Europe Gains Ground

Elena
07 Jun, 2006
New York City

European markets finished largely in the positive, trying to recover from the sharp declines posted Tuesday and awaiting the European Central Bank meeting on Thursday to decide future interest-rate policy. The euro fell 0.5% to $1.2764. London FTSE 100 rose 0.3%, the German DAX 30 added 0.1%, while the French CAC 40 fell 0.1%.

[R]12:30PM European markets closed near the flat line.[/R]
European markets finished largely in the positive, trying to recover from the sharp declines posted Tuesday when concerns about higher interest rates sent global markets deeply in the red. Markets also awaited the European Central Bank meeting on Thursday to decide future interest-rate policy. Earnings news and merger-and-acquisition deals helped push stocks higher. Cadbury Schweppes rose 1.9% after it said that its annual revenue should be at the upper end of its goal range. Resolution Life rallied over 4.9% after agreeing to buy Abbey National''s life insurance operations for 3.6 billion pounds. The euro fell 0.5% to $1.2764. London FTSE 100 rose 0.3%, the German DAX 30 added 0.1%, while the French CAC 40 fell 0.1%.

Oil prices declined after U.S. government data showed rising domestic supplies of crude oil and gasoline inventories. Light crude July delivery dropped $1.55 to $70.95 a barrel. London Brent crude fell 43 cents to $70.38. Gasoline lost 4 cents to $2.14 a gallon. Natural gas futures dropped 36 cents to $6.025 per 1,000 cubic feet. The dollar rose versus major currencies on speculations of further interest-rate increases. The euro traded at $1.2777, down from $1.2834. The dollar bought 113.57 yen, up from 113.14. The British pound stood at $1.8552, down from $1.8608. European gold prices declined. In London the precious metal traded at $621.25, down from $626.10 per ounce. In Zurich gold fell to $619.45 from $626.35. Silver traded at $11.65, down from $11.76.


[R]11:30AM Stocks advanced on bargain hunting.[/R]
Stocks moved to the upside, following some early lackluster trading. The three market averages advanced as traders turned to bargain hunting. Supporting the Dow, United Technologies Corp. ((UTX)) added 1.4% to $60.90 after positive comments from Deutsche Bank. Shares of Google Inc. ((GOOG)) rose 0.4% to $391.62 after one of the company''s founders met with U.S. lawmakers to press for legislation that would prevent Internet access providers from charging Web sites more for faster content delivery. Shares of L-3 Communications Holdings Inc.((LLL)) jumped 5% on acquisition speculations after the company''s CEO''s sudden death. C.H. Robinson Worldwide Inc. ((CHRW)) jumped 3.8% on brokerage upgrade. The airline sector moved considerably higher, benefiting on retreating oil prices and higher fuel costs concerns. The Amex Airline Index gained 1.6%. Brokerage stocks also showed strength in morning trading, with Legg Mason ((LM)) helping the sector higher with an advance of 3.7%. The Amex Securities Broker/Dealer Index rose 1%. Notable strength was visible among the networking, biotechnology, and retail stocks. Housing stocks gained some ground, recovering from heavy losses in the previous sessions. Gold stocks extended declines, helping to limit the upside for the broader market. The Amex Gold Bugs Index dropped 2.6%. After the release of the Energy Department''s report on U.S. oil inventories, the price of oil further declined, contributing to significant weakness in the energy sector. The Philadelphia Oil Service Index fell 2.4%, while the Amex Oil Index and the Amex Natural Gas Index slipped more than 1%. The report showed that crude oil inventories unexpectedly rose 1.1 million barrels, versus expectations crude stockpiles to fall by 500,000 barrels. Gasoline inventories also rose, marking their sixth consecutive weekly increase.

[R]Crude oil and gasoline inventories advanced.[/R]
Crude oil inventories advanced during the most recent week, according to government statistics released Wednesday. This added to gains posted in the previous week. Gasoline and distillate fuel oil also experienced a build in inventories. The Department of Energy''s Energy Information Administration said that crude oil inventories climbed by 1.1 million barrels for the week ended June 2. Specifically, the measure climbed to 346.6 million barrels from the previous week''s level of 345.5 million barrels. This followed an advance of 1.6 million barrels in the previous week. Oil inventories for the week were 4.2% higher than last year. Meanwhile, gasoline inventories showed a week-over-week increase of 1 million barrels. This built on an advance of 800,000 barrels in the previous week. The level of gasoline inventories was 2.4% below last year. Distillate fuel oil had an inventory build of 1.8 million barrels during the week, matching the advance of 1.8 million barrels in the previous period.


[R]10:30AM Indian Sensex falls for a third straight day in highly volatile trading.[/R]
Sensex in India closed 200.56 points, or 2.01% lower, to close at 9,756.76. The turnover on BSE rose to Rs 3,262 crore ($725 million), slightly up from Tuesday’s Rs 3,009 crore ($666 million). The market-breadth was strongly negative with only 188 shares advancing and 2,219 declining and 24 shares were unchanged. Among the decliners were L&T plunging 5.70% to Rs 2,008, despite hitting a high of Rs 2,219 in early trade. Ranbaxy Laboratories shed 6.30% to Rs 364 on 0.7 million shares. It slumped to a low of Rs 348 as trading intensified. NTPC lost 5.62% to Rs 100 while SBI edged 3.40% down to Rs 812 on 0.93 million shares. ONGC plummeted 4.85% to Rs 990 on 0.8 million shares. Large-cap Reliance Industries lost 1.72% to Rs 891.05 on 4 million shares. Tata Investment Corporation plunged 7%, to Rs 354.95 on flat quarterly results.

Among the gainers was Bharti Airtel advancing 2.90% to Rs 355.60 on 0.4 million shares. Cipla also gained 1% to Rs 215 and Infosys edged up 0.76% to Rs 2,784.70. Small-cap and midcap companies plunged under selling pressure. The BSE mid-cap index lost 6.25%, while the BSE small-cap index dived 6.90%. Major decliners were, Bombay Rayon plunging 20% to Rs 137.75, Rathi Udyog off 20% to Rs 40.20, Ucal Fuel declining a huge 18.80% to Rs 108, Mahindra Gesco slumping 18% to Rs 485 and Hindustan Zinc losing 13% to Rs 456.10. Hotel Leela Ventures plunged 11% to250 rupees. The stock has lost 41% of its value in the last five weeks from its high of 427 rupees. The local affiliate of international hotel group based in Switzerland, Kempinski Hotels has operations in Mumbai and Bangalore. The company is in the room expansion stage in Bangalore and is at early stages of developments in Pune, Chennai and Hyedrabad. The company reported its fiscal fourth quarter, ending March 2006, revenue growth of 20% and earnings growth of 52%. The company reported revenue of 100 crore rupees ($25 million) and earnings of 37 crore rupees ($7 million).


[R]9:00AM Stock futures indicated a slightly positive start.[/R]
U.S. stock futures were pointing to a slightly higher opening, trying to gain some ground after the steep declines posted in the previous two sessions and somewhat helped by the upward momentum late on Tuesday. Market has been volatile recently on higher interest-rate concerns which have been growing since the Fed Reserve Chairman and other officials made comments on inflation, suggesting that the increase of the key interest rate will continue. Investors will listen closely for clues about rates in speeches from Fed officials later on Wednesday ahead of the approaching Fed''s policy meeting on June 28-29. Among stocks, shares of anti-virus software maker Symantec Corp. ((SYMC)) jumped 6.4% to $16.36 in pre-market trading after the company announced a deal with IBM ((IBM)). Shares of Google ((GOOG)) rose 1.3% before the opening bell after one of the company''s founders met with U.S. lawmakers to press for legislation that would prevent Internet access providers from charging Web sites more for faster content delivery. On the earnings front, BMC Software ((BMC)) and H&R Block Inc. ((HRB)) are due to report quarterly results on Wednesday. Standard & Poor''s 500 futures were up 2.3 points, slightly above fair value. Dow Jones industrial average futures were up 17 points, and Nasdaq 100 futures were up 5.5 points.

Uti Worldwide Inc, ((UTIW)), freight forwarding and logistics company, reported Q1 net income fell to 17 cents a share, a penny down from the same period a year ago. Revenue at company grew 23% to $773.7 million from $630.2 million. The company beat analysts’ forecasts for earnings of 16 cents a share.

American Woodmark Corp, ((AMWB)), cabinet maker, reported Q4 net income advanced to 83 cents a share, almost double from 44 cents a share in the year-earlier period. The company beat the analyst forecast for a profit of 51 cents a share. Revenue at the company advanced 4%. The company sees its Q1 sales to be up by 0%-4%, with adjusted earnings of 65-70 cents a share and net income of 60-65 cents a share.

Analogic Corp, ((ALOG)), health and security systems manufacturer, reported Q3 net income dropped to 18 cents a share, from $2.07 a share in the year-earlier period. Revenue declined to $81.3 million from $84.6 million. Operating income plunged to 18 cents a share, from $2.14 a share. The company missed analysts’ forecasts fro earnings of 41 cents a share.

Veritas DGC Inc, ((VTS)), provider of integrated geophysical services, reported Q3 net earnings of 84 cents a share, up from 52 cents a year earlier on higher demand for the geophysical services it provides to the petroleum exploration business. The company reported sales of $236.2 million, up 35% from $175.5 million in the year-ago period. The company topped analysts’ expectations for earnings of 71 cents a share.

Ryanair Holdings PLC, ((RYAAY)), airline, reported a 12.5% rise in full-year net profits, to euro 301.5 million ($389 million) from euro268.1 million the year before despite absorbing a strong rise in the cost of jet fuel. Sales advanced 28% to euro1.69 billion ($2.18 billion) from euro1.32 billion. The company did not break out Q4 results. Ryanair added that fuel costs advanced 74% to euro462 million ($596 million), while the company''s other operating costs dropped 6% in the year. It attributed the results to the efficiency of the airline''s new Boeing 737-800 aircraft and better deals with airports.


[R]8:00AM Oil prices declined on positive developments over Iran''s nuclear program.[/R]
Crude oil prices retreated Wednesday, reflecting Iran’s positive reaction to the recent diplomatic developments with the West in connection to Teheran’s nuclear program. After receiving the latest proposal from EU foreign policy chief Javier Solana, Iranian nuclear negotiator Ali Larijani called the talks with Solana ‘constructive’ and said Iran would respond after studying the incentives. However, according to analysts, uncertainty over the outlook will keep a floor under oil prices. Light sweet crude for July delivery fell 35 cents to $72.15 a barrel in electronic trading on the Nymex by midday in Europe. July Brent crude futures on London''s ICE Futures exchange fell 26 cents to $70.55 a barrel. Gasoline futures fell less than half a cent to $2.1760 a gallon, while heating oil prices were down more than a cent to $2.0312 a gallon. Natural gas prices fell 12 cents to $6.265 per 1,000 cubic feet. Oil prices have largely hovered above $70 a barrel on mixed signs on U.S. gasoline consumption, the approaching hurricane season and geopolitical uncertainties, including the war in Iraq and violence in Nigeria, the United States'' fifth-largest supplier. Nigerian militants kidnapped five South Koreans in a bloody overnight raid on a Daewoo Engineering and Construction Co. compound in southern Nigeria. The militants said the workers were contracting for oil company Royal Dutch Shell PLC at the time.


[R]7:30AM Asian stocks finish lower on U.S. interest rate concerns.[/R]
Asian markets finished lower. The Nikkei fell 1.88% to 15,096.01. Banks and heavy-industry shares were among the biggest decliners in the Tokyo session. Resona Holdings dropped 4.48%. Kawasaki Heavy Industries fell 4.29%. Machinery maker Komatsu plunged 6.5% after KBC Securities lowered its rating to sell from buy on worries that the stock was overvalued. Exporters also dived on concerns that U.S. inflation could hurt overseas demand for Japanese products. Toshiba Corp shed 3.49% and Sanyo Electric Co fell 2.3%. In Hong Kong, the Hang Seng benchmark finished down 0.98%, to 15,816.55. Property shares widened their losses as U.S. interest rate expectations impacted the dollar-pegged economy. Sinopec Shanghai Petrochemical lost 8.97% after parent company Sinopec rejected reports it intended to buy out its subsidiary''s Shanghai-listed shares. The Bank of China, having advanced every day since its debut on the exchange on Thursday, was also down 1.4%. It said that an over-allotment option in its IPO had been exercised, making possible the sale of 3.84 billion additional shares at the initial price of HK$2.95. The move raised an additional $1.42 billion, putting the total value of the IPO to more than $11 billion.


[R]6:30AM European stocks continued the decline in mid morning trade.[/R]
European markets were lower in mid morning trade. London FTSE 100 lost 20 points, or 0.4% to 5,649.4. The Xetra Dax fell 9.1 points, or 0.2%, at 5,502.81 and the French CAC 40 dropped 14.4 points, or 0.3%, at 4,783.48. On the corporate front, Novartis gained 0.1%, after the Swiss pharmaceutical company launched a $569m bid for the UK biopharmaceutical, NeuTec Pharma. The move plans to strengthen its infectious details portfolio. Neutec traded 14.6% higher. Societe Generale lost 0.2%, after the French bank announced it was buying a 10% stake in Rosbank of Russia. The deal means that Rosbank will delay its planned flotation indefinitely. France Telecom said that it intends to sell its majority stake in its directories business Page Jaunes as a non-core business. The sale of France Telecom’s 54% stake was expected to raise more than £3bn. Page Jaunes was the strongest gainer from the FTSE Eurotop 300, up 2.8 % higher, while France Telecom fell 0.2%.

Crude oil traded 26 cents lower at $72.24 a barrel by 0232 GMT, after shedding 10 cents on Tuesday. London Brent declined 23 cents to trade at $70.58. The dollar gained against the euro. In morning European trading, the euro purchased $1.2790, down from $1.2834 in New York on Tuesday. The British pound slid to $1.8573 from $1.8608 in New York, while the dollar advanced to buy 113.40 Japanese yen from 113.14 the day before.