While you were sleeping: Oil slips, stocks fall; Cadbury chair disses Kraft offer

Monday 14th September 2009

Crude oil sank 3.9% in New York as shares on Wall Street snapped five days of gains and figures showed US petroleum inventories rose more than expected.

US crude for October delivery dell US$2.82 to US$69 a barrel on Friday on the New York Mercantile Exchange. Reuters reported prices may also have fallen because of Deutsche Bank's redemption of around US$425 million in double-long crude oil linked exchange-traded notes, that was set for around September 9.

The Dow Jones Industrial Average fell 0.2% to 9605.41 and the Standard & Poor’s 500 fell 0.1% to 1042. The Nasdaq Composite declined 0.2% to 2080.90.

Lenders fell, led by a 1.5% decline in Bank of America to US$16.97. Exxon Mobil slipped 1% to US$69.98 and Chevron fell 1% to US$70.75 as the price of crude fell.

Coca-Cola Co. rose 2.8% to US$51.51. Motorola Inc. jumped 8.9% to US$8.68 on optimism about a new cellphone developed with Google Inc. which provides easy access to social networking sites such as Twitter.

American Airlines may make an equity investment in Japan Airlines Corp., or JAL, to prop up its unprofitable ally, Bloomberg reported, citing people familiar with the plan. The two airlines, both in the Oneworld alliance, will also extend their code-share arrangements.

JAL is casting around for financial partners and is also in talks to sell stakes to Delta Airlines and Air France-KLM, according to the report. The Nikkei newspaper said JAL may be seeking US$2.8 billion. American Airlines rose 0.1% to US$6.70 on Friday in New York.

Cadbury Plc fell 0.7% in London after chocolate and confectionery company’s chairman Roger Carr said Kraft Foods Inc. 9.6 billion pound takeover offer was “an unappealing prospect.”

“Under your proposal, Cadbury would be absorbed into Kraft’s low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure-play confectionery company,” Carr said in a letter to Kraft chief executive Irene RosenFeld that was posted on the company’s website. Kraft is a company with “a considerably less focused business mix and historically lower growth,” the letter said.

The UK’s FTSE 100 gained 0.5% to 5011.47 on Friday. Man Group Plc rose 8.9% following a Reuters report cited John Rowsell, managing director of Man Investments, saying the hedge fund industry will have net inflows by the end of the year. The industry has turned a corner, he said.

The Dow Jones Stoxx 600 rose 0.5% to 241.74. Air France-KLM rose 6.5%. Among other regional benchmarks, Germany’s DAX 30 rose 0.5% to 5624.02 and France’s DAC 40 gained 0.8% to 3734.89.

President Barack Obama said he will fight opponents of his efforts to overhaul the US healthcare system.

“I will not waste time with people who think that it’s just good politics to kill health care,” Obama told a rally in Minneapolis. His proposals to reform healthcare have an estimated cost of US$900 billion, which is causing even some Democrats to flinch.

Gold rose an 18-month high as the U.S. dollar weakened, stoking the appeal of the precious metal as an alternative investment.

Gold futures for December delivery rose 1% to US$1,006.40 an ounce on the New York Mercantile Exchange, a record-high closing price.

The US Dollar Index, which measures the greenback against a basket of currencies of six trading partners, fell 0.3% to 76.61 on Friday, the lowest since late September 2008.

The US dollar weakened as the cost of borrowing in dollars fell. The three-month London interbank offered rate, or Libor, for dollars declined to a record low 0.299% on Friday.

The yen strengthened about 2.5% to 90.69 against the dollar and earlier reached 90.21, the strongest since February. Japan’s currency gained to 132.17 per euro. The euro gained to $1.4567.

Businesswire.co.nz

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