Germany Leads Europe Up

Elena
30 Jan, 2007
New York City

European stocks closed higher, led by airline stocks. Moves were limited as European investors awaited the Fed Reserve''sa interest-rate decision. Airline companies attracted the most attention, with Alitalia rising 3.8% after the Italian government said it received 11 bid offers. Air France-KLM shares gained 6.7%, as the company didn

[R]1:00PM European markets closed higher, led by airlines[/R]
European stocks closed higher, led by airline stocks. Moves were limited as European investors awaited the interest-rate decision and commentary from the Federal Reserve. Airline companies attracted the most attention, with Alitalia rising 3.8% after the Italian government said it received 11 bid offers. Air France-KLM shares gained 6.7%, as the company didn’t launch a bid for Alitalia. British Airways shares added 2.4%, a day after the airline averted a strike by cabin crew. Siemens AG shares rose 4% after it was upgraded to buy from neutral at Merrill Lynch. On the side of the losers, Porsche lost 0.8% after Deutsche Bank downgraded the automaker to hold from buy. The German DAX 30 rose 0.93%, the French CAC 40 gained 0.46%, while the U.K. FTSE 100 added 0.03%.

Crude oil prices climbed $1, with traders focused on weather forecasts and OPEC production cuts. Light, sweet crude March delivery rose $1.16 to $55.17 a barrel. Heating oil added 3 cents to $1.5805 a gallon, while gasoline gained 4 cents to $1.4825. Natural gas added 41 cents to $7.346 per 1,000 cubic feet. London Brent climbed $1.15 to $54.83. The U.S. dollar traded mixed against its major currency rivals. The euro was quoted at $1.2954, down from $1.2956. The dollar bought 121.60 yen, down from 121.94. The British pound was quoted at $1.9615, up from $1.9595. European gold prices declined. In London, gold traded at $645.75 per troy ounce, down from $646.93. In Zurich, the precious metal traded at $643.45 per ounce, down from $644.15. Silver closed at $13.33, up from $13.30.


[R]11:30AM U.S. stock averages traded modestly higher ahead of Fed Reserve’s decision.[/R]
U.S. stocks turned modestly higher, with investors cautious before the Fed Reserve''s decision on interest rates. Positive news on the economic front generated some positive mood. The Conference Board said consumer confidence rose modestly in January as the job market remained strong. Consumer Confidence Index met analyst expectations, edging up to 110.3 in January from a revised 110.0 in December.

The Dow reversed from earlier weakness, although 3M ((MMM)) dropped 4.4%, Procter & Gamble ((PG)) fell 1.1%, and Merck ((MRK)) lost 1% on quarterly results. Photography and imaging company Getty Images ((GYI)) was a notable gainer, rising 8%, despite 29% profit drop in Q4 on restructuring and other costs. The company earned 50 cents per share, down from 64 cents last year. Excluding items, profit beat estimates.

In the technology sector, Motorola Inc. ((MOT)) rallied 6.2% % after the company said that the wealthy investor Carl Icahn who owns a 1.4% stake in the company is seeking nomination to the mobile phone maker''s board of directors. At the same time, shares in Microsoft ((MSFT)) fell 0.6%, even after the software giant launched its new operating system Vista in 70 countries. The launch is expected to give a lift to the technology sector.

The oil service sector advanced, as oil prices rebounded after a sharp drop Monday. A barrel of light sweet crude rose $1.10 to $55.11. Consequently, shares in airline companies moved to the downside. In late morning trading, the Dow rose 22.28, or 0.18%, to 12,513.06. The S&P 500 index was up 2.94, or 0.21%, at 1,423.56, and the Nasdaq composite index rose 2.82, or 0.12%, to 2,443.91. The bond market remained mostly unchanged. The yield on the benchmark 10-year Treasury note was unchanged at 4.87% from late Monday.

[R]Consumer confidence index inched up in January.[/R]
The Conference Board released its report on consumer confidence in the month of January on Tuesday, showing that confidence improved slightly compared to the previous month. The consumer confidence index came in just above economist estimates. The report showed that the consumer confidence index edged up to 110.03 in January from an upwardly revised 110.0 in December. Economists had expected the index to come in at 110.0 compared to the 109.0 originally reported for the previous month. The Conference Board said that the present situation index increased to 133.9 in January from 130.5 in December, as those saying jobs are ‘hard to get’ fell to 19.7 percent while those saying jobs are ‘plentiful’ rose to 29.9 percent. At the same time, the report also showed that the expectations index fell to 94.5 in January from 96.3 in December. Those expecting business conditions to worsen edged up to 8.0 percent, while those expecting conditions to get better decreased to 16.2 percent.


[R]10:00AM NY-9:00PM Mumbai Tata Steel tops estimates, ONGS net up 20%.[/R]
Tata Steel, resource company, has reported a Q3 consolidated net profit increase of 27.3% to Rs 1,054.65 crore, or Rs 18.19 per share, higher than Rs 828.51 crore, or Rs14.93 per share for the same period the previous year. Net revenues advanced 18.86% to Rs 5,971.15 crore, up from Rs 5,023.69 crore for the same period the previous year. Revenues from the steel business rose 20.44% compared with same time a year ago and operating profits advanced 26.58%. Total income of the group advanced to Rs 6,072.28 crore for Q3, while it was Rs 5,082.38 crore in the same period a year ago.

Oil and Natural Gas Corp. Ltd., oil company, announced its Q3 net profit rose 20%, topping forecasts of 6% rise in net profit. The oil and gas producer reported net profit rose to Rs 4,668.310 crore from 3,887.76 crore a year ago. ONGC produces 80% of the oil and gas in India. Total income rose to Rs 16,269.01 crore from Rs 13,038.01 crore for the same time the previous year. The governement demands that ONGC sell crude at discount to refiners to keep the cost of fuel down.

The Tata Power Company Limited, power company, reported that Q3 profit after tax as well as net profits after tax stood at Rs. 279.90 crores on revenues of Rs. 1200.51 crores, compared to Rs. 227.65 crores and Rs. 1224.77 crores for the same period the previous year respectively. Sales Volume during Q3 rose by 9.05% at 3655 MUs, while units sold in the Mumbai license area advanced by 5.44%.

Gokaldas Exports Limited, manufacturer of ready-made fashion garments, has reported 13.42% rise in net profit for Q3 compared to he same time the previous year. Total revenues in Q3 advanced 14.69% and stood at Rs 245.83 crore against Rs 241.35 crore in the same period a year ago. Although interest costs were higher and stood at Rs 5.48 crore in Q3 against Rs 3.68 crore for the comparable period a year ago, the company announced that this was on account of borrowing under the textile upgradation fund of Rs 60 crore.


[R]9:45AM Market opened mixed. Merck and 3M weighed on the Dow.[/R]
Wall Street saw a mixed performance at opening on Tuesday, reflecting cautiousness ahead of the Fed Reserve''s decision on interest rates and notable declines for three blue-chip companies. The Dow was pressured by 6% decline for 3M Co. ((MMM)) on a disappointing profit outlook. Merck ((MRK)) also weighed on the blue-chip average, falling even after its earnings, excluding special items, matched forecasts. Merck & Co. said that its Q4 profit plunged 58% to $473.9 million, or 22 cents per share, down from $1.12 billion, or 51 cents per share a year ago. The drugmaker’s profit dropped, due to charges for restructuring costs, an acquisition and increased legal reserves, mainly for its withdrawn painkiller VioxxMerck. Fellow drug maker Wyeth ((WYE)) lost1.9% amid disappointing earnings. Elsewhere, Colgate-Palmolive ((CL)), fell 1%, despite a better-than-forecast profit increase.

Similarly Procter & Gamble ((PG)) fell 1.4%, despite raising its earnings outlook. Investors weighed its organic sales growth, which came in at the lower end of its guidance. On the side of the gainers, photography and imaging company Getty Images Inc. ((GYI)) rose 8%, despite a Q4 profit drop on restructuring and other costs. The company earned $30.3 million, or 50 cents per share, down 29% from $42.5 million, or 64 cents per share in the prior year. Excluding special items, the company earned $39.5 million, or 66 cents per share. Sales rose 10% to $203.5 million from $185.8 million. Analysts had expected earnings of 56 cents per share on sales of $195.9 million. The Dow fell 9.93, or 0.08%, to 12,480.85. The S&P 500 index was up 1.26, or 0.09%, to 1,421.88, and the Nasdaq composite index fell 3.08, or 0.13%, to 2,438.01. The bond market remained mostly unchanged as investors awaited a decision from the Fed Reserve on short-term interest. Bonds were mostly unchanged, with the yield on the benchmark 10-year Treasury note flat at 4.87% from late Monday.


[R]9:30AM NY-2:30PM London FTSE declines on weak performance by miners.[/R]
The FTSE 100 in London declined 18.6 points to 6,221.5 by mid-day on Tuesday.

Advancers

News that Sanofi-Aventis of France and Bristol-Myers Squibb of the US were in talks over a possible merger lifted the pharmaceutical sector. AstraZeneca gained 0.8%. British Airways advanced 1.6% on continued relief that the proposed strike has been called off.

Takeover talks continued to buoy food and drinks group Cadbury Schweppes, up 1.5%, and J Sainsbury, 0.8% higher. Woolworths, the retailer, gained 2.3% after it said it struck a deal to supply music, DVDs, games and books to Virgin Retail. Mortgage provider Kensington announced underlying profits increased by 17% to 65.2 million pounds last year, but it added that tough competition will result in slower profit growth this year. Its shares advanced 2.68%.

Decliners

Kazakhmys led the decliners in the mining sector, down 2.2%, despite posting a 9% rise in copper cathode production. Other miners also declined. Vedanta Resources shed 1.4%, Lonmin fell 1.5%, Xstrata retreated 1.3% and Rio Tinto dropped 1.1%.

Among mid-caps PZ Cussons shed 4%. The soap maker posted a 4.5% rise in first-half profit before tax and stated its guidance remained positive despite the impact of the continued weak dollar. IT software and services company EG Solutions announced it expects revenues to be up to 500,000 pounds lower than market expectations, resulting in a pre-tax loss for the year. Its shares plunged 27.33%.


[R]9:00AM Market futures moved higher on strong earnings.[/R]
U.S. stock futures pointed to a higher opening on Tuesday, lifted by upbeat earnings results. Tuesday will see the opening of the Fed Reserve''s interest-rate decision making meeting. The Conference Board''s U.S. consumer confidence data for January is also due.

In pre-market earnings highlights, consumer products maker Procter & Gamble Co. ((PG)) reported 12% profit increase in Q2, driven by solid sales of Gillette razors and Tide detergent. The company posted net income of $2.86 billion, or 84 cents per share, up from $2.55 billion, or 72 cents per share a year ago. Revenue rose 8% to $19.73 billion. Company’s second-quarter financial results beat estimates of 83 cents per share on $19.57 billion in revenue. The blue chip company lifted its annual profit guidance. Colgate-Palmolive ((CG)) posted better-than-expected results, while Dow component 3M Co. ((MMM)) posted 58% profit rise, which matched expectations excluding items. Another Dow component, pharmaceutical giant Merck ((MRK)) reported quarterly earnings drop, while earnings excluding special items came in line with forecasts. Revenue rose above expectations.

After the Japanese market closed, Sony ((SNE)) raised its full-year earnings forecast. The manufacturer said quarterly profit fell 5%, hurt by huge costs for launching its PlayStation 3 video game console. Group net profit at Sony Corp slipped to 159.9 billion yen ($1.3 billion) from 168.9 billion yen a year earlier. The electronics company said its sales jumped 9.8% to 2.61 trillion yen ($21.4 billion). In corporate news, Starbucks ((SBUX)) was upgraded to overweight by J.P. Morgan. Shares of the coffee retailer rose 2.2% in pre-open trading. S&P 500 futures rose 3.80 points to 1,430.00 and Nasdaq 100 futures advanced 4.75 points to 1,791.50. Dow industrial futures climbed 30 points to 12,555.


[R]8:00AM 3M Co. reported soaring Q4 profit.[/R]
3M Inc. ((MMM)), maker of industrial adhesives, said its Q4 net income soared 58%, including a $354 million gain from selling its pharmaceutical business. The company said its profit increased to $1.18 billion, or $1.57 a share, from $746 million, or 97 cents a share, earned a year ago. The latest quarter''s per-share figure includes 47 cents on the sale of the unit. Sales rose 9% to $5.78 billion. 3M’s quarterly results exceeded analyst expectations of earnings of $1.14 a share on revenue of $5.76 billion, on average. The company projected 2007 earnings in the range of $5.20 and $5.45 a share, or between $4.60 and $4.75 on an adjusted basis. The 2007 adjusted forecast includes 21 cents to reflect stock-option expenses. The average analyst forecast stands at $4.99 a share for 2007.


[R]7:30AM Asian markets advance Tuesday with exporters leading gainers.[/R]
Asian markets mostly advanced on Tuesday. Japanese Nikkei Index ended 0.1% higher at 17,490. Japan Airlines rose 1.2%. Semiconductor companies and auto stocks enjoyed a good run, as Kyocera advanced 1.6% and Honda Motor moved up 1.5%. Sony closed 1.7% lower, though. After the closing bell, the company announced on Tuesday its group net profit declined 5.3% in October-December from a year earlier, on losses at its games division.

The Hong Kong Hang Seng Index advanced 1.1% to 20,460. China Travel International Investment soared 22% after JPMorgan issued an upbeat report on the stock, and Property developer Cheuk Nang Holdings surged 28% ahead of book closing on Thursday on a bonus warrant issue. The Shanghai Composite Index, however, lost 0.5% to 2,931. Property firms pulled the stock market lower on concerns there will be more government moves to restrict growth in the sector. China Merchants Property Development dipped by the daily 10% limit and Poly Real Estate Group shed 8.3%.

South Korean Kospi Index advanced 0.6% to 1,371. Hyundai Marine & Fire Insurance gained 4.8%, while Samsung Fire & Marine Insurance added 2.2% ahead of its Q3 results. Korea Exchange Bank gained 2.1% ahead of Q4 earnings due in February. Australian S&P/ASX 200 ended 0.9% higher at 5,813. Takeover activity continued to aid the market, with Veda Advantage and Symbion Health being the latest targets. Veda Advantage advanced 18% after receiving a takeover approach from a private equity consortium, and Symbion Healthcare soared 10% on news of a takeover approach from Primary Health Care.


[R]6:30AM Europe was lower on Tuesday on losses in banks and telecoms.[/R]
European markets declined on Tuesday. In early trade, the FTSE 100 in London shed 0.3% to 6,2238, Frankfurt Xetra Dax was little changed at 6,724.37, and the CAC 40 in Paris fell 0.2% to 5,609.54.

Advancers

Air France-KLM, which has cross-shareholdings with Alitalia, gained 3.6% after it said the conditions were not right for a bid. Lufthansa, which on Monday was upgraded by JPMorgan, gained 1.4%, and budget carrier Ryanair added 1.4%. Alitalia jumped 3.3% after receiving 11 expressions of interest. The deadline for first-round offers ended yesterday.

Decliners

The worst performing sectors were basic resources like oil groups and mining stocks as prices fell on commodity markets. Norway Statoil fell 1.2 %, while Austrian OMV lost 0.5% and Italian Eni lost 0.4%. London-listed mining stocks added to the losses as metals prices fell. Kazakhmys lost 2.4%. Steelmakers were also lower, with French steel pipe maker Vallourec off 1.2%, and German ThyssenKrupp down 0.6%.

Oil and gold

Crude oil for March delivery rose 40 cents, or 0.7%, to $54.41 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $54.27 in early trade in London. Brent crude for March gained 47 cents, or 0.9%, to $54.15 a barrel in electronic trading on the ICE Futures exchange and last traded at $53.98 in London.

Gold for immediate delivery in London fell $2.40, or 0.4%, to $641.30 an ounce, and traded $642.50 in early trade.

Currencies

The 13-nation euro rose slightly against the U.S. dollar Tuesday ahead of a meeting of the U.S. Federal Reserve that could set the tone for future interest rate hikes. In morning European trading, the euro bought $1.2960, compared with $1.2956 late Monday in New York. The British pound rose to $1.9675 from $1.9595, while the dollar fell to 121.92 Japanese yen from 121.94 yen.