London Gains, France Declines

Elena
24 Oct, 2006
New York City

European stock markets finished mixed due to cautious trading ahead of the Fed Reserve

[R]13:00PM European shares closed mixed.[/R]
European stock markets finished mixed due to cautious trading ahead of the Fed Reserve’s decision on interest rates. London FTSE 100 gained 0.27% at 6,182.50 points, hitting a new record high since 2001. Mining stocks declined on lower commodity prices. Anglo American tumbled 1.49%, while BHP Billiton lost 0.59%. BHP Billiton''s production update failed to impress traders, despite a record high level of aluminum production. Elsewhere in London, shares in household products maker Reckitt Benckiser rose 5.64% on better-than-expected Q3 results. The German DAX 30 added 0.07% to finish at 6,247.52 points. The French CAC 40 fell 0.13% to close at 5,404.54 points. Shares in telecom equipment maker Alcatel closed up 7.19%, helped by strong results from U.S. merger partner Lucent. Alcatel delivered lower-than-expected Q3 results because of a fall in profitability in its mobile division.

Crude oil climbed ahead of weekly U.S. inventory data. Crude oil gained 51 cents to $59.32 a barrel. London Brent rose 53 cents to $59.74. Heating oil gained 2 cents to $1.691 per gallon, while heating oil rose 5 cents to $1.518. Natural gas climbed 10 cents to $6.983 per 1,000 cubic feet. The U.S. dollar dropped against its rival currencies. The euro was quoted at $1.2566, up from $1.2574. The dollar bought 119.24 yen, down from 119.31. The British pound stood at $1.8747, up from $1.8733. European gold prices further dropped. In London, gold traded at $575.60 per troy ounce, down from $596.60.


[R]9:45AM stocks opened lower ahead of Fed reserve’s decision.[/R]
U.S. stocks opened in the red Tuesday, as investors grew cautious ahead of the Fed Reserve policy meeting. A lot of investors expect the central bank''s policymakers to leave interest rates at the same level for the third straight meeting, but there was still much concern about the assessment of the domestic economy.

Wall Street was also focused on Q3 earnings reports. Lockheed Martin Corp.((LM)), the world''s largest defense contractor, also surpassed expectations. The semiconductor sector came under pressure in early trading after Texas Instruments ((TI)) released a weaker-than-expected sales forecast and said inventories at the company rose by half from a year ago. The Dow was supported by 2.8% rise for DuPont ((DD)), as the chemical giant''s Q3 profit exceeded expectations, with the help of higher sales volume and lower fixed costs. In the first hour of trading, the Dow Jones industrial average was down 12.72, or 0.10%, at 12,104.19. The Standard & Poor''s 500 index was down 4.29, or 0.31%, at 1,372.73, and the Nasdaq composite index was down 6.93, or 0.29%, at 2,348.63.


[R]9:30AM London declines, struggles with lower metal prices.[/R]
The FTSE 100 in London fell 0.4 points to trade at 6,165.9 by mid-day.

Advancers

Shares in BP, the largest company in Britain, rose 1% after it reported third-quarter replacement cost profit slightly above expectations, up 58%. Tate & Lyle firmed 2% after Morgan Stanley raised its recommendation on the sweetener group from underweight to equal-weight.

Carpetright added 1.5% after it said sales at its UK and Irish business had increased 5.9%, while like-for-like sales in the rest of Europe were 3.6% higher. AMEC rose 0.7% after the engineering group said its joint venture with Babcock International had been appointed preferred bidder for a National Grid contract.

Debenhams advanced 2.7% as pre-tax profits at the retailer rose 67.9%. Debenhams said the retail climate had been volatile after unseasonably warm weather.

Decliners

Miners led the decliners. BHP Billiton lost 1.9% in the wake of its copper production having been hit by the strike in August at the Escondida mine in Chile. Kazakhmys slipped 2.5% while Anglo American eased 2.3%.

Autonomy Corporation was hit by profit taking after it reported a 220% increase in third quarter adjusted profit before tax. Shares in the search software company fell 3.2%. Drugmaker Hikma Pharmaceuticals dipped 3.4% following its statement that it expected annual generic sales to be slightly below those achieved in 2005.

Corporate news

Lapp Plats, mining company, today responded to a surge in its share price, admitting that it is in talks regarding a possible acquisition.

Reckitt Benckiser released a bullish set of figures today, with profits in line with forecasts and a hike to its earnings guidance for the year.


[R]9:00AM Stock futures declined on disappointing outlook from Texas Instruments.[/R]
U.S. stock market futures moved lower on Tuesday, a day after a store revamp plan by Wal-Mart drove averages higher, with the Dow reaching an all-time close. The negative mood Tuesday morning was generated by cautiousness ahead of Fed Reserve interest rate decision and a disappointing view from microchip maker Texas Instruments.

Texas Instruments ((TI)) shares dropped 1.4% in Germany after reporting slower-than-forecast 13% sales growth and warning that Q4 semiconductor growth will be below the seasonal average. Shares of peer STMicroelectronics dropped 1.9% in Paris.

Among companies reporting earnings today, chemicals producer DuPont ((DD)) said it swung to a Q3 profit of 52 cents a share, beating estimates. Lockheed Martin Corp. ((LM)), the world''s top defense contractor, reported a 47% gain in Q3 earnings to $1.46 per share, up from 96 cents per share a year ago, beating estimates of $1.24 per share. Sales rose 4% to $9.61 billion, below expectations of $9.83. The company lifted its outlook for fiscal 2006.

The commodity sector was in the spotlight in Europe, as oil giant BP ((BP)) posted a 4% profit decline, oil and aluminum producer Norsk Hydro ((NHY)) reported a 15% profit rise and metals giant BHP Billiton ((BPL)) reported a 19% drop in copper production. The Federal Open Market Committee opens its interest-rate setting meeting but results of the meeting will be announced not earlier than Wednesday. Dow Jones futures were recently down 8 points, S&P 500 futures slipped 1.7 points and Nasdaq futures fell 4 points.


[R]8:00AM DuPont swung to profit in Q3. The company predicted strong Q4 earnings.[/R]
Chemicals giant DuPont Co. ((DD)) said Tuesday that it swung to a Q3 profit, helped by improved sales and lower fixed costs, despite higher expenses for raw material. The company reported Q3 earnings rise of $485 million, or 52 cents a share, compared to a loss of $82 million, or 9 cents a share last year. Total revenue increased 7.5% to $6.31 billion from last year''s $5.87 billion, with particular strength in Asia Pacific and Europe.

The Dow component confirmed its forecast for earnings of about $2.86 a share for 2006, in line with the average analyst estimates. Excluding items, it sees earnings of about $2.85 a share. The company is optimistic about the fourth-quarter earnings, expecting significantly higher quarterly profit compared to last-year same period. The strategy of the chemical maker involve plans to continue investing in the exciting pipeline of new customer-driven products and technologies, led by the ambition to meet its long-term financial goal of 10% annual growth in earnings per share.

DuPont said it bought back $100 million of its common stock in the latest quarter, and that it now has about $1.7 billion left available on its $5 billion repurchase authorization. The company expects to complete the program by the end of 2007.


[R]7:30AM Asian markets closed mixed, Japan slips, China advances.[/R]
Asian markets ended mixed on Tuesday. The Nikkei 225 Index ended 0.1% lower at 16780.47. Softbank fell 1.1% as the company announced a cut in tariffs and added that it would other incentives in a bid to compete more effectively with its two larger rivals. DoCoMo shares fell 2.13%, and shares of KDDI, Japan second biggest cellular operator, shed 7.1%. Sony, due to report its earnings on Thursday, ended 1.3% higher. Consumer electronics company Matsushita Electric rose 0.6%. Shares of Honda erased earlier gains to close higher 0.2% ahead of its quarterly earnings report Wednesday.

In Hong Kong, the Hang Seng Index ended 0.4% higher at 18153.41, while the China Enterprises Index gained 0.6% to 7496.38. Trading in Hong Kong was range-bound with investors cautious ahead of the Federal Reserve meeting later this week. The Shanghai Composite Index closed 2.6% higher at 1805.18, its highest settlement since Sept. 21, 2001. Strong institutional demand gave large capitalized companies a boost.

South Korean stocks finished flat, as weak technology stocks hurt solid U.S. cues and strong gains by construction shares. The Korea Composite Stock Price Index, or Kospi, rose 0.1% to 1366.50. Construction shares continued to advanced amid local news reports that the government intends to develop two districts near Seoul as residential towns to stabilize surging property prices. Hyundai Engineering & Construction advanced 1.1% and Daewoo Engineering & Construction gained 1.8%.

Australia S&P/ASX 200 retreated from earlier gains to closed 0.3% lower as mining shares tracked declines in oil and copper prices. Shares of BHP Billiton lost 0.5% after the mining group reported weaker-than-expected quarterly results. The Weighted Price Index in Taiwan finished higher 0.8%. Markets in Malaysia, Singapore and Indonesia were closed for holidays.


[R]6:30AM European stocks decline Tuesday on weak oil and mining stocks.[/R]
European markets were lower by mid morning on Tuesday. The FTSE 100 in London was flat at 6,167.0, Frankfurt Xetra Dax lost 0.2% at 6,229.44, the CAC 40 in Paris slipped 0.4% to 5,392.92.

Advancers

Neste Oil outperformed in a generally flat oil sector, after reporting a 67% growth in third-quarter operating profit, easily beating market expectations thanks to a strong diesel market, the company stated. Shares in the Finnish refiner rallied 3.8%.

Banks gave some support to the markets, with gains for Erste Bank of Austria after Merrill Lynch upgraded the stock. Other high growth companies in the sector also performed well. Raiffeisen rose 1.2%, while Allied Irish Banks rose 2%.

Decliners

Other stocks in the energy sector, however, were falling as crude prices undermined most shares. Norsk Hydro fell 1.8% , after it reported a smaller-than-expected 18% rise in third-quarter operating profit. Statoil shed 0.6%.

London-listed miners were on the decrease too, as precious and base metals prices also retreated, while BHP Billiton announced quarterly copper output had fallen. BHP shares fell 2.5% and Anglo American shed 2.5%.

Oil and gold

Crude oil futures edged down Tuesday in electronic trading, as bargain-hunting trimmed earlier losses sparked by softening supply concerns. December contract on the NYME traded at $58.70 a barrel, down 11 cents from Monday.

Gold traded in London at $578.40 bid per troy ounce, down from $584.20 late Monday.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Tuesday morning. The euro was quoted at $1.2540, down from $1.2546 late Monday in New York. The British pound traded at $1.8699, up from $1.8649. The dollar traded at 119.51 Japanese yen, up from 119.30.