Advancers

The mobile phone company Vodafone gained 2.7% as analysts upped their numbers following better than expected results on Tuesday. Deutsche Bank stated that although fundamentals remained difficult, there were further potential upside to consensus estimates from industry consolidation and further cost saving.

Another gainer was Old Mutual adding 2.5% as Bear Stearns forecast strong figures from the South Africa-based life assurer later this month. Among mid-caps, recruitment group Hays gained 4.6% on news of strong like for like fee growth of 15% in the first four months of the financial year. Luminar jumped 8.1% after the nightclub operator said it was in the advanced stages on a plan to divest its entertainment division.

Decliners

Of the decliners, Kingfisher shed 3.5% as UBS and Merrill Lynch both cut the owner of retailer B&Q from buy to neutral after a strong run on the shares. The stock has risen 17% in three months. Lonmin fell 2.5% as investors took profits following a 140% jump in earnings at the platinum miner.

Cadbury Schweppes lost 1.7% as Goldman Sachs cut its stance from neutral to sell, arguing the confectioner was vulnerable to further weakness as the sector experiences a tough trading environment. J Sainsbury, the supermarket chain, shed 0.7% after it reported a 60% rise in first-half underlying profit before tax. The stock had performed strongly in the run up to the figures today.

Other news

Cheaper fuel meant the pace of inflation in the UK last month was slower than forecast, an outcome that caused the City of London to trim expectations for further interest rate rises. CPI was at 2.4%, below the 2.6% forecast.


9:00AM Stock futures pointed to a flat opening ahead of FOMC minutes.
U.S. stock futures indicated a flat start of Wednesday session, awaiting the release of minutes of the last FOMC meeting as well as crude inventories data. S&P 500 futures eased 0.50 of a point at 1,397.20 and Nasdaq 100 futures were 0.75 of a point lower at 1,795.50. Dow industrial futures slipped 7 points to 12,247.

In earnings news, Tyco International Ltd ((TYC0)), high-tech manufacturing and services conglomerate, reported Q4 profit increase on higher sales and a gain from special items. Net income jumped to $1.27 billion, or 62 cents per share, up from $917 million or 44 cents per share last year. Quarterly revenue rose 8% to $10.76 billion from $9.94 billion, exceeding estimate of $10.5 billion. Full-year earnings grew 22% to $3.71 billion, or $1.80 per share, compared with $3.03 billion, or $1.43 per share a year ago.

Airline stocks are seen in the spotlight after U.S. Airways (LCC: chart) made an $8 billion offer for Delta Air Lines in cash and stock for Delta Air Lines. The airlines would operate under Delta''s name. Shares of delta gained 3.5% before market opening, while US Airways rose 5%. Among other airlines rising in electronic trading were American Airlines operator AMR Corp. (AMR: chart), Southwest Airlines (LUV: chart), United Airlines parent UAL Corp. (UAUA: chart), Continental Airlines Inc. (GAL: chart) ant others.

Elsewhere, Dow component Altria Group (MO: chart) rose 1.7% in pre-open trading after Goldman Sachs upgraded the tobacco company to buy from neutral.


8:00AM U.S. Airways Group offered $8 billion for Delta Air Lines.
US Airways Group Inc. announced Wednesday that it had offered $8 billion to buy Delta Air Lines in a cash-and-stock deal. The bid was made despite Delta’s repeated statements that it is not interested in the merger deal. The offer to buy Delta emerges from bankruptcy protection by the middle of 2007 that would give Delta''s unsecured creditors $4 billion in cash and 78.5 million shares of US Airways stock. US Airways said the offer is a 25% premium over the current trading price of Delta''s pre-petition unsecured claims as of Tuesday, and a 40% premium over the average trading price for Delta unsecured claims over the last 30 days. US Airways said it would be financially supported by Citigroup Inc. which will provide $7.2 billion in new financing for the deal.

The transaction, if completed, would create one of the world''s largest carriers with about 85,000 employees. The combined company would operate under the Delta name and serve more than 350 destinations across five continents. US Airways said the deal is expected to generate $1.65 billion in annual savings from optimization of the airlines'' complementary networks and combining facilities in overlap airports. It also said the deal would reduce unprofitable flying and improve the mix of traffic.


7:30AM Asian markets close mostly higher Wednesday, Japan edges lower.
Asian markets ended mostly higher on Wednesday. In Japan, the Nikkei 225 Average Index ended 0.3% lower to 16243.47. Shares of camera maker Canon gained 0.5%, while electronics and entertainment company Sony shed 0.6%. In construction and steel stocks, Obayashi declined 1.7% and JFE Holdings lost 0.6%.

The Hang Seng Index ended at a record high, gaining 1.1% to finish at 19093.00. China Construction Bank led the advance, surging 6.4% after BOCI raised its rating on the bank to outperform, announcing it believes that strong earnings growth and high profitability will support higher valuation of CCB. Peers Industrial & Commercial Bank of China gained 3.1% and Bank of China advanced 2.5%. Shares of wireless provider China Mobile rose 1.6%.

The Straits Times Index in Singapore advanced 0.6% to 2777.62. Strength in the property and technology sectors also helped lift shares to a record closing high. An upbeat technology sector helped lift Taiwan''s Weighted Price Index, which gained 0.5% to 7236.85. The Korea Composite Stock Price Index, or Kospi, also rose 0.4% to 1412.54. Shares of Samsung Electronics advanced 2% and LG.Philips LCD added 4.2%. Bank shares were hit hard by the announcement of the government of further moves to control property prices. Kookmin Bank shed 1.8% and Woori Finance closed down 1.4%.