Telecoms Lift France, Drug Stocks Drag U.K.

Elena
26 Oct, 2006
New York City

European stock markets closed mixed on Thursday, reflecting disappointing news from major drug companies, losses in the metals sector, and positive earnings news from other companies like Royal Dutch Shell and telecoms provider France Telecom. London FTSE 100 finished down 0.48%, dragged by AstraZeneca and GlaxoSmithCline. The German DAX 30 gained 0.31%. The French CAC 40 rose 0.21%.

[R]13:00PM European shares closed mixed.[/R]
European stock markets closed mixed on Thursday, reflecting disappointing news from major drug companies, losses in the metals sector, and positive earnings news from other companies like Royal Dutch Shell and telecoms provider France Telecom. London FTSE 100 finished down 0.48%, dragged by AstraZeneca and GlaxoSmithCline, down 7.6& and 4% respectively. Peers Roche Holdings and Novartis also moved lower n Switzerland. Weakness in the mining sector also weighed, with Rio Tinto closing down. At the same time, oil giant Royal Dutch Shell advanced 2.4% on Q3 earnings. The German DAX 30 gained 0.31%. The French CAC 40 rose 0.21%, boosted by telecommunication stocks. France Telecom rose 3.6% after posting strong quarterly figures. Deutsche Telekom, Telefonica, and Vodafone Group also closed higher.

Crude oil extended gains Thursday after jumping $2 yesterday on news of falling U.S. supplies. Crude oil December contract gained 10 cents to $61.50 a barrel. London Brent fell 24 cents to $61.81. Heating oil gained to $1.7322 per gallon, while gasoline futures declined to $1.5900. Natural gas dropped nearly 11 cents to $7.584 per 1,000 cubic feet. The U.S. dollar traded lower against its rival currencies. The euro was quoted at $1.2670, up from $1.2615. The dollar bought 118.64 yen, down from 118.98. The British pound stood at $1.8873, up from $1.8793. European gold prices advanced. In London, gold traded at $594.30 per troy ounce, up from $587.40. In Zurich, the precious metal traded at $590.40 per ounce, up from $580.70. Silver closed at $12.13, up from $11.83.


[R]11:30AM Stocks turned lower on profit taking.[/R]
U.S. stocks turned lower as investors turned to profit taking, but Exxon Mobil Corp. ((XOM)) helped limit the downward trend on a strong earnings report. The latest report on the housing sector offered a mixed picture. The government reported that new homes sales unexpectedly rose 5.3% in September, the most in three months, while median sales prices dropped to a 36-year low of 9.7%.

Among Thursday’s movers, shares of Red Hat ((RHAT)) fell 26% after Oracle ((ORCL)) said it would offer full technological support for Red Hat''s Linux operating system at a lower price than Red Hat''s. Shares of Dow component Boeing ((BA)) fell for a second day in the wake of a quarterly earnings report that disappointed investors. The stock fell 3.5%. Affymetrix ((AFFX)) helped to lead the biotechnology sector higher, with the biotech company rising 16% after the company reported a Q3 loss versus a year ago profit but reported better-than-expected sales. Shares of Celgene ((CELG)) posted significant strength of 8.9% after the company reported Q3 earnings that came above expectations. The health insurance sector also advanced, with Aetna ((AET)) turning in one of the sector''s best performances, up 6.8% after the company reported Q3 earnings rise and uplifted full year guidance. Among pharmaceutical stocks, shares of AstraZeneca ((AZN)) fell down 7.7% after the drug maker said that it had stopped development of its stroke drug because of disappointing trial results.

[R]September new home sales increased, but sales prices dropped 9.7%.[/R]
The Department of Commerce released its report on new home sales in the month of September on Thursday, showing that sales increased compared to the previous month. This marked the second consecutive month of new home sales growth. The report showed that new home sales rose 5.3 percent to a seasonally adjusted annual rate of 1.075 million units in September from the revised August rate of 1.021 millions units. Economists had expected sales to remain unchanged at the 1.050 million unit rate originally reported for the previous month. Despite the month-over-month increase, new home sales remain 14.2 percent below the September 2005 estimate of 1.253 million units. The increase in September was partly due to strong new home sales in the West, which rose 23.9 percent after a revised 15.4 percent decrease in the previous month. While some new home sales growth was also visible in the South, new home sales fell 34.5 percent in the Northeast and 6.3 percent in the Midwest. The decrease in sales in the Northeast came after a revised 42.6 percent increase in August. The report also showed that the median sales price of new houses sold in September was $217,100, while the average sales price was $293,200. The Commerce Department also said that the seasonally adjusted estimate of new houses for sale at the end of September was 557,000. This represents a supply of 6.4 months at the current sales rate.


[R]10:30AM The Sensex gains 75 points bostered by banks and short covering.[/R]
The Sensex on BSE finished 75.13 points, or 0.6% higher, at 12,698.41. The market-breadth was positive. For 1,360 shares that advanced on BSE, 1,098 declined and 68 shares were unchanged. Advancers outpaced decliners by 6 to 5. The turnover on BSE was Rs 3,396 crore, compared to Rs 2,415 crore on Monday. The turnover on NSE was Rs 8,888.12 crore.

Advancers

The banking sector led the advancers today. ICICI Bank released strong second-quarter results and also, US Fed decision to keep US interest rates on hold, boosted the bank shares. ICICI Bank surged 4.5% to Rs 753.55. On Tuesday, ICICI Bank reported 30% growth in net profit for second-quarter, September 2006, to Rs 755.01 crore (Rs 580.05 crore).

PSU banks were also in focus. Oriental Bank of Commerce surged 7% to Rs 257.75, Bank of India gained 6% to Rs 156.90, Canara Bank jumped 5.6% to Rs 291, Union Bank of India was up 5.5% to Rs 128.50, and State Bank of India gained 4.3% to Rs 1,069. HDFC Bank advanced 2.8% to Rs 997.80, and HDFC gained 1.3% to Rs 1,448 on market speculation that a likely merger may follow.

The increase in the price of metals lifted metal stocks. Hindustan Zinc soared 13% to Rs 884, Sterlite Industries gained 7% to Rs 515, National Aluminium Company added 2.8% to Rs 227 and Hindalco added 3% to Rs 189.35.

Bharti Airtel advanced 1.6% to Rs 506. Bharti Airtel announces second-quarter results tomorrow. Software stocks gained on fresh buying interest. Infosys gained 1.5% to Rs 2,075, Satyam Computer rose 1.6% to Rs 431.95, and Wipro advanced 1.4% to Rs 555.20. Software firms have posted strong quarterly results.

Mahindra & Mahindra spurted 5% to Rs 726, supported by robust second-quarter results, posted today. The company reported that net profit jumped 70.4% to Rs 270.51 crore (Rs 158.69 crore). Another large-cap auto stock Maruti Udyog gained 0.6% to Rs 952. Net profit jumped 39.8% in second-quarter, September 2006, to Rs 367.44 crore (Rs 262.66 crore).

Some power equipment providers were in focus as well. Siemens rose 5% to Rs 1,204, EMCO gained 5.5% to Rs 633.50, Areva T&D surged 5% to Rs 759.05, Indo Tech Transformers gained 3.6% to Rs 174.75, Suzlon Energy added 2.8% to Rs 1,368 and ABB moved up 1.1% to Rs 3,562. BHEL rose 0.5% to Rs 2,460. The company announces second-quarter results tomorrow.

Decliners

Reliance Industries shed 1.2% to Rs 1,179, in volatile trading. Reliance Industries is running the 6,60,000 barrels per day Jamnagar (Gujarat) refinery at full-capacity with only a fire-hit desulphurisation unit out of action, reports stated today. The fire was extinguished within two hours. Reliance Industries has assured that the fire that destroyed one of its oil processing facilities will not impact its financial performance and production from the Jamnagar refinery.

Auto stocks fell under selling pressure. Hero Honda shed 1.7% to Rs 736, after posting a 9.2% drop in second-quarter net profit for September 2006 to Rs 215.97 core. Net sales advanced 2.9% to Rs 2,229.96 crore.

TVS Motors fell 5% to Rs 110, after it reported 22% fall in net profit for second-quarter, September 2006, to Rs 24.83 crore. Net sales jumped 36.5% to Rs 1,077.89 crore. Bajaj Auto lost nearly 2% to Rs 2,765.

Other news

The United Forum of Bank Unions, an umbrella of nine unions, has called a nationwide strike tomorrow to oppose outsourcing, privatisation and the proposed rise in voting rights of foreign investors in private banks.

The World Bank will consider an assistance of $5 billion (Rs 25,000 crore) to the state government for the development of the Mumbai Metropolitan Region over the next 10 years, announced Chief Minister Vilasrao Deshmukh after a meeting with World Bank officials today.


[R]9:45AM Market opened higher on economic data and strong earnings.[/R]
U.S. stocks extended gains Thursday. The Dow Jones Industrial Average gained for a fourth day in a row, helped by strong results from Exxon Mobil and upbeat economic data. The Commerce Department reported capital spending continued to rise as durable goods orders jumped to a six-year high of 7.8%. Exxon Mobil ((XOM)) rose 1.5% after the oil giant posted better-than-expected quarterly results, buoyed by higher crude-oil and natural-gas realizations and improved marketing. Meanwhile, Royal Dutch Shell reported a 34% drop in Q3 profit, as rising costs, higher taxes and reduced output from Nigeria weighed, but its result still beat analysts'' expectations. Navteq ((NVT)) climbed 14% after reporting Q3 profit drop of 73% compared with a year-ago quarter bolstered by a tax gain. Quarterly earnings fell to $27.1 million, or 28 cents per share, from $101.1 million, or $1.07 per share last year.

Chico’s FAS ((CHS)) rose nearly 5% after it was upgraded at Prudential to an Overweight rating. Starwood Hotels & Resorts Worldwide ((HOT)) reported Q3 quadrupled to 71 cents a share from 17 cents last year, despite 2.3% lower revenue, beating estimates of 50 cents a share. Starwood expects to earn 73 cents a share in Q4. The stock slipped 3%. In other news, shares of Red Hat ((RHAT)) plunged 23% after Oracle Corp. ((ORCL)) said it would offer full technological support for Red Hat''s Linux operating system at a much lower price than Red Hat charges for its services. In early trading, the Dow rose 23.77, or 0.20%, to 12,158.45. The Dow reached a new trading high Thursday, 12,165.26. The Standard & Poor''s 500 index rose 4.06, or 0.29%, to 1,386.28, and the Nasdaq composite index added 8.61, or 0.37%, to 2,365.20.


[R]9:30AM The FTSE 100 erases earlier gains Thursday as pharma stocks decline.[/R]
The FTSE 100 in London is almost flat in the afternoon, at 6,217, or 0.03% higher.

Decliners

AstraZeneca tumbled on news it has stopped the development of its experimental stroke drug NXY-059 as it failed to reduce significant disability in patients. The shares lost 7.48%.

GlaxoSmithKline also slipped despite raising earnings guidance for the year to mid-teens EPS growth from 12% previously, hiked its dividend and increased its share buyback program. The company shed 3.57%.

British American Tobacco also fell despite lifting nine month earnings by 13%, adding it is on track for a good year. Underlying profits rose 8% on revenues up 5%. The company stock declined 1.47%.

Cadbury Schweppes melted away as it said UK confectionery has been weaker than expected. Its shares moved back 1.10%. Medical product sterilisation firm Isotron has rejected an offer from Synergy Healthcare, saying it had no hesitation in doing so. Synergy Healthcare lost 5.04%. Discount retailer Instore has warned profits for the full year will be below expectations due to hefty stock clearance and restructuring measures. Its shares fell 10.17%.

Advancers

Third quarter results from Royal Dutch Shell were well received though as the oil titan reported a better than expected 33% increase in third quarter earnings per share before asset disposals. The company rose 3.91%.

Isotron has surged 7.17% after it rejected a bid offer. BP and BG rose, 0.57% and 0.08%, respectively. Vodafone meanwhile continues to rally from its recent lows. Vedanta Resources has gained 3.07%.

Other news

Independent News & Media, the media company, has launched a bid for APN News & Media, the Australian media group, valuing it at about 1.1billion pounds.


[R]9:00AM Stock futures advanced on Exxon Mobil earnings and steady rates.[/R]
U.S. stock futures indicated a higher opening, with further gains expected on the back of stronger-than-expected earnings and steady interest rates. A bigger-than-expected jump in durable goods orders and higher weekly jobless claims had little effect on futures. U.S. durable goods orders soared 7.8% in September, as orders for new aircraft nearly tripled. This was the biggest jump in six years, above estimates of 2.8% increase. In another report, the Labor Department said that the number of newly laid-off workers filing claims for unemployment benefits rose by 8,000 to 308,000 last week.

Exxon Mobil ((XOM)) advanced 1.6% in pre-market trading after posting better-than-expected Q3 results. The oil giant reported Q3 earnings rise of $10.49 billion, or $1.77 per share, up from a year-ago profit of $9.92 billion, or $1.58 per share, exceeding expectations of $1.59. Revenue slipped to $99.59 billion from $100.72 billion a year earlier. Exxon attributed the higher earnings to the impact of its continuing share purchase program, higher crude oil and natural gas realizations, and improved marketing.

In other earnings news, Bristol-Myers Squibb Co. ((BMY)) said Q3 profit tumbled to 17 cents a share from 49 cents a year ago, hurt by generic competition to Plavix. Analysts had expected it to earn 20 cents a share on revenue of $4.2 billion. Bristol-Myers Squibb raised its 2006 earnings per share target to between $1.02 and $1.07 a share from no less than 95 cents a share on a non-GAAP basis. Comcast Corp. ((CMCSA)), cable television provider, reported Q3 earnings increase of 58 cents a share, up from 10 cents a share on 22% revenue jump, beating estimates of 19 cents a share. Symantec ((SYMC)) slipped 5.7% in the pre-open after the computer security software maker didn''t meet analyst estimates with its quarterly results. In corporate news, Red Hat ((RHAT)) tumbled 17% after Oracle Systems ((ORCL)) said it would begin offering support for Red Hat''s Linux operating system. S&P 500 futures rose 3.20 points at 1,392.40 and Nasdaq 100 futures gained 3.50 points at 1,744. Dow industrial futures climbed 14 points to 12,203.

[R]Initial jobless claims advanced 8,000.[/R]
The Department of Labor released its report on initial jobless claims in the week ended October 21 on Thursday, showing that jobless claims increased in line with economist estimates. The report showed that jobless claims rose to 308,000 from the previous week''s revised figure of 300,000. Economists had expected jobless claims to rise to 308,000 compared to the 299,000 originally reported for the previous week. At the same time, the less volatile 4-week moving average fell to 305,250 from the previous week''s revised average of 308,000. The report also showed that continuing claims in the week ended October 14 rose to 2.449 million from the preceding week''s revised level of 2.446 million.

[R]Durable goods orders soared on strong aircraft orders.[/R]
Thursday morning, the Department of Commerce released its report on durable goods orders in the month of September, showing that orders increased by much more than economists had been expecting due largely to an increase in transportation equipment orders. The report showed that durable goods orders rose 7.8 percent in September after a revised 0.1 percent decrease in August. Economists had been expecting orders to increase by 2.3 percent compared to the unchanged reading previously reported for the previous month. The increase in durable goods orders was largely due to a significant increase in orders for transportation equipment, which surged up 27.6 percent in September following a 3.6 percent increase in August.

A sharp rise in orders for commercial aircraft and parts contributed to the increase in orders for transportation equipment, as Boeing ((BA)) recorded 175 aircraft orders in September compared with 30 in August. The report showed that orders for commercial aircraft and parts rose 183.2 percent in September after falling 19.9 percent in August. Excluding orders for transportation equipment, orders for durable goods edged up by only 0.1 percent in September compared to a 1.5 percent decrease in the previous month. The Commerce Department said that there was also significant growth in orders for defense capital goods, which rose 41.9 percent in September. Excluding defense, orders for durable goods increased 6.3 percent. The report also showed that shipments of durable goods fell 2.8 percent in September after rising 2.0 percent in August, while inventories of durable goods rose 1.0 following a 0.6 percent increase in the previous month.


[R]8:00AM Hewlett-Packard extended its offer for Mercury Interactive.[/R]
Hewlett-Packard Co. ((HPQ)) announced late Wednesday that it was further extending its tender offer for the shares of software-maker Mercury Interactive Corp. ((MERQ)). Hewlett-Packard agreed to acquire the software maker in late July for $4.5 billion, or $52 a share, with the offer being extended until Oct. 27. Now, H-P is extending the offer again, this time until Nov. 1. H-P said that approximately 38.9 million Mercury Interactive shares had been tendered as of October 24, short of the 50.1% majority it needs to complete the deal. The company also said it might waive certain conditions it had previously asked for to complete the tender offer, but it will not wave the ‘minimum condition’ of having a majority of the shares tendered. Mercury Interactive had 86.98 million shares outstanding for the year ended Dec. 31, 2005. For 2005, Mercury Interactive swung to a loss of $100 million, or $1.15 a share, from a profit of $53.8 million, or 53 cents a share, in 2004. The maker of software released Wednesday partial results for Q3, saying revenue rose between 20% and 22% from the same period a year earlier. The company didn''t report a quarterly profit.


[R]7:30AM HK, Japan surge, lead Asian markets higher on FOMC, oil stocks.[/R]
Asian markets finished higher on Thursday. In Tokyo, the Nikkei 225 Stock Average advanced 0.7% to 16811.60. As oil futures pulled back above the $60 mark overnight in U.S. trading, Inpex rallied 4.9%.

Exporters gained too. Honda closed up 2.2% after stating record first-half profits yesterday and Toyota finished 0.6% higher after hitting an all-time high in intraday trading. Nissan, which reported earnings after the market close, posted a 0.9% gain. There was a a mixed performance from consumer-electronic companies. Sharp finished down 0.2% despite reporting a 28% rise in its fiscal first-half net profit.

In Hong Kong, the Hang Seng Index set a record closing high, gaining 1.1% to 18353.74. China Mobile led the advance, the second-biggest stock in the index, which advanced 3.8%.Shares of CNOOC rose 1.7%. Australia S&P/ASX 200 finished 0.7% higher and New Zealand NZSX-50 advanced 1% and Taiwan Weighted Price Index gained 0.3%.

Telecommunication and tech stocks also led South Korean shares higher on expectations for more positive fourth-quarter earnings. The Korea Composite Stock Price Index, or Kospi, rose 0.2% to 1373.65. Hynix Semiconductor gained 0.6% despite reporting lower-than-expected numbers for the third quarter. SK Telecom shares rose 1%, despite posting a net profit decline of 22%.


[R]6:30AM European markets advance Thursday morning on earnings and oil.[/R]
European markets were higher in early morning on Thursday. The FTSE 100 in London climbed 0.4% to 6,239.2, Frankfurt Xetra Dax added 0.4% to 6,291.6, and the CAC 40 in Paris gained 0.5% to 5,448.52.

Advancers

Early advancers included Telenor, the Norwegian telecom operator, reporting forecast-topping earnings and announcing its agreement to sell its satellite services unit for a profit. Its shares added 5.9%.

Renault led European carmakers higher. Its 1.2% decline in nine-month sales was better than expected. Its shares gained 1.2%. The German carmaker US Chrysler unit made losses on the company, but these were counterbalanced by strong performances at Mercedes and its truck division. DaimlerChrysler shares added a further 0.8%.

Takeover talks gave German steelmaker ThyssenKrupp a boost after rumours that Nucor, the US steel manufacturer, was on the point of making an offer. Thyssen declined to comment, but the shares gained 3.2%.

Decliners

Chocolate and soda maker Cadbury Schweppes announced that the situation in Nigeria influenced its performance in the third quarter. Its shares dropped 1.3%

Another decliner was British drug company AstraZeneca, trading down 3.7%, following its statement that it no longer plans to develop NXY-059 in acute ischemic stroke.

Oil and gold

Light, sweet crude oil for December delivery was up 13 cents to $61.53 a barrel on the NYME. Prices at London ICE Futures exchange also moved modestly higher. Brent crude rose 18 cents to $62.23 a barrel.

Gold opened Thursday at a bid price of $592.60 a troy ounce, up from $587.40 late Wednesday.

Currencies

The euro rose slightly against the U.S. dollar Thursday after the U.S. Federal Reserve left interest rates unchanged and the president of the European Central Bank warned that the bank would adjust its own rates if needed. The euro bought $1.2657 in morning European trading, compared with $1.2615 in New York late Tuesday. The British pound advanced to $1.8839, up from $1.8793. The dollar was lower against the Japanese yen, falling to 118.71 yen from 118.98 yen.