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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (10966)	5/28/1998 2:02:00 PM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING WED, MAY 27 1998 (2) OIL & GAS TOP STORIES U.S. energy group eyes Canada Calgary Herald Coastal Corp., a Texas-based energy conglomerate, is looking to join the wave of American oil and gas producers buying in to the Canadian oilpatch. Coastal has set its sights on a corporate acquisition or property purchases in Western Canada to fulfil its commitment to ship 150 million cubic feet of natural gas a day on the proposed Alliance Pipeline. Coastal, which has no holdings in Canada, has talked with a local agent about opportunities. "It's something that we are actively looking at and when opportunities arise we are prepared to pursue them," Coastal spokeswoman Vicki Guennewig said Wednesday from Houston. Chief executive David Arledge first revealed Canadian plans at the company's annual meeting earlier this month. There are plenty of options available. Summit Resources Ltd. put itself up for sale Wednesday and retained Peters & Co., a Calgary investment firm, along with Morgan Stanley & Co. of New York to find buyers. Summit said it will consider separately selling some of its oil and gas properties. Summit joins a growing list of Calgary companies who have put themselves on the block in search of relief from low oil prices. Canrise Resources Ltd. and Torrington Resources Ltd., which are both gas oriented, are seeking buyers following the 35-per-cent drop in oil prices since last October to less than $15 US a barrel. One problem with a takeover for Coastal is that few companies produce gas in the volumes it is seeking without sizable oil production too, said Mike Tims, chief executive at Peters & Co. "Stock prices are down enough that I think in some cases it makes sense to look at (companies) but there are lots of property deals around too," he said. The resurgence of interest in Canada has been traced to the mature state of many U.S. petroleum basins, the low Canadian dollar and an anticipated rise in the price of Canadian gas as new pipelines to U.S. markets start to come on stream this fall. Recent cross-border deals include: - Union Pacific Resources Group Inc. of Dallas acquired Norcen Energy Ltd. for $5 billion. - Pioneer Natural Resources Ltd. of Dallas bought Chauvco Resources Ltd. for $1.7 billion. - Virginia-based Dominion Resources Ltd. acquired Archer Resources Ltd. for $183 million. - Cheasapeake Energy Corp of Oklahoma City paid more than $45 million for reserves held by Sunoma Energy Corp. "It seems to people on both sides of the border there are a lot of good opportunities to find and deliver Canadian gas into the U.S. market," Tims said. As a point of comparison, Archer produced 57.1 million cubic feet of gas a day and 1,755 barrels of liquids when it sold for $183 million. Coastal is seeking three times as much gas production. Any Coastal acquisition would support its 14.4-per-cent stake in Alliance. The pipeline, which needs regulatory approval, expects to begin delivering 1.3 billion cubic feet a day of gas from northeastern B.C. and Alberta to Chicago by late 2000. Rigel sees 1998 loss, North Sea go-ahead Rigel Energy Corp., pressured by low crude prices, is expected to post a net loss in 1998 despite higher oil and gas production, Rigel Chief Executive Don West said on Wednesday. Rigel was, however, expected to start reaping rewards from its U.K. North Sea operations in 1999, with what was looking like a go-ahead for the much-heralded Blake oil play in the Moray Firth region, West said at Rigel's annual meeting. West said Rigel was expected to post a net loss this year of C$22 million or C$0.39 a share, which would compare to a restated 1997 profit of C$900,000 or C$0.02 a share. Cash flow for the year was forecast at C$127 million or C$2.45 a share, compared to C$133 million or C$2.36 a share in 1997. He made his projections assuming a 1998 average West Texas Intermediate oil price of US$16 a barrel and Canadian natural gas price of C$1.95 per thousand cubic feet. West said the company's oil and gas liquids production was expected to average 25,600 barrels a day in 1998, up from 17,098 last year. Natural gas output was forecast at 166 million cubic feet a day, up from 148 million in 1997. Much of the increase in oil production was expected to be pumped from the company's 20-percent interest in the MacCulloch field in the North Sea, acquired in late 1997 for US$96 million. The field was now producing over 11,500 barrels of oil a day, he said. In total, the company expects to spend C$150 million on its operations this year, but if development plans for the Blake field are accelerated, that figure could rise by C$25 million, West said. Rigel and its partners in the play, BG Plc (quote from Yahoo! UK & Ireland: BG.L) and Amerada Hess Corp. (AHC), have drilled three appraisal wells since making the initial 13/24b discovery, which tested at restricted rates of 2,600 barrels a day in April 1997. Rigel holds a 20 percent working interest in Blake. West would not comment on the results of the appraisal wells, citing competitive reasons, but expressed confidence in the viability of the project. ''We are, I would say, 95 percent confident that this is a commercial field and will be developed. And we will be working towards that end right away,'' he said. He said last year the field could harbor as much as 900 million barrels of oil with a recovery factor of 30-40 percent. While he declined to give his projections on what the field would eventually produce, he said the partners were considering using the Glass Dowr floating production, storage and offloading vessel for the project. The Glass Dowr has a capacity of about 60,000 barrels a day and could be refitted to handle as much as 80,000, Rigel executives said. ''We are very seriously looking at that to come onto this play. If it does, it could be there early in the third quarter of 1999,'' he said. Excluding the probable Blake acceleration, Rigel planned to spend C$30 million drilling seven wells in the North Sea this year, he said. In other operating areas, Rigel planned to spend C$51 million in Alberta's Peace River Arch region this year in hopes of boosting production there by 10 percent to 18,000 barrels of oil equivalent a day. Another C$68 million was earmarked for drilling 100 wells elsewhere in Canada, where output was slated to increase by 20 percent to 14,000 barrels of oil equivalent a day, West said. He said that under current plans, Rigel's production was expected to reach 35,500 barrels a day of oil and over 200 million cubic feet a day of gas by 2000. That would mean cash flow of twice the current figure, he said. Summit Resources on auction block Summit Resources Ltd. said on Wednesday it would explore potential mergers and sales of the company, as well as the disposition of assets, in a move aimed at maximizing the value of its shares. Calgary based Summit, which has oil and gas operations in British Columbia, Alberta, Saskatchewan, Montana and North Dakota, said the move had the full support of its board of directors. The company's biggest shareholder, the California-based Rady family, also backed the move, Summit said. The company said it has retained Morgan Stanley & Co. Inc. and Peters & Co. Ltd. to be its financial advisers in any deals. Once a stock market darling because of hot speculation over its light oil properties in the Lodgepole region of the North Dakota's Williston Basin, Summit's stock price performance has been lackluster over the past two years. It was trading down 0.15 in light volume at 4 on Wednesday, down from a year-high of 7.30. The stock climbed above 16 in 1995. Two weeks ago, Summit reported a first quarter loss of C$1.8 million or C$0.06 a share, which represented a 166 percent drop from a year earlier profit of C$2.8 million or C$0.08 a share. Cash flow fell by 45 percent to C$8.2 million or C$0.25 a share, from C$15 million or C$0.44 a share in the first quarter of 1997. Based on its 33.4 million shares outstanding on March 31, Summit's current stock market value would be about C$134 million. It also has more than C$136 million in long-term debt. First-quarter oil and gas liquids production was 6,052 barrels a day, while natural gas output averaged 60.1 million cubic feet a day. Summit Resources Ltd. seeking sale opportunities The Financial Post Summit Resources Ltd. said yesterday opportunity, not financial distress, is causing it to look at selling assets or merging with another firm. The company has hired two investment firms, Morgan Stanley & Co. Inc. and Peters & Co. Ltd., to look for ways to enhance shareholder value. David Dyck, vice-president of finance and chief financial officer, said the 86-employee company has more plays than it can handle, particularly in the natural gas field. "We're looking for ways to increase our critical mass size to take advantage of an inventory of opportunities that Summit has to add upside potential to the company," he said. The 30% drop in oil prices this year is not hurting the company as much as it is hurting its competitors because it mostly produces light oil, he said. The company expects to open a data room in late June to let firms look over its books. Dyck said the company is open to asset sales, a merger or the sale of the entire company. The initiative has the support of major shareholder Ernest Rady, who owns 42% of the company, Dyck said. "We think that companies on both sides of the border are interested in what Summit is doing." U.S. companies, taking advantage of a strong US$ and the higher gas prices expected this fall as new pipelines begin operations, have been scouring the Canadian oilpatch for bargains. For example, Neutrino Resources Inc. concluded a deal to be bought by Southern Mineral Corp. of Houston, Archer Resources Ltd. was purchased by Dominion Energy Inc. of Richmond, Va., and Norcen Energy Resources Ltd. was taken over by Union Pacific Resources Group Inc. of Fort Worth, Tex. Peter Linder, an energy analyst with CIBC Wood Gundy Securities Inc. in Calgary, said some Canadian firms that might be interested in swallowing Summit can't afford to increase their already high debt. He expects to see other companies put themselves on the block as low oil and gas prices are setting the scene for brutal second-quarter financial results. "Some companies are in serious trouble. I think you'll see a few more [going up for sale]," he said. "I can see this summer as being very active for mergers and acquisitions." Summit was one of the success stories of the early 1990s, growing through acquisitions and drilling. A couple of successful wells in the U.S. in 1995 sent the stock surging to as high as $17.50. But the play never matched overheated expectations of investors and the stock sagged badly. No quick sale seen for Summit It could be months before a sale or merger involving Canadian oil and gas producer Summit Resources Ltd. is completed, one of the company's financial advisers said on Wednesday. ''Expect months here and not weeks in this process,'' Peters & Co. Ltd. vice-chairman Ian Bruce said. ''We'll probably have the data room open by early summer.'' Summit said on Wednesday it would explore sale and merger options with the aim of maximizing its share value. The move has the support of Summit's major shareholder, the California-based Rady Family, which owns 41.5 percent of Summit's stock. Bruce said he believed the Summit sale represented the beginning of a fresh wave of merger and acquisition activity in the Canadian oil patch, as low oil prices continued to pressure many companies. Depressed prices have already led to cuts in corporate cash flow estimates and a drop in production forecasts across the industry. The lower cash flow has left many firms, like Summit, with unfavorable debt-to-cash flow ratios, which was expected to lead to increasing numbers of sales, he said. Summit's main operating areas are in northeastern British Columbia, where the company has accumulated a large tracts of land, as well west-central Alberta, southern Alberta and Montana and the Williston Basin. It is also involved in a pinnacle reef exploration play in east Texas. Ipsco girds for rise in steel demand The Financial Post Steel maker Ipsco Inc. is betting up to US$450 million North American demand for heavy steel will be strong enough to handle a big increase in plate production. Directors of Regina-based Ipsco yesterday approved in principle plans to build a second mill in the U.S. to turn scrap steel into steel plate, used for heavy construction equipment, bridges and storage tanks. The company is considering three sites in the southern U.S., but Mario Dalla-Vicenza, senior vice-president of corporate affairs, would not identify them. Final selection will be based on several factors, including river access, land availability, power costs and time needed for regulatory approval. The 1.25-million-ton plant would raise Ipsco's annual total steel capacity to 3.5 million tons, 2.5 million of that in the U.S. The company has already begun the regulatory approval process. Assuming all permits are in place by the fourth quarter, a new plant could begin operating by the last quarter of 2000. Annual demand for steel plate is 12 million tons to 14 million tons, Dalla Vicenza said. "What we see is continued growing demand in North America and the fact there is sizable, huge, amounts of imported production coming into the market." The announcement was not a big surprise because Ipsco had talked of expanding a similar mill at Montpelier, Iowa, said steel analyst Anna Sorbo of CIBC Wood Gundy Securities Inc. "I think it's a good investment," she said. "They have the lowest-cost production, so why not capitalize on that and become the dominant player in the market?" She has a "strong buy" recommendation on the stock and projected a 12-month price of $60. While demand for plate steel is high, new competitors or an economic downturn could alter dynamics by the time the new mill begins pumping out product in 24 months, said Gregory Misztela, steel analyst for Griffiths McBurney & Partners. He said Ipsco intends to be a success by displacing other suppliers. He has an "accumulate" rating on the stock, with an estimated 12-month price of $51. Dalla-Vicenza said his firm looked at expanding the Montpelier works, but decided to go with a second mill. This will provide the flexibility to boost output at each location as needed. Ipsco is looking at various financing alternatives for the project, including internal cash flow, bank debt and equity. A final decision on the project will be made later in the year, subject to receiving environmental and other permits, finalizing a long term power supply and negotiating equipment and construction contracts. END - END - END

To: Kerm Yerman who wrote (10966)	5/29/1998 11:31:00 AM
From: Kerm Yerman	Read Replies (4) \| Respond to of 15196

MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING THURS, MAY 28 1998 (1) MARKET OVERVIEW Don't panic -- wait out market turmoil, say stock watchers Stock market turmoil may once again send some investors running for cover. But don't panic, market experts say. Stick to your financial plan and be prepared to ride out the ups and downs of the markets. Overseas markets fell dramatically this week while North American stock indexes were up and down, under selling pressure from investors concerned about weakening corporate profits and economic turmoil in Asia. Some analysts say the markets are overvalued, especially in the United States, and are due for a sharp fall -- a so-called correction. That might invoke memories of Black Monday of 1987 and its much smaller sibling Grey Monday from last October when the Toronto market shed 6.17 per cent and the Dow gave up 7.18 per cent. But no one is predicting such dramatic drops this time. Wall Street could lose between 10 and 20 per cent of its value in the next several months, predicts Rick Egelton, deputy chief economist at Bank of Montreal. But Canadian markets should take much less of a hit because the underlying economy here is in a stronger position. "I would expect the Canadian stock market to outperform the U.S. stock market," says Egelton. "But at the same time, if the U.S. undergoes a fairly significant correction, Canada wouldn't be immune to that." A dip in market values is inevitable, say some analysts. North American markets have become overvalued, particularly south of the border where they have been feeding off investors' expectations of bigger and better U.S. corporate profits, says Egelton. But warnings are already going out that those profits will come in lower than investors will like. At the same time, a slight rise in U.S. interest rates next year will boost the cost of doing business and slow economic growth. Those concerns are compounded by lingering fears that the economic turmoil in Asia is far from over. And adding to the woes are tight labor markets which mean rising wage costs for employers in the United States. But the picture is brighter in Canada, suggests Egelton. The domestic economy is expected to grow at about 3.5 per cent this year. Slack in the Canadian labor market should hold down wage costs and short-term interest rates will rise only a small amount, perhaps half a point, to compete with the U.S. for investment dollars, says Egelton. Stock markets in both Canada and the United States have been up and down for the last month, following steady climbs earlier in the spring. Both the Toronto Stock Exchange and Wall Street's blue-chip Dow Jones Industrial average dropped about 150 points each on Tuesday, -- the second worst daily fall for the Dow this year -- before recovering a bit the next two days. With so much turmoil, what's an investor to do? Stick to your financial plan and ignore small ups and downs along the way, advises Geoffrey Waters, portfolio manager with Jones Heward in Toronto. "The one thing you don't want to do is derail your plan for what may be a short term effect." And enjoy the overall gains -- the TSE has already grown about 13 per cent this year, despite small drops along the way, he points out. Many Canadians have gotten into the markets through mutual funds, saving for retirement. That means, think long-term. Buy good blue-chip stocks and let them grow over a long period, perhaps five years. Diversify. Ensure a mix of high and low-risk investments from various assets classes, such as stocks, bonds and money market funds. Rebalance. If you feel too exposed, with too much risk in your portfolio, shift some assets into safer, more conservative investments. Buy quality. Invest in funds with a proven track record. Stocks still show the greatest returns and should be part of most portfolios, says Waters. Nervous investors, particularly those near retirement, may decide to move holdings into safe, but low-yield, GICs and treasury bills. But in an era of low interest rates, stock markets are the only game in town for investors seeking good, steady investment growth, says Waters. "You don't have a lot of alternatives." Market Watch Whisper numbers creep into Canada Globe & Mail A company in your investment portfolio reports quarterly earnings higher than analysts' forecasts. Great, you think, the stock will pop up; it's only a question of how much. But wait -- it's losing ground, plummeting in fact. What happened? You've just become the unwitting victim of the "whisper number" -- the unofficial earnings estimates that some analysts and investors in the know bandy about. They usually differ from the official estimates by only a few cents a share, but those in possession of them can use the information to make trading decisions ahead of the pack. The scenario above is becoming increasingly common and actually happened last week with Dell Computer, one of the best known names in the technology industry. The company reported a 54-per-cent increase in first-quarter profit to 44 cents a share. This was slightly better than forecast, but a cent or two less than the whisper number. Since Dell's earnings came in below the unofficial forecast, the stock went into reverse. Over the next three days, the shares gave up an extraordinary $8 (U.S.). Whisper numbers are largely an American phenomenon, but are creeping into Canada. Everyone knows they are used, but no one talks about their origin and most have no ethical problem with them. "They are just one of those things; we're in the information business," says John Kinsey, portfolio manager of Toronto's Caldwell Securities. Whisper numbers, or at least the term, were unknown a decade ago. In the past couple of years, they have taken on a life of their own on Wall Street and to be without them means you are out of the loop. The reason: More often than not, they are more accurate than the official estimates, which are published by investor services companies, such as First Call. Academic research bears this out. Recently, three U.S. university professors collected almost a thousand whisper estimates from news stories and Internet bulletin boards between 1995 and 1997 and compared them with the projections collected by First Call. They found that whisper forecasts tended to be more bullish than the official numbers and that, on average, they were 8 per cent closer to the actual earnings numbers than First Call's. Whisper numbers were a U.S. invention, it appears, because of the enormous emphasis placed on earnings, as opposed to other measures of corporate performance. Wall Street's so-called momentum players adore companies that report constantly rising quarterly profits. When the trend is broken, they abandon the stock in droves, often with savage results. One Canadian analyst said: "In the U.S., there is an absolute preoccupation with quarterly numbers, especially in the tech sector. Without a whisper number, you can get destroyed." Whisper numbers tend to land just a few days before a company reports its results. By then, there is usually too little time for the analysts to change their published forecasts. Moreover, there is little incentive to do so. If the whisper number is higher than the analyst's own forecast, as they typically are, the stock probably will rise and everyone -- the analyst, company management and shareholders -- will end up smiling. Analysts lose credibility for overestimating earnings, not the opposite. The source of whisper numbers is hard to pinpoint, although the company itself would be a good place to start. Their accuracy implies they come from insiders. The insider might pass on a tidbit of information to a favoured analyst, who in turn may tell other analysts and fund managers. Internet investing sites pick up on the whisper and within minutes, it hits the street. "Analysts receive quiet calls from the company," says Larry Woods, editor of The Technology Review, a Toronto newsletter. "This is a game that goes on and on." Although whisper numbers have become essential investing tools, at least on Wall Street, they are morally loathsome. By definition, they are based on information that is not immediately available to everyone. It is only natural that an analyst in possession of a whisper number will pass it on to his biggest clients, the institutions, instead of the lowly retail investors. Guess who loses out by not having the up-to-the-minute forecast? It's the old story. Big-name investors get better treatment. Any small investor who has tried to grab a piece of an initial public offering is painfully aware of this. Will whisper numbers vanish in the interest of fairness? The U.S. Securities and Exchange Commission is putting pressure on companies and their investor relations and compliance officers to disseminate information to all investors on equal terms. But the reality is that whisper numbers benefit as many investors as they hurt. They are here to stay. Street returns to winning ways on strength in banks and golds Toronto's main equities index turned positive by Thursday's close but the overall market finished mixed as lackluster commodity prices weighed on investors' pocketbooks. "People said it would tank. It didn't and you could consider that a big win," said Rolie Bradley, Maison Placements Canada trader. ''Overseas, the (London) FTSE tried to rally but quickly fell back. That's the same with the U.S. market,'' said Katherine Beatty, a technical analyst with MMS International. ''In Toronto, we didn't even try to move higher at the open,'' she added. Beatty said she has a technical target of 7200 for the TSE 300 by the time this correction is done. ''The stock market is still the best place to invest your money but a bit of a correction is not surprising,'' she said. Beatty said the fragile Canadian dollar and weakness in the U.S. markets were adding to the malaise. Dealers said North American equities' late-session recovery on Wednesday, which halved losses in Toronto by the end of the day, is an excellent sign of equities' resilience. ''The market looks very fundamentally strong and the bull market's not over. This market just shows incredible resilience to be able to shake off almost everything,'' said Conor Bill, director of retail trading at ScotiaMcLeod Inc. ''What we saw yesterday, particularly in the U.S., is the market looking for an excuse to sell a couple of stocks.'' Weak oil prices and continuing softness in gold bullion were likely to spell trouble for Toronto on Thursday. Bill said the weakness likely will not be as pronounced as it was on Tuesday and Wednesday. Brent crude remained under pressure Thursday after the release of weak stocks figures. The Toronto Stock Exchange 300 composite index climbed 36.75 points, or 0.5%, to 7579.62, in a roller coaster session where the index fell as much as 38.5 points and gained as much as 43.9 points. About 104.7 million shares changed hands on the TSE, down from 112 million shares traded on Wednesday. Declining issues beat out advances 531 to 470 and 332 closed flat. The market recovered in modest trading worth C$1.5 billion. Nine of the 14 sub-indexes closed higher, including gold and precious minerals, pipelines, and the heavily weighted financial services. Shares in banks and other financial institutions which make up a quarter of the index rose more than one percent. Canadian stocks rose, led by bank issues after Toronto Dominion Bank reported better than expected earnings. The financial services subindex contributed 19 points to the advance. TD shares (td/tse) gained $1.25 to $63.80 after reporting fiscal second quarter earnings which beat analysts' estimates. The nation's fifth largest bank turned in the biggest percentage gain at 28 percent in profits by any bank in the second quarter after taking a one-time expense at the same time last year. Its earnings rose to C$307 million or C$1.00 a share. Bank of Nova Scotia (bns/tse) rose 60› to $38.85, Bank of Montreal (bmo/tse) jumped $1.25 to $81.35 and Royal Bank of Canada (ry/tse) climbed $1.05 to $87.55 to help boost the group. All three reported record earnings on Tuesday. Laurentian Bank of Canada (lb/tse) climbed 80› to $34 after it reported its fiscal second quarter earnings rose to 64› a share from 56› a share a year earlier. However, investors punished banks that failed to meet earnings expectations. National Bank of Canada (na/tse) tumbled 55› to $30 after Canada's sixth-largest bank said its fiscal second-quarter earnings rose to just 52› a share, from 44› a share a year ago. Analysts had been expecting earnings of 53› a share. Telecommunications related issues paced the TSE advance. Northern Telecom Ltd. (ntl/tse) rose 40› to $93.40. BCE Inc. (bce/tse) climbed 65› to $66.10, but is still down almost 2% since hitting a record high of $67.35 on Monday. Fonorola Inc. (fon/tse) pushed the utilities group higher, gaining $1.75 to $66.25. The long distance phone service provider said an unidentified non-Canadian company may bid for its shares in after its board this month urged stockholders to reject a $1.7 billion takeover offer from Call-Net Enterprises Inc. Utilities, with a gain of 32% this year, and financial services, up 20%, are the two best performing TSE groups. Gold shares staged a comeback. The gold group had fallen 9% in the nine previous sessions. Barrick Gold Corp. (abx/tse) gained 65› to $28.65, Placer Dome Inc. (pdg/tse) climbed 55› to $18.65 and Teck Corp. class B shares (tekb/tse) rose 50› to $18. "We're still suffering from this commodity problem," Bradley added. Soft commodity prices pulled down some of Toronto's natural resource sectors. The weaker sectors were transportation, base metals and minerals and media. Metal issues fell on expectations that Asia-Pacific economies will not rebound soon. Noranda Inc. (nor/tse) lost 30› to $25.65 and Alcan Aluminium Ltd. (al/tse) slid 55› to $42.25. CGI Group Inc. class A shares (giba/tse) rose $1.05 to $30.05 after the company raised the estimated value of its 10-year computer services contract with BCE's Bell Canada unit by $1.5 billion to $4.5 billion. Airboss of America Corp. led most actives, rising 0.10 to 0.90 on 1.3 million shares. Other Canadian markets closed higher. The Montreal Exchange portfolio rose 32.59 points, or 0.9%, to 3875.06. The Vancouver Stock Exchange gained 2.5 points, or 0.4%, to 596.05. My new site findings include profit100.com - Migt be worth a visit. New York U.S. stocks climbed, led by Goodyear Tire & Rubber Co., which accounts for more than 3% of the benchmark Dow Jones industrial average. The Dow gained 33.63 points, or 0.4%, to 8970.2 after losing 235 points in the previous four sessions. About 588.2 million shares changed hands on the Big Board, down from 687.5 million shares traded on Wednesday. The Standard & Poor's 500 composite index rose 5.36 points, or 0.5%, to 1097.59. The Nasdaq composite index rose 13.52 points, or 0.8%, to 1794.62. Goodyear shares (gt/nyse) rose US$1 13/16 to US$68 7/8. The company's earnings are expected to rise 41% this year, according to the average estimate from analysts surveyed by IBES International Inc. WorldCom Inc. (wcom/nasdaq) rose 15/16 to US$45 5/8 and MCI Communications Corp. (mcic/nasdaq) gained US$1 13/32 to US$53 15/16, leading the Nasdaq Stock Market higher. MCI agreed to sell its wholesale Internet business to British phone company Cable & Wireless PLC, in a bid to win approval for WorldCom's US$41.8 billion purchase of MCI. Intel Corp. (intc/nasdaq) fell 13/16 to US$73 1/2 on news the U.S. Federal Trade Commission will soon recommend an antitrust lawsuit accusing the world's largest chipmaker of abusing its monopolistic power. Home Depot Inc. (hd/tse), a retailer of building materials and home improvement products, rose US$3 3/8 to US$77 1/4 after announcing a two-for-one stock split Wednesday. International Stocks Early confidence evaporates LONDON -- A less than inspiring open on Wall Street, and a reluctance by investors to risk overnight volatility in Asia, saw European shares limp to a mixed close yesterday. Activity was jumpy throughout the day. Most European markets opened stronger on the back of a late rally in U.S. shares Wednesday and a modest recovery in the Japanese market. But the early confidence disappeared with news that Pakistan had conducted nuclear tests. "Everyone just stepped away, lost confidence and started selling again," said Hans-Peter Bruehwiler, director of European trading at Instinet. Bruehwiler said events in Asia remain the prime concern of most investors. "There's still a lot of money around that needs to be invested but Asia is a very big concern." There was less international concern about Russia after the Moscow stock market stabilized. The benchmark Russian RTS stock index climbed 6.1%, a recovery of half of Wednesday's losses. And in response to the bank's tripling of interest rates to 150% Wednesday, the rouble firmed to 6.149 to the US$ from 6.175. At the same time, however, Standard & Poor's put Russia's sovereign credit rating on CreditWatch, warning of the country's deteriorating debt service and fiscal situation. London: British shares finished flat, having spent most of the session tracking movements on Wall Street. The FT-SE 100 index closed at 5862.3, down 7.9 points. Frankfurt: German stocks clawed back after the previous day's heavy losses. The Dax index closed at 5481.26, down 9.38 points or 0.2%. In later screen-based trade, the Xetra Dax ended at 5507.36, up 40.48 points or 0.7%. Tokyo: Japanese shares finished higher on arbitrage buying as funds chased futures prices higher. Banks fell. Bank of Tokyo-Mitsubishi lost 40 yen to 1,415 yen and Industrial Bank of Japan tumbled 18 yen to 854 yen. The 225-share Nikkei average rose 132.26 points, or 0.8%, to 15,796.55. Hong Kong: Shares extended their losses for a fifth consecutive session. HSBC Holdings fell HK$2.50 to HK$186 while Cheung Kong Holdings shed HK$1.10 to HK$41.40. The Hang Seng index dropped 105.49 points, or 1.2%, to 8877.94. Sydney: Australian share prices closed higher after bargain hunters, encouraged by strength on the Japanese market, went on a late buying spree. Woolworths Ltd. rose A17›, or 3.2%, to A$5.51, Telstra Corp. gained A7›, or 1.8%, to A$3.80, and News Corp. rose A28›, or 2.9%,to A$9.89. The all ordinaries index climbed 27.6 points, or 1%, to 2714.6.

To: Kerm Yerman who wrote (10966)	5/29/1998 11:53:00 AM
From: Kerm Yerman	Respond to of 15196

MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING THURS, MAY 28 1998 (2) MARKET OVERVIEW, Con't Early This Morning European Stocks up on Firmer Dow and Dollar European stocks opened firmer on Friday as a higher close on Wall Street and the dollar's rise to a seven year high against the yen tempered market concerns about Russia and Asia. Danish stocks and bonds surged after the country voted ''yes'' on Thursday in a referendum on a key European Union treaty, prompting its central bank to cut key interest rates by a quarter of a percentage point. Germany set the trend for European stocks, with speculation about take overs in the chemical sector and positive corporate earnings lifting the Xetra DAX index by 0.7 percent in early trade. ''Rumours about take-overs in the chemical sector are still driving the market today,'' one trader said. Hoechst, seen by traders as the most likely takeover target, and Bayer led gainers. The dollar also gave a fillip to chemicals stocks and other exporters after the U.S. currency rose as high as 139.20 yen in Tokyo trade, its highest since August 1991. Dollar/yen eased back on talk of profit-taking early in the European session, but traders said sentiment for the dollar remained bullish given the gloomy state of the Japanese economy. Further evidence of the problems in Japan came with news that the unemployment rate surged to a record 4.1 percent in April, higher than analysts' expectations. Japan's Nikkei 225 index closed 0.8 percent lower on the data. ''There is scope for a higher dollar, but Foley's comments on trade may cap dollar/yen today.'' a dealer said. U.S. Ambassador to Japan Thomas Foley said on Friday the United States was closely watching the ''rapidly rising'' U.S.-Japan trade imbalance. Safe-haven flows also boosted the dollar after Pakistan's nuclear tests on Thursday. Concern about rising tensions between Pakistan and India was expected to limit gains and activity on the London bourse, where stocks followed the German and U.S. markets higher. The FTSE 100 index was up about 0.3 percent, unmoved by UK trade data that was largely in line with expectations. Shares in brewing and hotels group Bass jumped more than three percent after Morgan Stanley added the stock to its European top 10 list. ''Across the board there's a bit of buying and there's a better undertone,'' said one dealer. ''There's some money about and the market's very thin.'' Stocks were underpinned by a 0.38 percent rise in the Dow Industrials index on Thursday, its first gain in five sessions. Worries about Russia's economic woes were expected to reduce activity in the London market ahead of the weekend. The Russian Trading System's benchmark RTS shares index fell 1.85 percent in early trade. Dealers were watching the government debt market for further signs of stabilisation after the central bank tripled interest rates to 150 percent to defend the rouble. The Russian government said its overhaul of the budget would begin to bear fruit in four to five months, but it had done enough to stabilise markets and amend the budget to end the financial crisis. Its comments came as President Boris Yeltsin sacked the head of the tax service following this week's market turmoil. In Denmark, the focus was firmly on domestic events as the central bank cut interest rates by 25 basis points with immediate effect. The cut followed a ''yes'' vote in a referendum on the EU's Amsterdam Treaty. "The cut is absolutely positive for the market mood, coming as it does in the wake of the EU 'Yes','' one dealer said. ''It is stimulating investor interest, which was flagging due to uncertainty up to the Amsterdam Treaty referendum.'' Banks were strong, with Den Danske Bank up 24 crowns at 864 and bio-tech group Novo Nordisk, a key blue chip, putting on 31 crowns to 1,101. Danish bonds were steady but off earlier highs after the rate cut. At 0830 GMT, the benchmark 7.00 percent 10-year bond stood at 113.97, yielding 5.09 percent, or 21 basis points over 5.25 percent 2008 German Bunds. The Danish crown traded at 3.8082 per mark, unchanged from Thursday's French shares opened higher, following the German and U.S. markets. Bouygues climbed 4.27 percent on a reported build up of a 10 percent stake by U.S. fund Capital Research. Dassault Aviation up 1.48 percent after Daily La Tribune reported the aircraft maker was preparing to form a joint venture with British Aerospace to research the next generation of combat jets. MARKETS AT 0937 GMT CURRENCIES (figure in brackets previous London close) Dollar/mark 1.7838 marks (1.7780) Dollar/yen 138.99 yen (138.5250) STOCK MARKETS LONDON - FTSE 100: 5880.4 points, up 18.1 or 0.31 percent FRANKFURT - Xetra DAX: 5554.89 points, up 47.53, or 0.86 percent PARIS - CAC-40: 4057.02 points, up 42.1, or 1.05 percent PRECIOUS METALS (figures in brackets previous London PM fix) Gold - $292.65 per ounce ($294.00) Silver - $4.96 ($5.08) Brent crude oil futures $14.05, down $0.08 OIL & GAS REVIEW World Oil Prices Fall on U.S. Stock Data LONDON, May 28 - World oil prices were driven downward on Thursday by continued concerns of oversupply and surprisingly bearish U.S. gasoline and distillate inventory data, oil traders said. Brent crude closed off 10 cents, at $14.13 a barrel, after touching a day's low of $13.90. Traders cited five-year highs in Western hemisphere crude oil inventories as too large for any dramatic near term price recovery. Crude oil storage facilities on both sides of the Atlantic were nearly full and demand for oil sluggish, traders said. Signs that the UN and Iraq could be close to agreement on resuming ''oil-for-food'' exports intensified the bearish tone. The glut comes in spite of a March pact reached in Riyadh in which members of the Organisation of the Petroleum Exporting Countries (OPEC) and some independent producers agreed to cut two percent from global supply in an effort to shore up prices. In the U.S., weekly data from the American Petroleum Institute (API) showed a hefty 3.232 million barrel rise in gasoline inventories to 125.72 million barrels, contrary to an expected drawdown of 1.35 million barrels. U.S. distillate stocks rose by 1.69 million barrels, the API said. These were confirmed by U.S. Department of Energy data released on Thursday. Earlier this week, former Saudi Oil Minister Sheikh Zaki Yamani said OPEC would have to cut crude oil output again to stabilise prices when their ministers meets in Vienna on June 24. Yamani said in a speech presented at an oil company conference that if the organisation wanted to stabilise Brent at around $14 a barrel, then it would have to restrain output to 27 million barrels a day. A survey for April pegged output by the 11-member OPEC at around 28.2 million bpd. Some analysts are predicting monthly May data to confirm a stockbuild of crude oil and petroleum products approaching 50 million barrels for the month. NYMEX Crude down Late and U.S. gasoline prices fall on bearish news NEW YORK, May 28 - Crude oil and related products closed lower on the New York Mercantile Exchange, after two separate reports showed that U.S. gasoline inventories jumped last week. The Nymex July crude oil contract fell 14 cents to close at $14.85 a barrel, while the June gasoline contract dropped 0.76 cent to close at 49.20 cents a gallon. The American Petroleum Institute said late Wednesday that U.S. gasoline inventories rose 3,232,000 barrels last week. Thursday morning, the U.S. Department of Energy said gasoline stockpiles rose 2 million barrels in the week. Analysts had anticipated a reduction in inventories, in preparation for the usually strong demand over the May 23-25 Memorial Day long weekend. ACCESS energy futures fell Thursday, amid higher gasoline stockpiles and news the United Nations will likely approve a plan allowing Iraq to continue exporting petroleum under a oil-for-food program. After falling 14 cents a barrel in daytime trade, July crude oil came off another eight cents on ACCESS to trade at $14.77 by 1720 PDT. A meager 603 lots changed hands, with 468 traded in July. Earlier, news reports said the U.N. was expected to allow Iraq to sell up to $5.25 billion in oil over six months. That program will start after the current plan ends June 3. ''That might be a reason we're still coming off,'' an ACCESS trader said late Thursday. Prices fell during the day after the American Petroleum Institute (API) reported a sharp gasoline build late Wednesday. As of May 22, U.S. gasoline inventories rose a hefty 3.232 million barrels to 125.72 million, contrary to the drawdown of 1.35 million barrels which analysts forecast. The market had predicted a drawdown amid healthy gasoline demand for the long Memorial Day holiday which passed last Monday. The holiday traditionally kicks off the summer driving season. Unleaded gasoline for June delivery also fell on ACCESS, trading at 49.15 a barrel, or 0.05 cent below settlement. Trade for June unleaded reached 29 lots by 1700 PDT. At the same time, volume was 50 lots for all months. Heating oil for June traded 38.95 cents a gallon, or 0.03 cent under settlement, traders said, with 44 lots traded overall. NYMEX Hub natural gas ends with short covering gains NEW YORK, May 28 - NYMEX Hub natural gas futures ended higher across the board Thursday in fairly tame trade, lifted by slightly firmer physical prices and some technical buying when an early attempt to move lower stalled, sources said. July climbed 2.5 cents to close at $2.071 per million British thermal units after trading in a narrow range between $2.035 and $2.085. August settled 2.4 cents higher at $2.124. Other deferreds ended up by 0.3 to 2.2 cents. "We saw some minor short covering after support held early. July could test $2.115, but it will be tough to break $2.15. A close above there would be extremely bullish," said one Midwest trader. While the market has been oversold and due for a correction, traders said lingering concerns about high storage were likely to make any rally difficult to sustain without hotter weather. AGA said Wednesday U.S. gas stocks rose last week by 92 bcf, in line with Reuter poll estimates in the 80-90 bcf range. But overall stocks climbed to 453 bcf, or 41 percent, above last year. Forecasts still call for mostly above-normal temperatures across the central and eastern U.S. into early next week, but seasonal or below-seasonal readings are predicted by midweek. Hot weather is expected to continue in Texas for the next week or so, with highs predicted near 100 degrees F in western parts of the state. Cooler than normal and wet weather is still forecast for much of the West. Technical traders still pegged key July support at Friday's low of $2.03, which coincides with the $2.025 double bottom from last July and recent lows at $2.035. Spot continuation lows at $1.99 and $1.96-1.97 should also stir some buying. July resistance was seen at $2.14, $2.21, $2.255 and then at $2.33. In the cash Thursday, Gulf Coast swing quotes were flat to up slightly in the $2.03-2.08 area, with June gas on the same pipes talked on either side of $2. Midwest swing was little changed in the mid-$1.90s, with June one to two cents under swing. Chicago city gate day gas firmed a few cents to about the $2.20 level, while New York eased two cents to about $2.30. The NYMEX 12-month Henry Hub strip gained 3.3 cents to $2.321. NYMEX said an estimated 44,908 Hub contracts traded today, down sharply from Wednesday's revised tally of 117,449. U.S. June spot gas prices trade slightly under May NEW YORK, May 28 - U.S. June spot natural gas prices held a slight discount to next-day prices on Thursday as above-normal temperatures covered most of the eastern two thirds of the U.S., industry sources said. Cooler weather is forecast to seep into the upper Midwest and Northeast this weekend, but the heat is expected to linger in the South into next week. Physical June gas at Henry Hub was quoted today mostly at $2.03-2.04 per mmBtu, while next-day business remained at $2.07-2.10. In the Midcontinent, June prices hovered in the mid-$1.90s, with Chicago city gate pegged mostly at $2.12, market sources said. Next-day business in the Midcontinent was talked again at $1.93-1.98, while Chicago trades were reported done around $2.20. In west Texas, Permian prices were mostly at $1.82-1.84 for June 1 and at $1.84-1.90 for Friday. San Juan prices were at $1.71-1.74 for June 1 and at $1.73-1.78 for Friday, sources said. Transwestern Pipeline Co.'s unit 2 at the Keystone gas plant in western Texas is expected to remain shut until June 19 following scheduled maintenance. The outage began Tuesday and is affecting about 30 million cubic feet per day of supply. In the Northeast, June gas at the New York city gate sold at $2.25-2.26, while next-day business was quoted little changed at $2.29-2.32. Scheduled maintenance work is underway on Sonat Inc.'s Sea Robin line at the Vermilion Block 149 compressor station. The outage, which is still expected to end this weekend, is affecting about 70-75 million cubic feet per day of supply. Canadian spot natural gas prices hold in slow trade NEW YORK, May 28 - Canadian spot natural gas prices were mostly steady Thursday as the convergence in prices between May and June kept trading fairly quiet, market sources said. ''The market (in Alberta) has leveled off with June. It's really going nowhere,'' a Calgary-based trader said. Spot prices at the AECO storage hub in Alberta for both day and June gas were talked at C$1.71-1.725 per gigajoule (GJ), up from C$1.70-1.71 on Wednesday. Storage injections in Alberta totaled 647 million cubic feet per day (mmcfd) on Wednesday, down from 805 mmcfd on Tuesday. Field receipts on NOVA were mostly steady at 12.0 billion cubic feet (bcf) on Wednesday. Also, the allowable IT at the East Gate (Empress/McNeill) will be 62 percent of IT nominated, equating to a cut of 44 mmcfd. At the borders, Sumas gas prices in the west were quoted unchanged at US$1.38 per million British thermal units (mmBtu). At Niagara, prices were steady to slightly lower at US$2.18-2.19, while June business was quoted mostly at US$2.15-2.16. Canadian Gas Association storage survey for week ending May 22 can be found at biz.yahoo.com This Morning Oil Prices Flat, Glutted Market Eyes More Iraqi Oil LONDON, May 29 - World oil prices were little changed on Friday but bearish traders saw the possibility of a temporary halt in Iraqi exports recede as they scoured the West for spare tanks to store unwanted oil. World benchmark Brent blend crude was down three cents at $14.10 a barrel at 1250 GMT. Prices have fallen from over $15 earlier in May and are $5 below the average price last year. ''It's still a fairly grim situation on the physical oil market...as bad as any I can remember,'' said Nigel Saperia of Bankers Trust International in London. Five-year highs in Western crude oil stocks, the prospect of rising supply next month and seasonally falling demand will pressure prices lower, said traders. ''This month we had a lot crude oil taken off the market into South Africa and Germany. But we don't expect that to happen again next month,'' said a trader. ''There just isn't anywhere left to store oil in Europe, everywhere is full,'' said another. Iraq's current six month oil-for-food'' deal with the United Nations ends on June 3 and some oil traders had expected an interruption of possibly several weeks before the next phase of the deal got under way. There have been hold-ups lasting several weeks between deals twice over the past year. But United Nations Secretary-General Kofi Annan is expected to sign the food distribution plan on Friday, giving the final go ahead for the next six-month programme to begin on June 4. Iraqi Foreign Minister Mohammed Saeed al-Sahaf said Baghdad would halt exports for a few days in early June. In February, the United Nations approved an increase in Iraqi oil exports from $2 billion to $5.25 billion, to begin after Annan approves Iraq's distribution plan. But the new plan calls only for a maximum $4.5 billion in oil sales over the next six months providing Iraq can upgrade its oil industry. The next step is for the Security Council to approve $300 million in spare parts for Iraq's dilapidated oil industry. But members disagree on how to do this and no action is expected until next week. Despite the rise to $4.5 billion worth of oil Baghdad is already pumping close to capacity and there will not be a big change in the amount of Iraqi oil hitting world markets. Exports have been near 1.6 million barrels per day over the past month which would earn Baghdad about $3.2 billion over six months a current prices. The relatively smooth roll-over of the Iraqi ''oil-for-food'' deal will keep the pressure on OPEC to shore up its pact with some independent producers to cut two percent from global supply. Earlier this week, former Saudi Oil Minister Sheikh Zaki Yamani said OPEC would have to cut crude oil output again to stabilise prices when its ministers meets in Vienna next month. Yamani said in a speech presented at an oil company conference that if the organisation wanted to stabilise Brent at around $14 a barrel, then it would have to restrain output to 27 million barrels a day. A Reuters survey for April pegged output by the 11-member OPEC at around 28.2 million bpd. Oil traders agree that OPEC must cut deeper if it wants to boost oil prices. The pact called for cuts of 1.5 million bpd but OPEC's efforts were undermined by rising Iraqi exports and analysts have said Norway's pledge to cut looks unlikely to have removed volumes from the market. Commentary CRB Outlook: Steady to down on softs, livestock pressure Updated Fri May 29 09:28 ET Chicago--May 29--The Commodity Research Bureau index is expected to be steady to lower again today, as losses in softs and livestock could be partly offset by gains in Jly crude oil. Softs were seen lower, with cocoa futures opening down after a drop in morning London trade and after Thursday's sharply lower session in New York. Coffee futures opened lower after a drop in London robusta futures on origin selling from the east and the threat of Vietnamese offers. Energy was expected to steady to slightly higher, with New York Jly crude oil seen flat to up 5 cents ahead of Jun product expiry. Livestock were seen steady to lower, with hogs down on dropping cash prices and cattle potentially steady on near-term oversold conditions. Grains were seen slightly lower in line with Project A trade. Early calls for soybeans were flat to down 2 cents per bushel, with corn flat to down 1c and wheat up 1 to 2c. The CRB index was last down 6 basis points at 214.40. Energy Commentary For May 29, 1998 Energy prices once again posted moderate losses on Thursday after a bearish API report Wednesday evening. Spreads in both the gasoline and crude markets continue to perform on the weak side. While many expect additional production cuts at the upcoming June 24th OPEC meeting, it is doubtful that there will be enough cuts to create any major change in trend. History clearly demonstrates that importing nations have a tendency to build inventories during times of political uncertainty. With the economic turmoil in Asia, India and Pakistan's testing of nuclear warfare, and Russia's financial collapse, I believe the energy complex will experience some exogenous event in the not-too-distant future that will dramatically change the fundamental picture. Until that happens the trend will remain lower. For today, expect prices to remain on the defensive. Gasoline will probably lead the complex lower.