European Markets Extend Gains, Tullow Cuts 2016 Capex

Lucy Stoeva
13 Jan, 2016
New York City

European sentiment rebounded and investor sought comfort in the latest international trade data from China. Barratt said home completion in six months to December increased 9.4%. U.K. retailer Dunelm blamed the mild winter for the 0.8% drop in sales. Sodexo kept its forecast for 3% revenue growth in 2016.

[R]4:00 PM Frankfurt – European sentiment rebounded and investor sought comfort in the latest international trade data from China. Barratt said home completion in six months to December increased 9.4%. U.K. retailer Dunelm blamed the mild winter for the 0.8% drop in sales. Sodexo kept its forecast for 3% revenue growth in 2016.[/R]

Stocks and commodities markets in Europe extended their Tuesday gains as better-than-expected Chinese trade data uplifted market sentiment.

In China, December exports dropped 1.4% from a year ago, less than 8% decline estimated by traders. In November, exports fell 6.8% from a year ago.

The yuan remained stable and alleviated investors’ concerns about the depreciation of the Chinese currency.

The trade data also showed Chinese crude oil imports soared 9.3% in December.

Energy stocks were among the major gainers after the Brent crude oil rose 1.74% to $31.49.

BP soared 5.4%, Royal Dutch Shell gained 2.3%, and Spanish oil producer Repsol added 3.7%.

French consumer prices increased in December 0.2% from a month ago and from a year ago due to a seasonal increase in the price of services, according to National Institute of Statistics and Economic Studies in Paris.

The Bank of France said the country’s current account deficit increased in November to €1.4 billion compared to €1 billion in October.

In London, FTSE 100 index gained 65.66, or 1.11%, to 5,994.9 and in Germany, the DAX index rose 108.31, or 1.08%, to 10.093.74.

In Paris, the CAC 40 index added 63.07, or 1.44%, to 4,441.82.

Aegon surged 11% to €5.49 after the Dutch life insurance firm launched a share buyback plan for €300 million and unveiled plans to cut costs and improve profitability.

Barratt Developments Plc added 0.4% to 612 pence after the U.K. homebuilder said home completions including joint ventures in the six month period to December increased 9.4% to 7,626 units.

The average selling price increased 10.8% and total forward sales, including joint ventures, grew 20% from the previous year to £2.2 billion.

Dunelm Plc tumbled 4.1% to 868 pence after the UK homeware retailer reported adjusted comparable store sales dropped 0.8% during the Christmas season.

The company blamed the unseasonably warm weather for the decline.

Total same store sales rose 3.9% in the 13 weeks to January 2 and 4.6% in the 26 weeks to January 2 driven by the extended winter sale period, which contributed £10 million to overall sales.

Chief executive John Browett denied the rumors that Dunelm was interested in buying DIY chain Homebase.

Sodexo rose 2.5% to €91.05 after the French food services and facilities management group posted revenue growth of 4.7% for the fiscal first quarter.

The company kept its forecast for 3% organic revenue growth for the year and said it expects 8% growth in operating profit.

Tullow Oil recovered 10.8% to 136 pence after the U.K. based oil producer announced plans to cut its capital expenditure to $1.1 billion in 2016 from $1.7 billion in 2015.

Due to the lower levels of activity planned for 2016, the company booked exploration write-offs of $400 million, impairment charges of $300 million, a rig contract charge of $200 million, and $15 million in goodwill impairment charge.

Tullow Oil also reported “substantial progress” on the development of the Ten project off the coast of Ghana, which is expected to begin production in the middle of 2016.

Chief executive Aidan Heavy estimated 100,000 barrels per day oil production in West Africa in 2017.

Volkswagen AG added 1.3% to €122.5 despite the Swedish regulator launching an investigation, while the California State regulators rejected the offer of the German car maker to recall 500,000 diesel cars.