Oil and Gas Stocks Lead Europe Lower

Elena
23 Nov, 2006
New York City

European stock markets finished mostly in the red on Thursday as weakness in oil and gas companies along with sharp losses for transport stocks dragged down indexes. The French CAC 40 dropped 0.5%, with Air France-KLM posting a loss of 6.5%. Oil-heavy London FTSE 100 closed down 0.3%, with oil majors BP and Royal Dutch Shell losing 0.7%. The German DAX 30 finished flat at 6,476.12, reversing from an earlier rise on the back of upbeat economic data.

[R]1:00PM European markets closed mostly lower on weak oil stocks.[/R]
European stock markets finished mostly in the red on Thursday as weakness in oil and gas companies along with sharp losses for transport stocks dragged down indexes. The French CAC 40 dropped 0.5%, with Air France-KLM posting a loss of 6.5% after the airline reported a below-forecast Q2 operating profit and added to M&A speculation in the sector by saying that it is in acquisition talks with struggling Alitalia. Shares in the Italian carrier climbed 2.9%. Lower oil prices limited the downside for transportation stocks, but weighed on oil and gas companies. Consequently the oil-heavy London FTSE 100 closed down 0.3%. Oil majors BP and Royal Dutch Shell lost 0.7%. Mobile-phone operator Vodafone Group was among gainers, rising by 1.1%. Scottish oil explorer Cairn Energy''s stock advanced 2.7% after it said a placing of shares in its Indian unit had raised around $822 million. Other gainers included newspaper group Daily Mail & General Trust, up 5.5% after its fiscal-year profit topped forecasts. The German DAX 30 finished flat at 6,476.12, reversing from an earlier rise on the back of upbeat economic data.

Crude oil prices were steady due to sufficient crude oil supplies. Crude oil December contract slipped 6 cents to $59.18 a barrel. London Brent dropped 14 to $59.41. The U.S. dollar extended decline against its rival currencies. The euro was quoted at $1.2951, up from $1.2942, the highest jump since June. European gold prices advanced as the stronger euro boosted the metal’s appeal. In London, gold for immediate delivery traded at $631.25 per troy ounce, up $1.50.


[R]10:30AM The Sensex took a breather in a volatile trading on Thursday.[/R]
The Sensex on BSE finished 25.70 points, or 0.19% lower, at 13,680.83. The market-breadth, positive in the first half weakened in late trading session. As 1,324 shares declined on BSE, 1,219 rose and 68 shares were unchanged. The turnover on BSE was Rs 5,531.48 crore, higher than Rs 5,184 crore on Wednesday, supported by a large block deal of 92.7 lakh in the in ICICI Bank, at Rs 880.50. The turnover on NSE was Rs 8,884.68 crore, lower than Rs 10, 463.59 crore on Wednesday.

Economic news
India’s largest lender, State Bank of India, may revise its growth target upwards to 30% growth in loans for the year to March 2007, Managing Director Yogesh Agarwal told reporters on Thursday.

Finance Minister P Chidambaram today announced that Indian companies going for overseas acquisitions is the new facet of the globalisation process.

Advancers
Hero Honda spurted nearly 3% to Rs 749.90. The company said margins will remain under pressure in the second half of the year. Bajaj Auto also gained 1.6% to Rs 2,640. Private sector bank HDFC Bank surged nearly 4% to Rs 1,120. State Bank of India rose 0.5% to Rs 1,256.
Zee Telefilms gained 3.5% to Rs 361, after its spin-off plans became effective on 22 November 2006. Zee Telefilms demerger scheme was approved by the Mumbai High Court on 17 Nov 2006.

L&T advanced 2% to Rs 1,402. L&T said its sales will grow at a higher rate of 20% in October 2006-March 2007 period, compared to a growth of 12% in the first half of the financial year.

Hindustan Organic Chemicals jumped 7% to Rs 31.90. The stock rose on huge volume of 56.1 lakh shares on BSE. In a clarification regarding media reports, Hindustan Organic Chemicals today said the government has sanctioned a financial restructuring package of Rs 250 crore.

Decliners
Satyam led the decliners today down 2.97% to Rs 463.50, Bharti Airtel shed 1.93% to Rs 625.90 on profit taking, after a recent solid surge. Tata Steel lost 0.3% to Rs 471.05. EU regulators on Thursday set a Jan. 3 deadline to rule on Tata Steel 4.3 billion pound or $7.7 billion bid for Corus Group PLC of Britain, just days after CSN made another higher offer.

Oil exploration large-cap ONGC shed 1.3% to Rs 845, following a decline in crude oil price to below $60 a barrel, on Thursday. Tata Consultancy Services (TCS) shed 0.4% to Rs 1,140.90. Microsoft has bought 10% stake in TCS China, where TCS holds a majority 65% stake.

Software large-cap Infosys ended flat at Rs 2,225. The stock had weakened since Tuesday pricing of a $1.6 billion swap of local stocks into ADR. Other decliners included Hindustan Lever down 1.57% to Rs 240.95, Reliance Energy falling 1.57% to Rs 544 and Tata Motors dropping 1.38% to Rs 821.

Reliance Industries lost 0.6% to Rs 1,270. Reliance Industries may get seven blocks in the sixth round of the New Exploration Licensing Policy. The bids for the sixth round had closed on 15 September 2006.
[R]9:30AM London markets further their losses tracking negative broker comment.[/R]
The FTSE 100 was 13.5 points, or 0.2%, lower at 6,145.8 by mid-morning on Thursday.

Decliners

Kelda Group lost 2.4% after Citigroup downgraded the water group from hold to sell. The bank said the chances of a takeover were fully discounted in the near-term. British Land eased 1.5% after HSBC cut its rating on the property group from overweight to neutral.

Advancers

In a surprise ruling a European Court of Justice ruled that individuals must continue to pay domestic customs duties if they buy alcohol in another EU state and have it delivered home. Tobacco duty is higher in the UK than in other EU countries. Imperial Tobacco gained 1.8% and Gallaher Group was higher by 1.5%.

Miners were lifted by further hopes of consolidation in the sector. Kazakhmys was up 1.1% and Rio Tinto put on 1%. Vodafone added 1.5% after Swiss telecoms group Swisscom said it would begin negotiations with the UK mobile phone company to repurchase a 25% stake in Swisscom Mobile.

In the mid-caps, Kesa Electricals gained 3.3% after third-quarter sales beat forecasts. Newspaper publisher Daily Mail & General Trust gained 3% after news of higher profits and signs of a gentle advertising recovery.


[R]7:30AM Asia advances with Australia higher on bid talk speculation.[/R]
Asian markets were mostly higher on Thursday. Japanese markets were closed Thursday for a public holiday. The S&P/ASX 200 in Australia rose 0.4% to 5,469.30. In Australian trading, shares of Qantas declined 2.4%. The Australian national carrier surged 15% to a record high in the previous session after confirming it was in takeover talks with a private equity consortium led by Macquarie Bank Ltd. and Texas Pacific Group, with some estimating the deal could be worth as much as $8.5 billion.

Shares of Metcash, a food and liquor wholesaler, gained 2.5% while Foster''s jumped 5.8%, with both companies advancing on reports they may become the next takeover targets. Shares of BHP Billiton were little affected by reports the mining company may be considering a bid for Freeport-McMoRan Copper & Gold Inc. Shares of BHP fell 0.1% in late Australian trading.

The Hang Seng Index in Hong Kong edged 0.4% higher to 19,317.75, extending gains after closing at a fresh record Wednesday. The China Enterprises Index, Hong Kong benchmark for China shares, rose 1.4%. Malaysia KLSE Composite traded basically flat and New Zealand NZX-50 Index added 1%.

Kospi in South Korea shed 0.3% while Taiwan Weighted Price Index rose 0.5%. Shanghai Composite Index gained 1%. Indonesia JSX Composite fell 0.3%. Shares of Samsung Electronics inched 0.2% higher, pacing gains in U.S. technology shares.


[R]6:30AM European stocks fall Thursday on thin trading and financials.[/R]
European markets were lower on Thursday. By mid morning, the FTSE 100 in London lost 0.3% to 6,143.2, Frankfurt’s Xetra Dax fell 0.1% to 6,472.23, the CAC 40 in Paris shed 0.2% to 5,442.74.

Advancers

Swisscom, the telecoms group, gained 1.9% after it said late on Wednesday it was in talks with the UK Vodafone to repurchase a 25% stake in Swisscom Mobile. Vodafone shares gained 1.1%.

Greek mobile group Cosmote meanwhile gained 0.7% after Greek market regulator approved the company mandatory public offer for the remaining shares it does not already own in Germanos, the phone retailer.

Decliners

KBC Group, the Belgian financial services company, fell 2.7% as concerns over lower fees and loan impairment charges overshadowed better-than-expected third-quarter profits.

French Credit Agricole fell 2.1%, advancing the previous session losses when it reported a continued slowdown in profit growth and weaker-than-expected third-quarter revenues.

Air France lost 6.8%, the biggest decline on the market. Net income for the quarter ended Sept. 30 gained 26% to 374 million euros ($484.8 million), excluding the gain from the sale of a stake in Amadeus Global Travel Distribution SA. That compares with the median estimate of 370 million euros of analysts, lagging a bit behind.

Oil and gold

Crude oil fell because U.S. oil supplies advanced to a five-month high and tankers started loading crude at the port of Valdez, Alaska, for the first time since Nov. 20 after the weather improved. Crude oil for January delivery fell as much as 35 cents, or 0.6%, to $58.89 a barrel in electronic trading on the NYME. The contract traded at $58.99 in early trading in London.

Gold for immediate delivery fell as much as $1.30, or 0.2 %, to $629.00 an ounce.

Currencies

The euro advanced to the highest against the dollar since June after a report showed business confidence in Germany, the largest economy in Europe, unexpectedly rose to a 15- year high this month. The euro gained to $1.2959 in early trading in London, from $1.2942 late yesterday in New York, when it reached $1.2957. The European currency traded at 150.79 yen, from 151.10. The dollar traded at 116.37 yen, from 116.74. Against the dollar, the British pound was at $1.9145 from $1.9139 late yesterday.