee Program. GE confirmed that the company was in the market for a benchmark deal under the TLGP but couldn't elaborate on timing or final terms. GE Capital will sell a benchmark-sized offering, meaning at least $500mln for each piece, which will include two- and three-year maturities. The final size has not been determined. Capital One (+5%) became the latest financial to announce a dividend cut, saying it was slashing its yield from 37.5 cents to 5 cents beginning in Q2 and holding into the future. The credit card company said the move will save $500 million annually.
3) Technology: Apple (-2.6%) was hit for a second straight session by an analyst's note suggesting the recession has caught up with the company. Thomas Weisel Partners lowered its price target for Apple shares while also cutting revenue and profit estimates for Apple's FY'09 & FY'10. On Friday, Apple shares fell as much as 6% after JPMorgan analysts did the same thing. "The global economy continues to deteriorate," which will slow sales of Apple's Macintosh computers and its iPhones smartphone, Thomas Weisel' wrote. An Apple spokesman had no comment.
4) Burgers: McDonald's (+0.4%) said its February same-store sales rose .4%. The fast-food chain's U.S. outlets outperformed the rest of the world last month, in contrast to past results showing international strength. U.S. same-store sales rose 2.8%, with McDonald's citing its breakfast offerings and chicken lineup. In contrast, Europe recorded a .2% decline, while the Asia-Pacific, Middle East and Africa region saw 0.7% growth, driven by Australia and Japan. Sales in China were muted in part because Chinese New Year fell in January this year.
5) Energy: In the oil market, fear of economic torpor was overcome by expectations of tightening supplies, as OPEC is expected cut production at a meeting next week in Vienna. The group's secretary general told reporters at an energy conference in Qatar that OPEC will cut its 2009 oil-demand forecast this week. Iraq's oil minister called for higher oil prices, saying the current level is not "profitable and fair" for producing countries, echoing similar remarks by Venezuela. Crude futures for April delivery rallied $1.55 to $47.07 a barrel. Contracts for May
delivery were not rallying as strongly, up $0.34 to $48.06. One floor trader said that narrowing of spreads along the futures curve suggests that the market may be bracing for a sustained run higher, perhaps to $60 in the next few months. "We're not overly glutted with inventories at this point. What you're seeing here is that we're getting back more to pure supply and demand moving this market."
6) Opinion: In one of the bleakest assessments yet, economists at the World Bank predicted that the global economy and the volume of global trade would both shrink this year for the first time since World War II. The World Bank said that the crisis that began with junk mortgages in
the United States was causing havoc for poorer countries that had nothing to do with the original problem. As a result, it said, nations in Latin America, Africa and East Asia have had not only their growth stifled but their access to credit as well. The bank's assessment for 2009 was grimmer than those of most private forecasters. It did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks. The World Bank warned that the financial disruptions are all but certain to overwhelm the ability of institutions like it and the International Monetary Fund to provide a buffer.
The head of the ECB said the world's economy is still slowing, but suggested a turning point could be near as massive fiscal stimulus packages, low interest rates and cheaper energy prices bolster prospects for growth. "We're approaching a moment where we might have a pickup," said ECB president Jean-Claude Trichet, in his most optimistic assessment to date of tentative signs of stabilisation in some markets. He cited a modest rebound in corporate bond markets as one positive sign. Trichet also suggested investors, who last week drove major U.S. tock indexes to 12-year lows, are underestimating the significance of government efforts. Policy makers worldwide have made "a very, very strong commitment ... not to let any systemic institution go under," Mr. Trichet said. This "may not be fully priced in by the market."
People's Bank of China Vice Governor Yi Gang said the fiscal stimulus
measures announced by China so far are appropriate and already seem to
be working. "At this point, I think the current package of the fiscal
stimulus is sound and it seems already effective," Mr. Yi said. "So at
this point, I think the current stimulus package is fine."
The man who predicted the current financial crisis said the US recession
could drag on for years without drastic action. Among his solutions: fix
the housing market by breaking "every mortgage contract." "We are in the
15th month of a recession," said Nouriel Roubini, a professor at New
York University's Stern School of Business. "Growth is going to be close
to zero and unemployment rate well above 10% into next year." Roubini
said he sees "no hope for the recession ending in 2009 and will more
than likely last into 2010." Roubini told CNBC that the risk of a total
meltdown has been reversed for now but that the economy is going through
"a death by a thousand cuts." He also said that "most of the U.S.
financial institutions are entirely insolvent." "The market friendly
view for the banks is nationalization," said Roubini. "Temporarily take
over the banks, clean them up and get them working again." He said that
while U.S. GDP next year could be zero, global GDP could dip into
negative territory. "We could end up ... with a 36-month recession, that
could be "L-shaped stagnation, or near depression," Roubini said. He
puts the chance of a severe U-shaped recession at 66.7%, and a less
severe L-shaped recession at 33.3%. Finally, while he says there will be
"a light at the end of the tunnel", it'll probably get worse before it
gets better. Those who believe in a second half recovery this year "are
delusional" he says.
Warren Buffett told CNBC that the U.S. economy has "fallen off a cliff."
Buffett said economic developments have been very "close to the worst
case" that he had imagined, although conditions would be far worse if
the Federal Reserve hadn't stepped in last September. Other key points:-
i) the economy "can't turn around on a dime" and a turnaround "won't
happen fast"; ii) five years from now, the economy will be running fine.
The strength of the American system will pull it through, just as it has
many times in the past; iii) Democrats and Republicans should work
together and not try to take advantage of the economic situation to
achieve partisan goals; iv) Inflation has the "potential" to be worse
than the 1970s; v) most banks are in "pretty good shape" and can "earn
their way out" of the current problems given the low cost of funds.
Banks, however, "need to get back to banking"; and vi) it is extremely
important that the government make clear depositors won't lose their
money if banks fail. Obama needs to make a "clear statement" in support
of the banking system.
Treasury Market
Treasurys bowed to supply pressure, pushing bond prices down across the
board. Investors sold bonds ahead of this week's sales of $63bln in
government debt, which kick off Tuesday with $34bln in three-year notes,
followed by $18bln in 10-year notes Wednesday and $11bln in 30-year
bonds Thursday. The two-year note yield added 1bps to 0.955%. The
10-year bond yield closed flat at 2.87%.
European Markets
European shares finished mixed. While most bank shares declined, drug
makers rallied on a large deal in the sector.
The FTSEurofirst 300 index fell 4.83, or 0.7%, to 657.30.
Bank were in sharp focus after Lloyds struck a deal over the weekend
with the British government for the U.K. to insure £250bln in Lloyds
assets and increase its stake in the bank to as much as 77%. Lloyds lost
as much as 14% but eventually closed higher by 4.1%. BNP Paribas gained
1.6% after the French lender signed a deal to buy the majority of Fortis
Bank from the Belgian government, along with an interest in Fortis'
insurance business, in exchange for official guarantees against losses.
Fortis spiked 20.8%. Among other financials Credit Suisse slid 6.2%, UBS
5.3% and Barclays 5.3%.
Insurers, ex-Aviva (+8.4% having lost 44% over the previous two
sessions), remained friendless. AXA sank 5.7%, Generali 4.2%, Zurich
Financial 2.4%, and MunichRe 1.4%.
Europe-listed pharmaceutical shares rallied after Merck said that it
would buy rival Schering-Plough for $41.1bln. AstraZeneca rose 3.5%,
Roche 3.5%, Bayer 2.2%, and Sanofi-Aventis 2%.
Italian Internet provider Tiscali plunged 47.3% after the group said
talks with BSkyB over the sale of its U.K. assets have ended and that it
will miss an interest payment on its debt.
Adidas vaulted 3% after Merrill Lynch added the German apparel maker to
its list of top stock picks in Europe.
Oil producers also gained ground as light, sweet crude-oil futures
pushed through $47.00 a barrel. BP rallied 5.9%, and Royal Dutch Shell
2.8%.
Telecom shares dialled up broad losses. Telecom Italia retreated 4.6%,
BT 3%, France Telecom 2.8%, Vodafone 2.8%, and Telefonica 2.5%.
In London the FTSE 100 tacked on 11.67 points, or 0.3%, to 3542.40.
The benchmark mounted a late-session commodity and drugs stock-led rally
to finish in positive territory, having spent much of the session in a
bank-led slump. Commodity stocks were buoyed by a gain in oil prices,
while drugs groups were given a tonic by merger activity in the sector.
At midday, the FTSE100 had been down as much as 1.6% as the ailing
banking sector once again exerted the most pressure.
Barclays tanked 5.3% after it said it would talk to UK Treasury
officials about its participation in the government scheme.
Mining stocks failed to enjoy the gains made by their oil brethren. Rio
Tinto fell 1.9%, XStrata slumped 8.1% and Anglo American gave back 1.4%.
BHP Billiton bucked the trend to advance 1.3%.
Elsewhere Brambles dipped 0.6%, British Airways slid 2% and BSkyB
declined 1.6%.
In Paris the CAC 40 Index lost 15.16 points, or 0.6%, 2519.29.
In Frankfurt the DAX Index climbed 25.62 points, or 0.7%, to 3692.03.
Commodity News
April crude rallied $1.55 to $47.076 a barrel.
April gold dived $24.70 to $918.00 an ounce.
LME base metal futures closed broadly lower amid conflicting demand
signals. Copper slid 2.9% as traders worried that some of the recent
pick-up in consumption in China could be stock-building. Nickel fell
1.8%, aluminium 0.8%, and zinc 0.4%. The CRB index dipped 1.18 to
208.41.
The Baltic Dry Index hit a fresh five-month high of 2,262, up 1.7% on
the day.
Australian Stocks
London
BXB: Brambles Plc dipped 0.6%, or 1.25p, to 213.25p (A$4.65) to
leave BIL Ltd at a 1% premium. Volume was 11k shares.
BLT: Billiton gained 1.3%, or 15p, to 1171p (A$25.55) which leaves
BHP at a 13.98% premium. Volume was 13.3mln shares.
HGG: Hendersons climbed 1.6%, or 1p, to 65.25p (A$1.4236) from the
Australian close of $1.45. Volume was 2.1mln shares.
RIO: RIO plc dropped 1.9%, or 34p, to 1791p (A$39.08) which
leaves RIO at a 21.56% premium. Volume was 6mln shares.
New York
BHP: In ADR trade BHP lost 2.1% to A$28.77 from the Australian close
of $29.12. Volume was 9.8mln ordinary shares equivalent.
NWS: NWS sank 4.9% to an A$ equivalent of $8.94 from the Australian
close of $9.36. Volume was equivalent to 6mln ordinary shares. The
spread is at $1.04, or 11.68%.
NWSLV: NWSLV tanked 5% to an A$ equivalent of $7.90 from the
Australian close of $8.27. Volume was equivalent to 22.9mln non-voting
shares.
RMD: Resmed slid 4.3% to A$5.38 from the Australian close of $5.62.
Volume was 11.8mln ordinary shares equivalent.
MPEL: Melco PBL Entertainment gained 1.1% to US$2.66. Volume was 457k
ADSs.
Toronto
LGL: Lihir Gold dived 3.9% to C$2.50 (A$3.0451) from the Australian
close of $3.15. Volume was 1,600 ordinary shares equivalent.
SPI Futures
Sycom: The March contract has fallen 15 points to 3134, a 20.5 point
discount to the ASX/S&P 200.
Sources: Bloomberg, Reuters, Dow Jones News Wires, The Wall Street
Journal, TheStreet.com, CNN, CNBC, CBS, The Guardian and the Financial
Times.
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