OML leads insurers higher in London

Banks and insurers led European equities markets higher Thursday on the possibility of takeovers in both sectors and on the hope that an agreement on the US bailout plan will come soon.

The FTSE 100 added 1.99 percent to 5,197.02 in London, while the FTSE 250 gained 0.32 percent to 8,434.65.

All five of the biggest gainers on the 100 were in the insurance sector, led by Old Mutual (LSE: OML; JSE: OLOML) with a gain of 12.56 percent, followed by Royal & Sun Alliance (LSE: RSA) at 11.08 percent higher while Aviva (LSE: AV) added 9.92 percent, Legal & General (LSE: GEN) was up 9.8 percent and Prudential (LSE: PRU; NYSE: PUK) gained 8.46 percent.

Most banks were higher, but Bradford & Bingley (LSE: BB) dropped 15 percent, and most miners were lower, led by Aquarius Platinum (LSE: AQP), which dropped 7.7 percent while Eurasian (LSE: ENRC) fell 6.3 for the worst performance on the 100.

The FTSE Eurofirst 300 was down 2.24 percent to 1,126.25 while the Dax fell 1.99 percent to 6,173.03, the CAC-40 was 2.73 percent lower to 4,226.81 and the IBEX dropped 2.93 percent to 11,438.6.

UBS (SWX: USBN; NYSE: UBS; TYO: 8657) added 5.3 percent on the possibility of a bid from HSBC (LSE: HSBA; NYSE: HBC; Euronext: HSBC; SEHK: 005), which was up 1.79 percent in London, while Repsol YPF (IBEX-35: REP; NYSE: REP) gained 4.4 percent on a report that Total (Euronext: FP; NYSE: TOT) and Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) are interested in buying the Spanish oil company.

Meanwhile, Swiss Re (SWX: RUKN) was up 5.2 percent on a statement that its liquidity is acceptable even without external funding sources.

Most equities markets in the Asia-Pacific region were lower after US President George W. Bush said in televised remarks that the US faces a “long and painful” recession if an agreement cannot be reached soon on a bailout program for the financial sector, while reduced output by Japanese carmakers and declines among miners also hurt markets.

In Tokyo, the Nikkei 225 was down 0.9 percent to 12,006.53 while the Topix index was 1.2 percent lower and the Mothers market dropped 0.62 percent to 435.69.

New data showed that Toyota’s (TYO: 7203; NYSE: TM; LSE: TYT) output dropped 17 percent globally in August, while Nissan’s (TYO: 7201; NAS: NSANY) output fell by 5.5 percent and Honda (TYO: 7267; NYSE: HMC) saw output drop by 4.8 percent, sending Toyota’s shares down 2.5 percent while Honda fell 3.2 percent and Nissan dropped 5 percent on the session.

Tokyo’s markets were hurt not only by declines in output by automakers, but also by new numbers showing that Japanese exports to the US fell by 22 percent in August compared to the same month last year, and by another bankruptcy in the property sector as Re-plus (TYO: 8936) became the 11th property company to file for protection this year.

In the construction sector, meanwhile, Taisei Corp. (TYO: 1801) was down 1.2 percent after losing as much as 8.8 percent on a projection of losses for the full year, which it blamed on problems in the property sector.

Elsewhere in the region, the Hang Seng was down 0.15 percent to 18,934.43 while in Australia the Sydney Ordinaries fell 0.59 percent to 4,960.8 and the S&P/ASX200 dropped 1.09 percent to 4,927.4.

The Sensex was down 1.06 percent to 13,547.18 in India while Taiwan’s Taiex was 1.17 percent lower to 6,060.83 and the Straits Times Index dropped 1.35 percent to 2,444.24.

Indices seeing gains included South Korea’s Kospi with a gain of 0.38 percent to 1,501.63 and the Shanghai Composite, which added 3.64 percent to 2,297.5.

At just past 12:30 p.m. in New York, the Dow Jones Industrial Average was up 2.31 percent to 11,075.67 while the Nasdaq Composite had added 2.01 percent to 2,199.1 and the S&P 500 had gained 2.4 percent to 1,214.36.

The gains came on hopes that some form of the financial bailout plan will be approved soon, after two days of testimony by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke before the Senate Banking Committee and after President Bush spoke to the nation last night about the credit crisis.

Markets advanced even though new Labor Department data showed that new jobless claims were up by 32,000 in the United States last week and after the Commerce Department released numbers that had sales of new homes down 11.5 percent in August as prices for new houses were down by the most ever.

Additionally, durable goods orders dropped by 4.5 percent in August, much more of a decline than had been expected.

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