Europe and Asia Mostly Lower

12 Apr, 2005
New York City

European and Asian benchmarks were mostly lower Tuesday dragged by chip stocks and profit-taking in the retail sector.

U.S. Trade Gap May Expand

European and Asian benchmarks were mostly lower Tuesday dragged by chip stocks and profit-taking in the retail sector.

The dollar weakened against the yen and the euro on speculation a U.S. government report today will show the trade gap probably expanded to the second- largest on record in February.

The UK's largest supermarket Tesco fell 1.3% as investors took profits. Tesco has become the first UK retailer to surpass 2 billion pounds in annual profit.

Shares of Advantest Corp. (ATE) dropped 1.4%, while Au Optronics (AUO), Taiwan Semiconductor (TSM) and United Microelectronics (UMC) gained. The Taiex index was up 0.2%.

Japanese bank stocks fell after Bank of Japan said Japanese bank lending dropped 3% in March on year. Companies continue to use profits to pay down debt rather than borrow more funds for investment. Bank lending in Japan has been down for seven straight years.

U.S. markets today expect the minutes of the March 22 meeting of the Federal Open Market Committee to shed some light on whether the Fed will head off inflation or ensure growth. Increasing interest rates could stabilize the dollar.

The February trade deficit report is also coming Tuesday. A wider trade gap would mean that imports exceeded exports and that U.S. consumers are buying more products made by overseas companies, leaving exporters in Asia and Europe with more dollars to convert.

Crude oil for May delivery ended up 0.7% at $53.71 a barrel, rebounding from an intra-day low of $52.10.

In earnings news, biotech giant Genentech Inc. (DNA) posted strong growth in profit and revenue in the first quarter as sales of its new cancer drug Avastin continued to expand. Net income jumped 61% to $284.2 million, or 27 cents a share, from $176.6 million, or 16 cents, a year earlier. Revenue rose 50% to $1.46 billion.

NCR Corp. (NCR), which makes ATMs and cash registers, raised its first-quarter earnings forecast to 16 cents a share from a range of two cents to five cents a share announced in January. For the year 2005, the company expects to earn $1.35 to $1.40 a share, above prior forecasts of $1.20 to $1.25.

BMC Software Inc. (BMC) warned that its fourth-quarter earnings and sales will fall short of projections, and said it will cut 12% of its work force to reduce expenses. The company expects to earn three cents a share on sales from $388 million to $400 million. Dismissals should reduce annual expenses by $100 million.

Northwest Airlines (NWAC) is in final talks to order 18 Boeing 787 Dreamliner airplanes valued at around $2.1 billion, according to newspaper reports. The Chicago based aerospace company will seek to compete with Airbus, tapping in more high-profile sales.