Germany, France Close down 1.1%

Elena
02 Nov, 2006
New York City

European stock markets closed notably lower, as investors turned to profit taking after a weak opening on Wall Street, mixed earnings reports, and a hint by the ECB that it will raise interest rates at its next meeting. The German DAX 30 slipped 1.1%. The French CAC 40 also dropped 1.1%, while London FTSE 100 closed flat at 6,149,30.

[R]13:00PM European markets closed lower on mixed earnings, Wall Street weakness.[/R]
European stock markets reversed from recent gains to close notably lower, as investors turned to profit taking after a weak opening on Wall Street, mixed earnings reports, and a hint by the ECB that it will raise interest rates at its next meeting. The German DAX 30 slipped 1.1%, reflecting losses posted by utility company E. On, down 2%, Deutsche Bank, steelmaker TyssenKrupp, and automaker DaimlerChrysler, each falling at least 1.6%. The French CAC 40 also dropped 1.1%, while London FTSE 100 closed flat at 6,149,30, with losses limited by Unilever, 4.6%, and drug makers GlaxoSmithKline and AstraZeneca. GlaxoSmithKline rose 1.6% after it was upgraded to neutral from underweight. AstraZeneca gained 1.5%. Shares of Credit Suisse rose 3.3% after the bank''s profit drop of 1% was well above market expectations.

Crude oil traded below $58 on strong supplies. Crude oil December contract fell 82 cents to $57.89 a barrel. London Brent slipped 83 cents to $58.15. The U.S. dollar traded mixed against its rival currencies. The euro was quoted at $1.2765, up from $1.2754. The dollar bought 117.06 yen, unchanged. The British pound stood at $1.9074, down from $1.9085. European gold prices advanced. In London, gold traded at $621 per troy ounce, up from $615.20. In Zurich, the precious metal traded at $620.35 per ounce, up from $613.95. Silver closed at $12.51, up from $12.42.


[R]11:30AM Stocks erased earlier losses. The Nasdaq advanced.[/R]
The U.S. stock markets turned mixed, with the Nasdaq moving above the flat line, while the Dow and the S&P 500 trading in negative territory. Stocks erased some of the earlier losses, as some investors bought into weakness sparked by wage inflation worries, a disappointing outlook from Wal-Mart Stores, and a brokerage downgrade of Intel Corp. Government showed that labor costs rose more than expected, while business productivity was flat in the third quarter.

A decline in crude oil prices and a brokerage upgrade on computer maker Dell helped limit losses. Health insurance and healthcare provider stocks posted strength, while utilities and oil service stocks further declined.

Discount retailers brought weakness in the retail sector, as most of them reported lower-than-expected sales. Wal-Mart Stores ((WMT)) fell 1.8% after it said it expects November same-store sales to come in flat. Target Corp. ((TGT)) dropped 2.4% after it said same-store sales climbed 3.9%, below expectations of a 4.2% gain. Costco ((COST)) shares also fell 2.3% after its October sales disappointed.

Dow component Intel ((INTC)) lost 1.3% after Merrill Lynch downgraded its rating on the semiconductor giant to neutral from buy, due to weakening demand and persistent excess capacity. On the other hand, Dell ((DELL)) rallied 3.3% after Goldman Sachs upgraded the computer maker to neutral from sell, saying it expects the company to achieve better-than-expected earnings. Citigroup upgraded its rating on Lincare ((LNCR)), provider of respiratory therapy services, to buy from hold. Lincare shares jumped 10%.In late morning trading, the Dow, which had fallen below the 12,000 benchmark, was up 0.97, or 0.01%, at 12,031.99. The Standard & Poor''s 500 index was up 0.38, or 0.03%, at 1,368.19, and the Nasdaq composite index was up 1.12, or 0.05%, at 2,335.47. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60% from 4.57% late Thursday.

[R]Factory orders rose less than expected.[/R]
Thursday morning, the Department of Commerce released its report on factory orders in the month of September, showing that orders rose less than economists had been expecting. The report showed that factory orders rose 2.1 percent in September following a revised 0.3 percent decrease in August. Economists had expected orders to increase by 3.6 percent compared to the unchanged reading originally reported for the previous month. The increase in orders was largely due to a sharp rise in orders for durable goods, which rose 8.3 percent in September. Last week, the increase in durable goods orders was reported at 7.8 percent. The sharp rise in orders for durable goods, which was largely due to a substantial increase in orders for commercial aircraft, was partly offset by a 4.6 percent decrease in orders for non-durable goods. The report also showed that shipments of manufactured goods fell 3.5 percent, while inventories of manufactured goods rose 0.6 percent. Subsequently, the inventories-to-shipments ratio rose to 1.22 in September from 1.17 in August.


[R]10:30AM The Sensex hits an all-time high supported by buying in large-caps.[/R]
The Sensex on BSE finished 58 points or 0.45% higher to 13,091.12. The market-breadth, positive throughout the day, turned negative in the latter part of the trading session, on selling pressure for small and midcap stocks. For 1209 shares that advanced, 1309 declined, and 70 were unchanged. From the Sensex stocks, 17 advanced while the rest declined. The turnover on BSE was Rs 3974.23 crore, lower than the turnover of Rs 4114 crore on Wednesday. The turnover on NSE was Rs 7,363.93 crore.

Most active

Reliance Industries was the most active stock on BSE with turnover of Rs 207.14 crore. Indiabulls Financial Services came second.

Advancers

Oil exploration large-cap ONGC le dhte advancers, up 3.87% to Rs 835.10 on 4.97 lakh shares. It traded in a range of Rs 806 to Rs 842.

Bajaj Auto advanced 2.11% to Rs 2,800. The stock recovered after slipping to a low of Rs 2728. Maruti Udyog rose 1.74% to Rs 979 on 3.70 lakh shares.

Index heavy Reliance Industries gained 0.89% to Rs 1,275.40 on 16.16 lakh shares. It retreated from gains after advancing to an all-time high of Rs 1,298.50 in later trading.

Drug maker Dr Reddy’s Laboratories rose 1.28% to Rs 761 while housing finance large-cap, HDFC rose 1.39% to Rs 1,448.

Refinery shares also advanced on renewed buying, as crude prices stayed low. HPCL gained 0.73% to Rs 330.80, Indian Oil Corporation rose 1.69% to Rs 525 and BPCL rose 1% to Rs 413.

Decliners

Satyam Computers led the decliners, down 1.78% to Rs 427.15 on 4.48 lakh shares. Other IT shares also declined, as Infosys was off 0.89% to Rs 2,085, Wipro lost 0.69% to Rs 533.50 and TCS sank 0.21% to Rs 1,080.

Tata Motors slipped 0.10% to Rs 828.40, after surging to a high of Rs 845. Its October total sales rose 5.6% to 43,540 units from 41,219 units. October CV sales rose 18.6% to 23,354 units (19,700 units) while October passenger car exports declined to 3,460 units from 4,433 units in the previous year.

Ashok Leyland declined 0.57% to Rs 43.50 and truck maker Eicher Motors lost 1.48% to Rs 362 after its October commercial vehicle sales in India rose 19% to 2,399 vehicles from the year ago.

Sakthi Sugars slipped 0.57% to Rs 131 after it acquired the entire capital of Chennai-based, unlisted Tilan Sugar for Rs 5 crore.

Economic news

The Delhi High Court today restrained Bharar Sanchar Nigam (BSNL) from awarding any contract for its GSM network expansion till the next hearing on November 16.

India junior oil minister, Dinsha Patel, said on Thursday that in return, ONGC has offered Hydro a holding in its two exploration blocks in Cuba.

Presenting the first ever UK Trade and Investment India Business Awards here Wednesday night, Duke of York Prince Andrew lauded the significant expansion in Indo-British economic ties in the past two years, stating that UK is a key market for India. UK provides ready access to the EU which now has a population of almost 500 million and the UK is the top destination for Indian investment into Europe.


[R]9:45AM Market opened lower on mixed retail sales and weak data.[/R]
U.S. stock markets opened in the negative on Thursday, reflecting disappointing retail sales and weak economic data which raised concerns about the outlook for corporate profits. The Labor Department said that productivity was flat in Q3, while wages rose by 3.8%.

Retailers showed mixed sales performance in October, with Wal-Mart being one of the biggest disappointments. According to the Conference Board, consumers'' confidence weakened in October, dragged down by consumers’ concerns about the job market. Dow component Wal-Mart ((WMT)), the world''s largest retailer, which is struggling with its merchandising strategy, reported a meager 0.5% rise in same-store sales. It also predicted flat same-store sales in November. Costco Wholesale ((COST)) said October same-store sales rose 4%, below analyst estimates of a 4.6% increase. Discount retailer Target ((TGT)) reported same-store sales growth of 3.9% that fell below expectations of 4.2%. Another disappointment was Abercrombie & Fitch ((ANF)) which said same-store sales fell 3% vs. expectations of a 2% rise.

Winners included department stores and some apparel specialty stores. Federated ((FD)) posted a 7.7% gain in same-store sales, beating the 6.2% estimate. Federated expects same-store sales to increase by 3% to 5% in November. J.C. Penney ((JCP)) had a same-store sales increase of 8.1%, beating the 6.2% estimate. Limited Brands ((LTD)) posted a stronger-than-forecast 9% same-store sales rise.

Teen retailers had a mixed performance. Pacific Sunwear ((PSUN)) posted a 7.1% drop in same-store sales, worse than the 5.4% decline expected by analysts. But Bebe Stores Inc. ((BEBE)) had an 8.2% gain in same-store sales, slightly below the 8.3% estimate. American Eagle Outfitters Inc. ((AEOS)) reported a same-store sales increase of 8 %. But Hot Topic Inc. ((HOTT)), posted a 7.2% decline in same-store sales, worse than the 5.7% decline expected. In midmorning trading, the Dow fell below the 12,000 benchmark and was down 38.90, or 0.32%, at 11,992.12. The Standard & Poor''s 500 index was down 3.65, or 0.27%, at 1,364.16, and the Nasdaq composite index was down 6.90, or 0.30%, at 2,327.45. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60% from 4.57% late Thursday.

[R]Initial jobless claims rose more than expected.[/R]
The Department of Labor released its report on initial jobless claims in the week ended October 28 on Thursday, showing that jobless claims rose by much more than economists had been expecting. The report may raise some concerns about the October employment report. The report showed that jobless claims rose to 327,000 from the previous week''s revised figure of 309,000. Economists had expected jobless claims to edge up to 310,000 compared to the 308,000 originally reported for the previous week. The Labor Department also said that the less volatile 4-week moving average rose to 311,250 from the previous week''s revised average of 305,500. The report also showed that continuing claims in the week ended October 21 fell to 2.415 million from the preceding week''s revised level of 2.442 million. The Labor Department is due to release its report on employment in the month of October on Friday, with economists expecting an increase of about 125,000 jobs.

[R]Productivity gained 0.1% in the third quarter.[/R]
Thursday morning, the Department of Labor released its preliminary report on labor productivity in the third quarter. The report showed that productivity unexpected came in unchanged compared to the previous quarter. The Labor Department said that productivity in the non-farm business sector was unchanged in the third quarter following a downwardly revised 1.2 percent increase in the second quarter. Economists had expected 1.1 percent growth compared to the 1.6 percent growth originally reported for the second quarter. The lack of productivity growth in the third quarter came as output and hours both increased 1.6 percent. The increase in output came after a 2.7 percent increase in the second quarter, while hours increased by 1.5 percent in the second quarter. The Labor Department noted that the increase in hours in the third quarter reflected 0.8 percent gains in both employment and average weekly hours at work. The report also showed that unit labor costs in the non-farm business sector rose 3.8 percent in the third quarter following an upwardly revised 5.4 percent increase in the second quarter.


[R]9:30AM The FTSE recovered from early losses on Unilever, pharma stocks.[/R]
The FTSE 100 in London bounced back from its early losses to trade just 0.6 points lower at 6,149.0.

Advancers

Unilever led the advancers with a gain of 4.5%. The company said it would replace pay a 750 million euros special dividend this year, replacing the 500 million euros share buyback planned for 2006, and it also unveiled plans for a further 1.5 billion euros share buyback in 2007.

Astrazeneca added 1.6%. GlaxoSmithKline, up 2.2%, also benefited from a JP Morgan upgraded to neutral from underweight. GlaxoSmithKline and Astrazeneca gained following a report from a healthcare information company which showed global pharmaceutical sales rose 5% in the 12 months to August. Both companies have underperformed the market recently and traders said they appeared good value at these lower levels.

Strong gas prices sent BG Group up by 51% to 3.6 billion pounds by the end of the third quarter, helping it grow profits by 45 %. The shares rose 1.3%.

Pub chain JD Wetherspoon rose 5.6% after it reported stronger sales growth in its smoke-free outlets ahead of next year’s ban on smoking in public places.

Decliners

Smith & Nephew fell 1.2% after the medical devices maker said it was in preliminary merger discussions with Biomet, its US rival, in a deal aimed at creating an orthopaedic specialist worth up to $20 billion and capable of competing against the US sector leaders, Zimmer and Stryker

Wolseley fell 1% as the largest plumbing supplier in the world announced a six further small acquisitions for a total of 61 million pounds. Wolsely is highly acquisitive and has spent 331 million pounds on 16 deals in Europe and North America since the start of the current financial year in August.

ICI fell 1.4% after the speciality chemicals maker cautioned it continued to experience higher raw material prices, in spite of falling oil prices.

Miners retreated after a strong showing during the previous session. Antofagasta fell 1.6% while Xstrata was 0.9% weaker.

Economic news

The European Central Bank kept its main interest rate at 3.25% on Thursday as forecast, and signalled to markets it intended to raise rates again in December.


[R]7:30AM Asian stocks end mixed, HK advances while Tokyo dips.[/R]
Asian markets closed mixed on Thursday. The benchmark Nikkei 225 index fell 0.2% to finish at 16350.02 points on the Tokyo Stock Exchange. A retreat overnight on US market on lackluster economic data. The U.S. is a huge market for Japanese exports, and any downturn there is seen as having a big impact on Japan economy. Asahi Glass fell 3.2% after the glass maker Wednesday revised down its profit outlook for 2006.

Hong Kong stocks rallied to hit another fresh record high led by large-cap stocks HSBC Holdings and China Mobile. HSBC led the advance and rose 1%, while China Mobile jumped 3.7%, record closing highs for both stocks.

Elsewhere in the region, the Kospi in South Korea rose 0.5% and Taiwan Weighted Price Index rose 0.8%. Singapore Straits Times Index fell 0.6%.The benchmark Shanghai Composite Index, which tracks Class A and B shares, finished down 0.2% at 1851.31.

Australia S&P/ASX 200 fell 0.1% to 5409.40, easing back from Wednesday record close of 5416.40. BHP Billiton gained 0.1% and fellow miner Rio Tinto slipped 0.4%. Philippine stocks gained for the 10th straight session to a fresh nine-year high, buoyed by investor confidence in the economic outlook of the country. The benchmark 30-company Philippine Stock Exchange Index rose 0.5% to 2721.78.


[R]6:30AM Europe falls on banks, miners, downbeat US economic data.[/R]
European markets were lower by mid morning on Thursday. The FTSE 100 in London shed 0.25 to 6,138.9, Frankfurt Xetra Dax fell 0.23% to 6,276.35, and the CAC 40 in Paris lost 0.7% to 5,334.53.

Advancers

Bucking the weaker banking sector, Credit Suisse, the investment bank, gained 3.1% after the third-quarter net profits came in well ahead of expectations as strong trading income helped it on the way to a year of expected record earnings.

Altana, the German drugs and chemicals manufacturer, gained 3.2% after reporting a 19% rise in nine-month core earnings, beating expectations, thanks to a strong performance at its chemicals division.

Unilever, the Anglo-Dutch consumer goods group, announced a 4.8% rise in third-quarter core sales at the top end of expectations. This outshone a disappointing fall in margins as the company spent heavily on branding and advertising to aid its recovery. The Amsterdam-listed shares gained 3.2%.

Decliners

Miners fell on the demand implications behind slowing growth in the US. Rio Tinto was off 1.4%, while Antofagasta slipped 1.5%.

The performance contrasted with that of domestic rival UBS, which on Tuesday reported a 21% fall in third-quarter profits, missing expectations. UBS shares fell 0.3%, while those of Deutsche Bank, which reported lower trading revenues on Wednesday, fell 0.2%.

Oil and gold

Oil prices fell slightly Thursday as the market reacted to a weekly U.S. report that showed a climb in crude oil stocks but a larger-than-expected drop in product inventories. Light sweet crude for December delivery fell 11 cents to $58.60 a barrel in electronic trading on the NYME.

Gold opened Thursday at a bid price of $614.90 a troy ounce, down from $615.20 late Wednesday.

Currencies

The euro rose to $1.2758 from $1.2756 yesterday. Against the euro, the British pound was at 66.88 pence from 66.85 pence yesterday. The U.K. currency was also at $1.9082 versus the dollar from $1.9095. The yen climbed to 116.77 against the dollar.