Mining, Oil Stocks Push Europe Up

Elena
13 Oct, 2006
New York City

European markets closed mostly higher Friday, surpassing five-year highs. Stocks were boosted by gains in commodity-related stocks on the back of rebounding oil prices, helping to offset losses posted by cosmetics giant L

[R]12:30PM European shares broke five-year highs.[/R]
European markets closed mostly higher Friday, surpassing five-year highs. Stocks were boosted by gains in commodity-related stocks on the back of rebounding oil prices, helping to offset losses posted by cosmetics giant L’Oreal and early weakness on Wall Street. London FTSE 100 ended up 0.3% at 6,142 as mining stocks Rio Tinto and BHP Billiton rose more than1%, and oil major BP climbed 1.8%. The German DAX 30 gained 0.1% at 6,168, with support provided by chip maker Infineon Technology and technology consulting group SAP. The French CAC 40 ended flat at 5,362 , with 2.3% decline by L’Oreal weighing on the index. Shares of the cosmetics giant came under pressure, following disappointing sales figures. Still, the downward move was limited by gains at telecommunications giant Alcatel. Exchanges were again in the spotlight after Deutsche Boerse and Borsa Italiana agreed to push for a three-way merger with pan-European exchange operator Euronext. Euronext shares fell 0.8% and Deutsche Boerse also dropped 0.8%.

Crude oil prices climbed above $59 a barrel after Norway ordered production shut down at two offshore platforms. Light, sweet crude rose $1.42 to $59.28 a barrel. London Brent gained 099 cents to $59.73. Gold for immediate delivery in London jumped $8.70 to trade at $588 per troy ounce.


[R]11:30AM The Dow declined, dragged by Home Depot. Apple led the Nasdaq up.[/R]
U.S. stocks turned mixed in late morning trading Friday. A day after hitting an all-time high, the blue-chip index was dragged lower by losses at conglomerate General Electric and home improvement store Home Depot. At the same time, the tech-heavy Nasdaq was pushed to the upside, led by Apple Computer Inc. ((AAPL)), rising nearly 1%.

Shares of General Electric Co. ((GE)) traded lower 1.3% on concerns that costs in some of its businesses advance faster than revenues. The company reported Q3 profit in line with expectations and higher-than-anticipated revenues, raising concerns about weak margins. In addition, a negative brokerage recommendation pushed the Dow average and the Standard & Poor''s 500 stock index further to the downside. Home Depot Inc. ((HD)) slipped 2.6% after Prudential Equity Group began coverage of the biggest retailers with an ‘unfavorable’ rating and suggested that investors should cut the proportion of Home Depot holdings. A drop in shares of Centex Corp. ((CTX)), the fourth-largest U.S. home builder, declined 3.9% after the company cut its earnings outlook because of slowing housing market. Computer hardware stocks posted some strength, contributing to the gain shown by the Nasdaq. Apple ((AAPL)) and Dell ((DELL)) were two of the sector''s best performances.


[R]10:30AM The Sensex closes above 12,700 level as blue chips soared.[/R]
The Sensex on BSE finished 198.44 points, or 1.58% higher, at 12,736.42. But the market-breadth remained negative as small-caps and mid-caps witnessed intense profit-taking. On BSE 1,065 shares advanced, 1,459 declined, and 57 stocks remained unchanged.

From the 30-Sensex stocks, 20 advanced while the rest declined. The turnover on BSE jumped to Rs 4,071 crore, compared to Rs 3,479 crore on Thursday. The turnover on NSE was Rs 8,177.01 crore.

Economic news

The European Union and India made the first step on Friday toward an ambitious pact that both sides expect will pave the way to growing trade and investment between the two economic blocs. Currently less than 2% of European nation’s exports are to India. India exports less than $40 billion of exports to EU nations.

Inflation struck a 15-week high of 5.16% for the week ended September 30, but Finance Minister P Chidambaram stated there was no pressure on interest rates as prices will ease after arrival of recent harvest. 123jump.com survey of grain traders in the market points to higher food prices after the Diwali holiday period, despite rosy projections from the Finance Minister.

Most active

Reliance Industries was the most active stock on BSE with a turnover of Rs 207.73 crore, followed by Atlanta (Rs 204.31 crore), Infosys (Rs 176.34 crore), Reliance Communications (Rs 131.56 crore) and Tech Mahindra (Rs 102.95 crore).

Advancers

Reliance Communication led the advance, surging 6.87%, to Rs 369.70 on a volume of 36.46 lakh shares. Index heavy Reliance Industries topped its all-time high of Rs 1,195 and ended at Rs 1,195.95. It closed 1.71% up, at Rs 1,189.55, on a volume of 17.49 lakh shares.

Infosys Technologies surged 3.90% to Rs 2099.90, on 8.49 lakh shares on renewed buying post robust Q2 results. Stocks in IT sector rose with Satyam Computers egde up 0.83% to Rs 426.45, Wipro surged 2.20% to Rs 557.60 and TCS gained 3.32% to Rs 1,118.90.

HDFC Bank advanced 3.10% to Rs 988.50, on expectations of strong Q2 results. It also traded at Rs 996.90, an all time high for the stock. Engineering company rose 3% to Rs 2,395, while ONGC advanced 1.8%, to Rs 1,154.

Second–tier IT stocks also rose. Geometric Software was up 6.30% to Rs 119.40, Geodesic Information systems gained 6% to Rs 177.50), Hexaware moved up 0.52% to Rs 165, Allsec Technologies advanced 1.80% to Rs 269, and Infotech Enterprises surged 3.10% to Rs 228.50.

Polyester and conveyor belts maker Nirlon rose 4.86% to Rs 34.55, after an order from the Board for Industrial and Financial Reconstruction. Crest Animation Studios surged 10% to Rs 137.10, as its board approved the sale of property in central Mumbai. Deccan Aviation gained 1.11% to Rs 99.90, following the assignment of the purchase of 60 Airbus aircraft to a special purpose vehicle, funded by a consortium of European banks for $100 million.

Dolphin Offshore Enterprises gained 2.67% to Rs 319.70, in the wake of its announcement of a joint venture with Germany''s IMPaC Offshore Engineering GMbH, for offering engineering services to oil and gas, ship building and petrochemical industries. UTI Bank gained 3.3% to Rs 410.45, after it reported 30.2% growth in net profit for second-quarter.

Decliners

Bajaj Auto led the decliners, down 1.10%, to Rs 3,113 on trading volume of 30,506 shares. Other decliners included Tata Steel falling 1.06% to Rs 511, SBI down 0.81% to Rs 1,021.10, Cipla shedding 0.42% to Rs 260.50 and Reliance Energy sinking 0.37% to Rs 462.


[R]9:45AM Market opened lower on weaker retail sales.[/R]
U.S. stock markets opened below the unchanged mark as investors reacted to a report showing an unexpected drop in September retail sales and an inline-with-estimates earnings report from General Electric failed to inspire. The Commerce Department reported 0.4% decline in retail sales last month, largely due to a 9.3% drop in spending on gasoline. A rise in crude-oil prices was also contributed to the weakness. Light, sweet crude gained 92 cents to $58.78 a barrel in pre-market electronic trading on the Nymex.

General Electric ((GE)), diversified manufacturer, dropped 1.4% after reporting Q3 net income rise of 6%, matching forecasts, helped by 12% sales growth. Another Dow component, Microsoft ((MSFT)), gained 0.5% after it said it remains on track for the release of its Windows Vista operating system worldwide to volume license business customers in November with general availability following in January. Among stocks driven by analyst comments, Altria Group ((MO)) added 0.7% after UBS upgraded the stock to neutral from reduce, citing valuation. Yahoo ((YHOO)) fell 1% after broker Thomas Weisel downgraded the Internet company to peer perform from outperform. In the first minutes of trading, the Dow Jones industrial average fell 15.37, or 0.13%, to 11,932.33. The Standard & Poor''s 500 index was down 1.06, or 0.08%, and the Nasdaq composite index was off 4.78, or 0.20%, at 2,341.40.


[R]Import and export prices dropped in September due to steeply lower petroleum prices.[/R]
The Department of Labor released its report on import and export prices in the month of September on Friday, showing that import prices pulled back sharply after trending higher in recent months. The report showed that import prices fell 2.1 percent in September after rising 0.8 percent in each of the two previous months. The decrease marks the first drop in import prices since a 0.1 percent drop in March. The drop in import prices was largely due to a steep drop in petroleum import prices, which fell 10.3 percent in September after rising 2.1 percent in August. Excluding petroleum imports, import prices rose 0.1 percent in September. Export prices also fell in September, dropping by 0.5 percent following a 0.4 percent increase in August. This marked the first drop in export prices since November of 2005. A decrease in agricultural export prices contributed to the decrease, with agricultural export prices falling 0.7 percent in September after rising 0.9 percent in August. Nonetheless, export prices still fell 0.5 percent excluding the drop in agricultural export prices.

[R]Retail sales unexpectedly fell in September.[/R]
Friday morning, the Department of Commerce released its report on retail sales in the month of September, showing that sales fell unexpectedly. The decrease was partly due to a steep decline in sales at gas stations. The report showed that retail sales fell 0.5 percent in September after edging up by 0.1 percent in August. The drop in sales came as a surprise to economists, who had expected retail sales to increase 0.2 percent. The drop in retail sales was due in large part to a steep decline in gas station sales, which fell 9.3 percent in September after falling 1.3 percent in August. The decrease came as the price of gasoline pulled back well off its recent highs. The Commerce Department also said that sales, excluding auto sales, fell 0.5 percent in September following a 0.2 percent increase in August. Economists had been expecting ex-auto sales to come in unchanged. Meanwhile, the report showed some growth in sales at clothing and clothing accessories stores, where sales rose 3.0 percent in September after falling 0.2 percent in August.


[R]9:30 AM The FTSE 100 retreats from earlier record highs, still trading positive.[/R]
The FTSE 100 in London was 24.60 points, or 0.40% higher, at 6,145.90, at 2:22 pm GMT.

Advancers

A surge for oil prices on Friday supported the energy sector higher, and BP gained 1.8% while BG Group advanced 1.6%. In the volatile mining stocks, BHP Billiton rose 1.7%, while Kazakhmys added 1.7%.

Vodafone had quitted Carphone and chosen rival chain Phones4U as its exclusive retailer for contract customers in the UK. Vodafone shares gained 1.2%.

Decliners

Financial shares declined Bradford & Bingley shed 1.1% as ABN Amro reduced its rating from buy to hold while HBOS lost 0.6% after a downgrade from Goldman Sachs. Barclays fell 0.4% after HSBC downgraded the bank from neutral to underweight. The same broker however, lifted its rating on Lloyds TSB from underweight to neutral and raised its price target from. Lloyds shares gained 2.6%.

Other blue-chip decliners included Alliance & Leicester, down 0.9%, and Amvescap, off 1.7%. Carphone Warehouse fell another 6% after Orange stated it was considering changes to its high street strategy.

Other news

Lloyds TSB is close to its long-awaited first sale of bonds backed by residential mortgages with a 5.62 billion pounds deal that is set to add to an upbeat market for such securitisations in Europe this year.

Evraz, second biggest steelmaker in Russia on Thursday backed away from the idea of large scale mergers and said it had no intererest in linking up with the Anglo-Dutch Corus steel business.


[R]9:00AM Stock futures were steady amid General Electric earnings report.[/R]
U.S. stock market futures were steady after industrial bellwether General Electric released in-line-with-estimate Q3 results and Yahoo came in focus after a broker downgrade. The Dow looked ready to continue the strong rally they started on Thursday when it hit an all-time high of 11, 947.70, pushed higher by optimism over corporate earnings. The blue-chip index looked to advance past 12,000 Friday a day after reaching its fifth record close in two weeks. On Thursday, upbeat results at leading companies lifted the Dow to a record high. McDonald''s ((MCD)) rose 2.38% after saying systemwide same-store sales rose 9.8% in September. Warehouse chain Costco Wholesale Corp. ((COST)) jumped 7.7% after reporting its fiscal Q4 profit rose 1%. Yum Brands Inc. ((YUM)) advanced 8.26% on 12% profit growth in Q3.

General Electric Co. ((GE)), industrial products, financial services and media conglomerate, reported Q3 profit growth of 6% to 48 cents a share, up from 44 cents a year ago, boosted by strong orders across the company. Revenue climbed 12% to $40.86 billion from $36.37 billion. Results included a loss from discontinued operations of $100 million and adjustments related to the Genworth and GE Insurance Solutions divestitures. The company project 2006 earnings in the range of $1.97 to $1.99 a share, above the average analyst estimate of $1.98 a share. In broker news, Yahoo ((YHOO)) was cut to peer perform from outperform at Thomas Weisel on beliefs that the company may have a difficult time achieving medium-term consensus earnings expectations.


[R]7:30AM Asian markets jumped buoyed by strong U.S. close.[/R]
Asian markets closed higher on Friday. The Nikkei 225 Average in Tokyo finished the day 1.02% higher at 16536.54. Stocks bounced back due to retail shares surging on news of solid earnings, while oil producers advanced on a rally in crude-oil futures.

Aeon gained 3.6%, Daiei moved up 3.7% and Maruetsu advanced 5.8% as Aeon announced it got exclusive negotiation rights to buy a stake in Daiei from Marubeni, which owns a 44.6% voting rights stake in Daiei.

Hong Kong Hang Seng Index rose 0.65% to 17988.86. HSBC Holdings rose 0.6% and China Mobile jumped 1.6%, near a six-year high. South Korea Kospi Index ended 1.26% higher at 1348.60. Leading advancers included state-run Korea Gas which rose 3.6% on positive September liquefied natural gas sales, up 5.6% from a year earlier.

Shanghai Composite Index added 0.4% to close at 1784.66. In China, gains in large-capitalized companies that forecast strong earnings pushed the stock market higher, with China Southern and Shenzhen Development Bank leading advancers.

Taipei advanced 1.21% to 7068.80 and Australia S&P/ASX 200 ended 0.58% higher at 5290.00. Australian stocks closed higher with help for mining and petroleum stocks. BHP Billiton rose 1.6% while Rio Tinto gained 3.1%. Woodside Petroleum rose 1.4%.


[R]6:30AM European markets lower on profit taking in the banking sector.[/R]
European markets were flat-to-lower by mid morning on Friday. The FTSE 100 in London was little changed at 6,122.4, the CAC 40 in Paris was 0.1% lower at 5,355.08 and Frankfurt’s Xetra Dax also remained flat at 6,161.34.

Advancers

Oil stocks were higher as crude prices held above $58 a barrel after a surprise drop in heating oil stocks. Neste Oil, the Finnish refiner, gained 1.5%, while Norsk Hydro rose 1.4%. Michelin, the French tyre maker, gained 2.4% after Deutsche Bank raised its price target for the company.

Decliners

Banks dipped in early trading. Intesa fell 2.1%, Sanpaolo shed 2.3%, while Santander lost 0.7%. Credit Suisse downgraded both Intesa and Sanpaolo from overweight to neutral, telling investors to lock in profits.

French cosmetics group L''''Oreal shares slipped 2.9% after the company said that sales invoiced in North America have been held back by turbulence in the distribution sector.

Oil and gold

Oil prices gained Friday on news that U.S. heating oil inventories dropped and that Norway ordered production shut down at two offshore platforms, sharply reducing flows from the world''''s third-largest oil exporter. Light, sweet crude oil for November delivery gained 33 cents to $58.19 a barrel on the NYME.

Gold opened Friday at a bid price of $577.85 a troy ounce, up from $577.03 late Thursday.

Currencies

Against the euro, the U.S. dollar traded at $1.2551, from $1.2556 late yesterday. It was also at 119.41 yen, from 119.38.