By James Langton
(August 25 – 09:00 ET) – There are no economic releases in Canada today. In the U.S., preliminary second quarter GDP came in at 5.3%, in line with expectations. The hot rate sparks interest rate fears and appears to be positioning markets for a down open. Fed chairman Alan Greenspan is speaking on globalization at the Kansas City Fed meeting today at 10:00 ET.
Stocks are up across Europe, however, thanks to strength in telecom stocks. The FTSE is up 42 points to 6,599. The CAC 40 is up 135 points to 6,597 and the DAX has gained 90 to 7,320.
European markets are buoyed by talk that the European Central Bank may raise rates to defend the euro. Bundesbank president Ernst Welteke said this morning that the slumping euro and skyrocketing oil prices and pushing inflation into Europe.
The big M&A news involves Canada’s own Rio Algom. South African miner Billiton plc has agreed to a $1.7 billion cash bid for Rio Algom. This $27 per share bid tops Noranda’s hostile $24.50 bid. Billiton has also promised to keep the firm intact, Noranda had proposed selling half its assets to a Chilean firm. Rio Algom’s board had unanimously recommended the offer. Billiton’s shares are falling on the news, with investors suspecting it has overpaid.
It’s also being reported that BP Amoco plc will regain control of a production unit of Russia’s OAO Sidanco, in which it had invested US$484 million.
In Asia, stocks finished the week mixed. The Nikkei added 241 points to 16,911. However the Hang Seng dropped 202 points to 17,236.