While you were sleeping: Cadbury surges on offer, UN chimes in on currencies

Tuesday 8th September 2009

Cadbury Plc soared 38%, leading European stocks higher, after the chocolate and confectionery maker rejected a 10.2 billion pound offer that Kraft Foods Inc. said would create a “global powerhouse” in the food industry.

Cadbury said the bid “fundamentally undervalues” the company, a view echoed by its biggest shareholders, Legal & General Investment Management. Analysts said Kraft, whose biggest shareholder is Warren Buffet’s Berkshire Hathaway, is likely to bolster its offer, seeking to create a business with US$50 billion of global sales.

Europe's Dow Jones Stoxx 600 advanced 1.4% to 237.20 as the Cadbury offer stoked speculation mergers and acquisitions may be set to increase. Nestle SA gained 0.5% as some investors speculated the world’s biggest food maker, or Hershey Co., may be spurred to make a counter-bid for Cadbury.

Abu Dhabi yesterday offered to acquire Singapore’s state-controlled chipmaker Chartered Semiconductor Manufacturing Whitbread Plc surged 18% after the hotel and restaurant company said its Premier Inn chain will lift its performance, helping drive annual profit to the top end of analyst estimates.

The UK’s FTSE 100 gained 1.7% to 4933.18, Germany’s DAX 30 advanced 1.5% to 5463.51 and France’s CAC 40 climbed 1.5% to 3652.83. US markets were closed for the Labor Day public holiday.

The yen and the US dollar declined against the euro as stocks rose and after the Group of 20 nations ended their weekend meeting saying they would continue with measures to stimulate the global economy.

Helping stoke global risk appetite, an index of European sentiment improved and Germany factory orders rose.

The Sentix research institute said its sentiment index improved to minus 14.6 from minus 17 in August. Factory orders in Germany rose a greater-than-expected 3.5% in July, adding to its 3.8% advance in June. European Central Bank President Jean-Claude Trichet said the global economy looks to be climbing out of recession.

“A number of projections had been slightly revised up, confirming that we’re probably, in a large part of the economy, out of the period of free fall,” Trichet said at a media conference after a meeting of the Bank for International Settlements in Switzerland. Still, the global economy may have “a bumpy road ahead and of course alertness remains of the essence.”

The yen weakened to 133.35 per euro from 132.98 in New York on Friday and the greenback fell to $1.4336 from $1.4297. The yen was little changed at 92.98 per dollar. The Dollar Index, which measures the greenback against a basket of six currencies, slipped 0.2% to 77.99.

The United Nations has called for a reduction in the US dollar’s role in international trade and the creation of a new global reserve bank charged with overseeing exchange rates.

The UN Conference on Trade and Development report comes after emerging economies Brazil, Russia, India and China suggested the greenback be replaced as reserve currency, with candidates including the International Monetary Fund’s special drawing rights, or SDRs.

Copper rose for a fourth day as optimism about a return to global economic growth outweighed worries that stockpiles of the metal are growing. Inventories of copper in Shanghai rose to a two-year high of 87,108 metric tons last week, according to the Shanghai Futures Exchange. China is the world’s biggest consumer of the metal.

Copper for delivery in three months rose as much as 1.2% to US$6,349.50 a ton on the London Metal Exchange.

Crude oil traded around US$68 a barrel ahead of a meeting of the producers’ cartel OPEC this week, which is expected to keep production targets unchanged. US crude was little changed at $68.05 a barrel. Gold for immediate delivery rose 0.1% to US$995.19 an ounce in London.

Businesswire.co.nz

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