FTSE 100	6090.4, -1	Dow	12871.8, -20.1
FTSE 250	10117.5, +98.5	Nasdaq	2424.4, +1.47
FTSE All Share	3100.86, +3.66	S&P 500	1396.35, -1.5
Nikkei	13894.4	Hang Seng	25856.1, +189.9
Oil (Brent)	$115.20	Gold	$895.50
Base Rate	5%	10 Yr Gilt	4.702%
£/$	1.988	£/€	1.276

Markets

London - News of the multi-billion Mars/Wrigley deal and better-than-expected results from Whitbread helped consumer stocks make strong advances on the London market today. Analysts said a $23bn (around £11.6bn) takeover offer from Mars for chewing gum giant Wrigley could spark off a wave of consolidation in the industry, propelling Cadbury Schweppes shares to the top of the risers board. Whitbread had already provided some welcome cheer for the consumer sector with its upbeat annual results, although the wider FTSE 100 Index failed to hold on to gains, closing down one point at 6090.4.

The Footsie was dragged lower after a lacklustre start on Wall Street, with investors cautious ahead of the US interest rates decision due on Wednesday. But it had otherwise been a strong start to the trading week in London. Cadbury benefited from the Wrigley takeover announcement, with the stock closing up 3% at 579p.

Halifax Bank of Scotland stuck close to its opening mark despite speculation it will announce a £4bn rights issue tomorrow. The UK’s biggest mortgage lender was 1.25p lower at 495.75p, although the group lagged behind other banks after JP Morgan said the worst of the European write-downs might be over. Barclays stood 3.25p higher at 470.5p and Royal Bank of Scotland strengthened 5.5p at 354.5p.

Miner’s added support after Credit Suisse raised its target price on Xstrata, lifting the stock 89p to 4094p. Cairn Energy rose 93p to 2999p after benefiting from crude oil prices of almost $120 a barrel. Transport companies shook off fuel price worries after a positive trading update from Stagecoach built on the momentum seen following a progress report from rival Go-Ahead on Friday. Stagecoach was 27.5p stronger at 248.75p in the FTSE 250 Index - a gain of more than 12%. Go-Ahead also rose, up 7p at 1664p, while Arriva added 11p to 692p.

An Office of Fair Trading investigation into alleged price-fixing of health, beauty and grocery products also hit the share prices of the UK’s three biggest listed supermarkets. Sainsbury’s fell 8.75p to 384p, Morrison’s slipped 8.25p to 289.75p and Tesco lost 6.5p to 420p.

New York - US markets finished relatively unchanged yesterday with investors buoyed by a takeover deal in the global food industry, but cautious ahead of the two day Fed policy meeting which starts today. The Federal Reserve is expected to cut interest rates again, but this could be the last for some time. Of more interest is what reason the Fed gives for a pause in the recent rate cutting campaign.

The Dow Jones slipped 20.1 points to end at 12,871.8; the S&P 500 lost 1.5 points to close at 1,396.35. The Nasdaq added 1.47 points to finish at 2,424.4.

News that Mars has offered to buy Wrigley sent the market higher early on, underscoring the notion that stocks are relatively cheap at the moment. The $23 billion all cash deal for the chewing gum producer will make Wrigley a subsidiary of Mars. Warren Buffett’s Berkshire Hathaway is to help finance the deal taking a minority equity holding in the new subsidiary. Shares of Wrigley surged 23% higher.

Also in deal news, billionaire investor Kirk Kerkorian’s Tracinda Corp is to offer $170 million to buy 20 million shares in Ford Motor, adding to the 100 million shares it already owns. This would raise Tracinda’s stake in the company to 5.6%. Shares in Ford Motor rallied 9.5%. Meanwhile, the potential deal between Microsoft and Yahoo is still no closer to being agreed. The weekend deadline has now passed for Yahoo to respond to the $44.6 billion cash and stock offer. This leaves Microsoft with the option of making a hostile bid or simply walking away. Yahoo fell 1.4% while Microsoft closed 2.8% lower.

US light crude oil for June delivery added $0.23 to close at $118.75 a barrel, having earlier hit a new record of $119.93. COMEX gold for June delivery rose $5.80 to $895.50 an ounce.

Treasury prices finished higher, lowering the yield on the 10 year note to 3.82% from 3.87%.

Tokyo - The Tokyo Stock Exchange is closed today.

Hong Kong - The Hang Seng is currently 189.9 points higher at 25,856.1. Financial stocks lead the market higher after Bank of China Ltd and BOC Hong Kong (Holdings) Ltd reported higher first-quarter earnings. Power producers improve on news that the Chinese government is discussing proposals to end losses in the sector as higher coal prices drive up fuel costs.

Economics

UK Consumer credit and mortgages (Mar) 09.30 bst

The unexpected rise in consumer credit last month can be largely attributed to student loans so a much weaker rate in March is expected. Just 60k new mortgages are expected to have been approved in March, following the BBA data last week, which typically accounts for 60 percent of total mortgage lending. This would be the lowest on record, even below the levels seen in the early 90s.

UK CBI distributive trades (April) 11.00 bst

Recent trading statements from the retail sector have been particularly downbeat. There is, therefore, little opportunity for retailers to pass on rampant import price inflation. Cost pressures will have to be absorbed in the margins of the distribution sector, which is likely to weigh on sentiment.

US Consumer confidence (Apr) 15.00 bst

Consumer confidence has plunged by 26 points over the past three months. Gasoline prices have reached new highs in April, and the weekly ABC/Washington Post survey has fallen to new lows. On the positive side, stock prices have recovered a bit, and initial claims at least temporarily stopped rising in April. The expectations index could stay around 48, while the present situation index may fall further to 86, down from 89.2. Total consumer confidence would fall slightly to 63.

Corporate

HBOS unveiled a £4bn rights issue to rebuild its capital base after a hefty hint on the valuation of risky assets. HBOS will offer tow new shares for every five at 275 pence per share, a 45 percent discount to Monday’s close of 495.75p, it said. The bank said it took negative fair value adjustments in the year to date of £970m in the trading book and £1.87bn, post tax, in the banking book. The bank said it would reduce its dividend payout ratio to 40 percent, with the interim 2008 dividend to be paid in shares. The final dividend for the year, however, is set to be paid in cash.

BP beat forecasts with a 48 percent leap in first quarter replacement cost net income, helped by record oil prices. Excluding non operating items, which amounted to a net gain of $96m, the RC result, which strips out the impact of changes in the value of fuel inventories, was $6.49bn. Analysts polled have an average forecast of $5.31bn for BP’s first quarter RC earnings, excluding non ops.
BP is undergoing a restructuring to simplify its corporate structure and cut costs, in an effort to address industry lagging operations performance and falling output.

Anglo American posted a 9.1 percent rise in first quarter copper output today but refined platinum output lid by 24 percent. Copper production for the first three months of 2007 increased to 159,733 tonnes from 146,387 tonnes in the same period last year, a statement said. Refined platinum output was hit by a range of problems, including power shortages, flooding at the Amandelbult mine and an increase in pipeline stocks.

Royal Dutch Shell beat all forecasts today with a 12 percent rise in first quarter current cost of supply net income, helped by record oil prices which broke $100 a barrel in the period. Excluding non operating items, which amounted to a net charge of $77m, the CCS result, which strips out the impact of changes in the value of fuel inventories, was $7.85bn. Analysts polled gave an average forecast of $6.84bn for Shells first quarter CCS earnings, excluding non operating items. The highest forecast was $6.99bn. The company said "They look like blow away numbers. Surprising across all divisions at this time. I can’t see anything in particular that is unusual, they’ve just done well".

Rio Tinto,under pressure to broaden its reach in commodities as it fights a takeover by BHP Billiton, said today it had agreed to tax clauses with Indonesia needed before it can develop a nickel mine costing $1.5bn. Rio has largely been absent from nickel mining and hopes to start mining the metal in Indonesia’s Sulawesi province in about seven years. BHP with operations in Australia and Columbia, is the world’s third largest nickel producer. BHP has criticised Rio’s lack of assets in areas such as nickel and oil where BHP also is active. Sulawesi is Rio Tinto’s second step into nickel. In December, it approved development of its Eagle Mine in the US at a cost of $300m. It has previously said production from Sulawesi project could begin in 2015. Rio said the agreement with Indonesia provides sufficient certainty to support a multi billion dollar investment in the project and was based on a combination of fixed rates and prevailing regulations. It did not elaborate further. The next stage will be to seek pacts with local governments near the project site over contracts of work, it said. The project is earmarked to initially yield about 46,000 tonnes of nickel a year, potentially rising to about 100,000 tonnes. Nickel is chiefly used as an alloy for stainless steel and currently sells for about $30,000 a tonne. The Eagle mine is expected to produce about 16,000 tonnes of nickel a year starting in 2009. Rio has rejected BHP’s proposal of 3.4 of its shares for every Rio share, worth $147bn when it was pitched in February, arguing that it is better off independent given its growth prospects. Last year it paid $38.1bn for Canadian aluminium group Alcan and has set out multi billion dollar plans to dig more iron ore mines in Australia.

The above details are provided for information only and are not intended to be construed a solicitation for the sale or purchase of any particular investment nor as specific investment advice.

Posted: April 29th, 2008 under Asset Management.
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