Archive for September, 2009

World stocks hold firm (Reuters)

Tuesday, September 29th, 2009 | Finance News

LONDON (Reuters) –
World stocks edged higher while the dollar steadied on Tuesday as BNP Paribas' move to pay back state financial support and growing corporate takeover activity bolstered confidence about economic recovery.

The yen slipped from the previous day's 8-month high versus the dollar after Japanese Finance Minister Hirohisa Fujii said he would not rule out taking action if currency moves were irregular.

Shares of BNP Paribas, France's biggest bank by market capitalization, rose 3 percent (BNPP.PA) after it launched a capital increase for 4.3 billion euros as part of its move to reimburse the French state early.

Its move follows similar paybacks from UBS, Goldman Sachs, JP Morgan and Morgan Stanley.

Wall Street rallied on Monday after Xerox Corp (XRX.N) agreed to buy Affiliated Computer Services (ACS.N) for $5.5 billion and Abbott Laboratories (ABT.N) said it would pay $6.6 billion for Solvay's (SOLB.BR) drug unit.

MSCI world equity index rose 0.15 percent.

The FTSEurofirst 300 index (.FTEU3) of leading European shares fell 0.15 percent, however, as weaker oil prices weighed on commodity shares and investors grew nervous about buying more given a recent rally and sharp lurch higher on Monday.

"After the storming day yesterday, markets are prone to sell off, particularly with so much uncertainty," said Peter Dixon, economist at Commerzbank.

"The upward trend is still intact, and I think (BNP's move) is an indication of the strength of banks' underlying fundamentals, compared to their position a year ago."

Emerging stocks (.MSCIEF) rose more than 1 percent.

The cost of financing has fallen significantly since the start of the credit crisis as central banks around the world cut interest rates to near zero, making it easier for corporates to raise funds to conduct merger and acquisition activity.

"Whilst some companies are still in the process of repairing their balance sheets from the credit binge earlier in the decade, there are also a number sitting on large amounts of cash, which sooner or later they will need to put to work," Calyon said in a note to clients.

"We feel it is too early to be calling the beginning of another M&A cycle just yet though ... However, as economic visibility improves, we believe the M&A theme could be big next year."

U.S. crude oil fell 0.1 percent to $66.73 a barrel.

The yen fell 0.1 percent to 89.81 per dollar, having risen as high as 88.22 on Monday. The dollar (.DXY) was steady against a basket of major currencies.

The September Bund future fell 9 ticks ahead of further debt supply due to hit the market, in a week that will see around 30 billion euros in new issuance.

(Additional reporting by Simon Falush, editing by Mike Peacock)

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BNP Paribas hikes capital, to pay back state early (Reuters)

Tuesday, September 29th, 2009 | Finance News

PARIS (Reuters) –
BNP Paribas (BNPP.PA), France's biggest bank by market capitalization, on Tuesday joined the rush to pay back governments for their financial support during the credit crisis.

The bank launched a capital increase for 4.3 billion euros ($6.30 billion) as part of its move to reimburse the French state early on its 5.1 billion euros capital advance.

BNP Paribas said the capital increase would be an underwritten rights issue with preferential subscription rights for ordinary shareholders. It added that the deal would boost its earnings per share (EPS) by around 8.4 percent.

The capital hike was set at 1 new ordinary share for 10 existing shares at a subscription price of 40 euros per share.

The subscription price represents a discount of around 29 percent to BNP's closing share price of 56.57 euros on Monday.

"I could subscribe to the offer. It's an attractive price," said Agilis Gestion fund manager Arnaud Scarpaci. Scarpaci recently sold 2,500 BNP Paribas shares at around 55 euros.

BNP said it would, as of October, reimburse the 5.1 billion euros in non-voting shares subscribed to by the French state on March 31 and will make a payment of 226 million euros, calculated over the seven-month period.

The move, making the most of low rates and recovering share valuations -- with the CAC-40 (.FCHI) blue-chip index breaking the 3,800 points index for the first time since October 2008 -- will also free BNP Paribas from the state's conditions for its financial help, including limits on bonus payments.

At 0726 GMT (3:26 a.m. EDT), BNP shares lead the gainers on the CAC 40 rising 3.2 percent while the DJ Stoxx European bank index (.SX7P) was up 0.6 percent.

SEEKING FREEDOM FROM GOVERNMENTS

Among European banks, Italy's Unicredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI) are set to raise funds in an effort to keep politicians at a distance and take advantage of healthy capital markets.

Britain's Lloyds Banking Group (LLOY.L) and Royal Bank of Scotland (RBS.L) are also considering raising billions from equity raising or asset sales to limit the state's stake.

Swiss bank UBS (UBS.N) (UBSN.VX) chief executive Oswald Gruebel told the Financial Times the bank also wanted to cut ties with the Swiss government by buying its way out of a bad bank deal and aimed to return to health within a year.

"BNP Paribas has increased its loan advances in France by 5.5 billion euros over the last 12 months," BNP Paribas Chief Executive Baudouin Prot said in a statement.

BNP said the capital increase, combined with new shareholders' equity resulting from the scrip dividend (0.75 billion euros) and a capital increase reserved for employees (0.26 billion euros), will finance the reimbursement of all the non-voting shares issued on March 31, 2009 to the Societe de Prise de Participation de l'Etat (SPPE) pursuant to the French State's plan to support the economy.

Following the transaction, BNP Paribas will have 59.4 billion euros Tier one shareholders' equity and its Tier one ratio will be over 9 percent on a pro forma basis as at June 30.

BNP Paribas said its earnings capacity and the organic generation of equity ensures that the group maintains financial flexibility to continue to grow in an environment where capital requirements are more stringent.

The bank added that its third-quarter results, due to be published in early November, were unlikely to differ from those of the second quarter. For the second quarter, BNP posted better-than-expected profits.

($1=.6822 euros)

(Aditional reporting by Sudip Kar-Gupta; Editing by Mike Nesbit)

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Airbus cuts A380 goal for ’09, keeps 2010 (Reuters)

Tuesday, September 29th, 2009 | Finance News

PARIS (Reuters) –
European planemaker Airbus (EAD.PA) confirmed on Tuesday it had cut its 2009 delivery target for A380s by one aircraft to 13 planes and said it was maintaining its delivery forecast for 2010.

"In agreement with a customer we have moved the 14th aircraft (for 2009) by a few weeks from December to early 2010," spokesman Stefan Schaffrath said.

"We maintain our planning to deliver more than 20 aircaft in 2010 as announced," he added.

Shares in parent EADS (EAD.PA) fell 0.5 percent in early trading, slightly lagging other leading stocks.

Airbus is shifting into a second automated production phase for the A380 known as Wave 2. The first 25 aircraft had to be wired up manually due to industrial problems that pushed delivery of the world's largest jetliner back by two years.

"We have just recently delivered the first Wave 2 aircraft and the second will follow very soon," Schaffrath said, adding the production rate was heading toward two per month.

The head of parent EADS (EAD.PA) told Reuters on Monday the move to shift one A380 delivery into 2010 followed talks with the aircraft's customer, Singapore Airlines (SIAL.SI).

EADS Chief Executive Louis Gallois also expressed concerns about the strength of the euro as EADS competes with Boeing (BA.N) for sales in dollars.

(Reporting by Tim Hepher, editing by Marcel Michelson)

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