European Averages Surge 2%

Elena
15 Jun, 2006
Frankfurt

European markets closed sharply higher, lifted by bargain hunting and a strong rally on Wall Street. Industrial companies like ABB and Agfa-Gevaert were among the top advancers, rising 7.6% and 5.5% respectively. The German DAX 30 climbed 2.2%, the French CAC $0 surged 2.4%, and London FTSE 100 rose 2%.

[R]12:30PM European markets closed sharply higher.[/R]
European markets rebounded Thursday to close sharply higher after the recent steep declines. Stocks gained on bargain hunting and strong rally on Wall Street. Miner BHP Billiton and oil giant Total sharply rose to stand out among the biggest gainers. Industrial companies like ABB and Agfa-Gevaert were among the top advancers, rising 7.6% and 5.5% respectively. The German DAX 30 climbed 2.2%, the French CAC $0 surged 2.4%, and London FTSE 100 rose 2%.


Oil prices advanced for a second day in a row, following a petroleum report, which showed a decrease in crude oil inventories. Light crude July delivery rose 46 cents to $69.60 a barrel. London Brent crude added 33 cents to $67.31. Gasoline gained 1 cent to $2.0454 a gallon, while heating oil traded up at $1.9452. Natural gas lost 2 cents to $6.573 per 1,000 cubic feet. The dollar declined versus major currencies. The euro traded at $1.2631, up from $1.2602. The dollar bought 114.86 yen, down from 114.99. The British pound stood at $1.8493, up from $1.8431. European gold prices were mixed. In London the precious metal traded at $574.10, down from $676.60 per ounce. In Zurich gold traded at $572.85, up from $666.65. Silver closed at $10.15, down from $11.15.


[R]11:30AM Stocks rallied in late morning trading.[/R]
The U.S. equity markets moved steeply higher Thursday morning, benefiting from broad based strength. Gold stocks posted particularly strong gains in morning trading, boosted by an increase in the price of the precious metal by $10.80 to $577.30 an ounce. Consequently, the Amex Gold Bugs Index jumped 4.7%. The energy sector was one of the market''s best performances, reflecting an upward move by the price of oil. The Philadelphia Oil Service Index was up 4%, while the Amex Oil Index and the Amex Natural Gas Index rose more than 2%. The brokerage sector stood among conspicuous gainers, lifted by bargain hunting and 3.8% gain for Bear Stearns ((BSC)) on the back of strong quarterly earnings. The Amex Securities Broker/Dealer Index advanced 4%. Airline stocks rallied over the course of morning trading, supported by significant gains for AirTran ((AAI)) and Continental Airlines ((CAL)), sending the Amex Airline Index up 3.9%. Some semiconductor, housing, and networking stocks showed significant strength as well. In midmorning trading, the Dow jumped 72.84, or 0.67%.The Standard & Poor''s 500 index was up 9.14, or 0.74%, and the Nasdaq composite index surged 26.95, or 1.29%. Bonds slumped, with the yield on the 10-year Treasury note up to 5.09% from 5.06% late Wednesday.


[R]10:30AM Indian Sensex ends nearly 7% higher in a strong rally.[/R]
The Sensex in India finished 615.62 points, or 6.89%, at 9,545.06. The turnover on BSE was $678 million or Rs 3,003 crore, slightly lower than Wednesday’s turnover of Rs 3,006 crore. The market-breadth was positive with 1,691 shares advancing, 681 declining and 46 unchanged. Value Added tax panel Chairman told reportes that the states where VAT has been implemented the revenue collection is up 23% in the first two months of implementation. He also indicated that trader registration is up 30% and revenue collection in the second year of implementation is likely to accelearate as commodities included for taxation will jump to 700 from 500.

BHEL led the gainers, surging 15.13% to Rs 1,847.50 on 0.2 million shares. Grasim Industries soared 14.50% to Rs 1,825, while large-cap HLL jumped 9.80% to Rs 204.40. Engineering & construction company L&T climbed 2%, to Rs 2,030 after it received a Rs 750 crore road construction project in Gujarat. Large-cap RIL advanced 4.61% to Rs 899 on a high volume of 2.5 million shares. ONGC, slumped to a low of Rs 970, but recovered to finish with a gain of 3.69% to Rs 1,024 on a volume of 0.5 million shares. State-run Indian Oil Corporation also soared % to Rs 370.95 on 3.63%, in the wake of reports that it has issued its first gas oil import tender to deliver a 0.05% sulphur cargo to the country''''s west coast this year.

The cement sector jumped on delayed monsoon in some parts of the country. This has led to advances in prices across the country. Shares of UltraTech Cement were up 10% to Rs 631.60, Mysore Cements added up 10% to Rs 33.50, ACC surged 6.65% to Rs 742, and Gujarat Ambuja Cements advanced 7.62% to Rs 91.15. Ciba Specialty Chemicals climbed 5.42%, to Rs 278 on a contract for a joint venture with the Virchow Group, Hyderabad, to produce Triclosan for domestic and other Asian markets and Kale Consultants advanced 5%, to Rs 84.40 on securing a 5-year contract for revenue accounting and data processing services valued at $15 million.


[R]9:45AM Stocks advanced for second day in a row.[/R]
Stocks moved higher for a second consecutive session, recovering from recent heavy loss on bargain hunting, strong quarterly earnings from Bear Stearns and mild economic data. Bear Stearns ((BSC)) was the latest of its peers to post upbeat Q2 results on improved trading activity during the market''s runup in the spring. Thursday morning, the Federal Reserve reported that industrial production unexpectedly fell 0.1%, below estimates for a 0.2% rise and down sharply from a 0.8% jump the month before. The Fed said capacity utilization fell slightly to 81.7%.

In early trading, the gold sector moved notably higher, boosted by a significant increase I the price of the precious metal. The Amex Gold Bugs Index climbed 4%. Airline stocks also performed well, strongly supported by Continental ((CAL)), AMR ((AMR)), and AirTran ((AAI)) and contributing to a 3.5% gain by the Amex Airline Index. Energy stocks posted significant strength as crude oil prices advanced. The market also benefited from strength in a variety of other sectors, with some brokerage and housing stocks posting notable gains. Among brokerage stocks, Bear Stearns rose 1.6% on earnings. In the first hour of trading, the Dow jumped 64.67, or 0.6%. The Standard & Poor''s 500 index was up 8.46, or 0.69%, and the Nasdaq composite index gained 23.05, or 1.1% as investors bought semiconductors and other undervalued sectors after a five-week sell-off. Bonds slumped, with the yield on the 10-year Treasury note up to 5.09% from 5.06% late Wednesday.

[R]Industrial production declined unexpectedly.[/R]
The Federal Reserve said that industrial production fell 0.1 percent in May following an unrevised increase of 0.8 percent in April. Economists had been expecting industrial production to increase by 0.2 percent. The drop in industrial production came as manufacturing production fell 0.1 percent and mining output fell 0.2 percent, more than offsetting a 0.2 percent increase in utilities output. The report also showed that the capacity utilization rate slipped to 81.7 percent in May from 81.9 percent in April. The capacity utilization rate had been expected to increase to 82.0 percent. The factory operating rate fell to 80.5 percent and the mining operating rate edged down to 89.6 percent, while the capacity utilization rate for utilities edged up to 86.5 percent.


[R]9:00AM Stock futures indicated a higher opening ahead of economic data.[/R]
U.S. stock futures pointed to a higher start of Thursday session, awaiting the release of several economic reports. The Labor Department''s report on initial jobless claims showed that jobless claims fell unexpectedly by 8,000 to 295,000 last week. In corporate news, shares of Bear Stearns ((BSC)) rose 3% after the company reported Q2 earnings, well above expectations. Philips ((PHG)) advanced in pre-market trading after the electronics company announced that it had reached an agreement to acquire Intermagnetics ((IMGC)) for $27.50 per share in cash, or $1.3 billion. Home builder KB Home ((KBH), expected to report earnings later on Thursday, fell 3.2% after Morgan Stanley cut the company to ''equal weight''. In other company news, Goldman Sachs Group Inc.((GS)) may be in focus as a group led by the investment bank raised its bid for Associated British Ports. Standard & Poor''s 500 futures were up 4.60 points, above fair value. Dow Jones industrial average futures were up 24 points, and Nasdaq 100 futures were up 9.25 points.

[R]Initial jobless claims dropped unexpectedly.[/R]
Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended June 10. The report showed that jobless claims fell unexpectedly. The Labor Department said that jobless claims fell to 295,000 from the previous week''s revised figure of 303,000. Economists had expected claims to increase to 320,000 compared to the 302,000 originally reported for the previous week. The report also showed that the less volatile 4-week moving average fell to 315,750 from the previous week''s revised average of 328,000. With the decrease, the moving average fell for the second consecutive week. The Labor Department added that continuing claims in the week ended June 3 rose to 2.425 million from the preceding week''s revised level of 2.410 million.

Pier 1 Imports Inc, ((PIR)), retailer of imported home furnishings, reported Q1 loss widened to 27 cents per share, down from 14 cents per share in th e year-ago period as store occupancy costs advanced and customer traffic remained weak. Sales at the company dropped 3.6% to $376.09 million from $390.31 million in the year-ago period. The company added that if not for an after-tax loss from discontinued operations of 1 cent per share, it dived 26 cents per share, matching analyst forecasts. Pier 1 announced it expects June same-store sales to be in the negative low- to mid-teens range in comparison to last year, when sales were powered by heavier promotions.""""""""

Comarco Inc, ((CMRO)), wireless equipment supplier, reported a Q1 net loss of 8 cents a share, less than the year-ago loss of 20 cents a share. Comarco added that Q1 loss incorporated about $300,000 of amortization covering previously capitalized software development costs as well as about $100,000 of non-cash compensation expense related to equity-based incentive compensation. The company’s quarterly sales advanced 33%, reaching nearly $10.6 million. The company also reaffirmed its full-year target calling for revenue growth of 20%, on top of the $46.9 million generated during fiscal 2006.

Bear Stearns Cos., ((BSC)), brokerage firm, reported Q2 net profit soared 83% beating analyst views by a wide margin on strong equities trading and fixed income revenue. Net income applicable to common shares advanced to $3.72 per share, up from $2.09 per share in the same quarter a year ago. Revenue jumped 33% to a record $2.5 billion from $1.87 billion in the year-earlier period. Analysts had projected Q2 earnings of $3.12 per share on $2.11 billion of revenue.


[R]8:00AM A bidding war broke out for AB Ports.[/R]
A bidding war broke out for Associated British Ports Holdings PLC when a consortium led by investment bank Goldman Sachs raised its offer and a rival group led by Australia''s Macquarie Bank Ltd. made a bid at the same level, both consortiums valuing the ports company at nearly 2.6 billion pounds ($4.8 billion). Goldman Sachs'' Admiral consortium first revealed it had raised its bid to 840 pence ($15.46) per share, just a day after it had reached agreement with AB Ports for a takeover at 810 pence ($14.90) per share. In March AB Ports, which owns 21 ports across Britain, as well as a 49% stake in the Southampton container port, had rejected Goldman Sachs'' bid of 730 pence ($13.44) a share.

Counterbid speculation began Wednesday when Dresdner Kleinwort Wasserstein jumped into the market and started buying AB Ports shares. AB Ports said it had also received a pre-conditional proposal from the Macquarie consortium, indicating a cash price equivalent to the Goldman Sachs offer. In the rival consortium are also the Canada Pension Plan Investment Board and Australia''s Industry Funds Management. AB Ports shares jumped 5.1% to 869 pence ($16.06) on the LSE.


[R]7:30AM Asian markets continue to advance, Japan leads the gainers.[/R]
Asian markets finished mostly higher. The Nikkei 225 Index advanced 1.13% to 14470.76. Bank, securities, tech stocks, real estate and mining shares were among the gainers due to investor confidence having been lifted by overnight trading on U.S markets. Mitsubishi UFJ Financial Group advanced 1.42%, and Advantest climbed 2.03%. Mitsui Mining & Smelting soared 10.28% and Sumitomo Realty & Development climbed 1.39%. Hong Kong’s Hang Seng Index also advanced 1.23% to 15435.08. After the market dropped 2,000 points in just a few weeks the market sentiment was firmly in upbeat mood. Some investors remained sceptical, looking at the rebound as more of a technical one. Shares in China, Singapore and Australia advanced too, but South Korea''s Kospi Index retreated from an initial 1.5% gain, shedding 0.5% to 1215.65. The bank sector lead the decline as foreign investors and institutions continued to worry about monetary tightening and global market weakness. Kookmin Bank dropped 1.2%, while Shinhan Financial edged down 1.3%. SK Telecom also fell 2.3%. Taiwan stocks also closed lower, as the Taipei Index shed 0.7% to 6426.39 due to profit-taking canceling some of Wednesday''s 2.1% climb.


[R]6:30AM European stocks make an early recovery on global market rise.[/R]
European markets opened higher in morning trading. The U.K. FTSE 100 index gained 1%, at 5,563, the German DAX Xetra 30 index advanced 1.2%, at 5,366, and the French CAC-40 index climbed 1.2%, at 4,669. On the corporate front, carmakers made gains after stronger than expected European car registrations data with Fiat adding 2.2%, while Renault climbing 1.4% and Volkswagen increasing 1.2%. DaimlerChrysler gained 1.4% and rival BMW edged up 0.9%. The aftereffects of EADS warning about delays to its Airbus A380 superjumbo have incited shareholders into revolt with the aerospace company, which is likely to remain under pressure. French regulators have made it clear that they will look at stock option sales in March by directors of EADS for any evidence of wrongdoing. Bargain hunters lifted EADS up 2.95%.

IPE Brent oil for July delivery advanced 75 cents to $67.73 a barrel in early London trade. The July contract expires at the end of the session. The August Brent contract advanced 66 cents to $69.15 a barrel. Gold jumped $16 to $574.00 a troy ounce, and silver moved above $10 a troy ounce after spending the past two sessions below this level. The dollar was lower against other major currencies in European trading Thursday morning. The euro was quoted at $1.2618, up from $1.2602 late Wednesday in New York. The dollar also dropped against the British pound, which climbed to $1.8448 from $1.8420 the day before. The dollar slid to 115.00 yen, from 115.05 the day before in New York.