Lagardere, SABMiller Pressure Europe

Elena
13 Mar, 2007
New York City

European stocks finished notably down Tuesday amid concerns over U.S. retail sales and more subprime mortgage woes. Heavy losses for French Lagardere and SABMiller further pressured the European markets. Lagardere dropped 3.6% after the media group reported a 57% fall in 2006 net profit.Shares in U.K. brewer SABMiller lost 4.4%. The German DAX 30 slipped 1.4%, the French CAC 40 dropped 1.2% and the U.K. FTSE 100 fell 1.2%.

[R]1:00PM NY European markets finished weak, tracking U.S. losses.[/R]
European stocks finished notably down Tuesday amid concerns over U.S. retail sales and more subprime mortgage woes. Heavy losses for French Lagardere and SABMiller further pressured the European markets. Lagardere dropped 3.6% after the media group reported a 57% fall in 2006 net profit, hurt by the poor performance of its shareholding in aerospace and defense group EADS. Shares in U.K. brewer SABMiller lost 4.4% after the company released warning about its full-year operating profit. Swisscom, which on Monday offered to buy Italian rival FastWeb for around $4.9 billion, dropped 2.2% after reporting a 21% drop in 2006 net income. Michelin also lost 2.2% after the tire maker announced plans to issue between 610 million and 700 million euros of 10-year, zero-coupon convertible bonds. However, there were individual gainers. The U.K. Cadbury Schweppes soared 10%, following news of a 2.98% stake in the company.The German DAX 30 slipped 1.4% at 6,623.99, the French CAC 40 dropped 1.2% to 5,432.94 and the U.K. FTSE 100 fell 1.2% to 6,161.20.

Crude oil prices reversed from steep decline in the previous session. Light, sweet crude April delivery rose 75 cents $59.66. Heating oil added 4 cents to $1.7222. Natural gas rose 11 cents to $7.026 per 1,000 cubic feet. The U.S. dollar lost ground against its major currency rivals. The euro was quoted at $1.3196, up from $1.3189. The dollar bought 117.02 yen, down from 117.66. The British pound was quoted at $1.9322, up from $1.9320. European gold prices rose. In London gold traded at $648.40 per troy ounce, down from $651.70. In Zurich, the precious metal traded at $646.85, down from $650.65. Silver rose to $12.85, down from $13.02.


[R]11:30AM Stock averages traded lower, weighed by economic worries.[/R]
Concerns over mortgage subprime lenders and weaker-than-expected retail sales weighed heavily on the market sentiment. Continued weakness among housing and financial stocks helped to keep the major averages in the red, with investors worried that problems in the sub-prime mortgage business could spread throughout the broader economy. Accredited Home Lenders ((LEND)) plunged 57% after it said it''s seeking more capital and exploring strategic options. New Century Financial Corp. ((NEW)) disclosed a $500 million error over its debt obligations. On Monday, the NYSE suspended the company''s shares from trading after they fell more than 50%. Financial stocks traded in the negative, with American Express Co. ((AXP)) falling 1.5%, Citigroup Inc. ((C)), losing 2%, and JP Morgan Chase & Co. ((JPM)), down 2.3%.

The brokerage sector showed some weakness, but a profit report from Goldman Sachs Group ((GS)) that came in well above analyst forecast helped limit losses. The investment bank posted record-high profit in Q1, up 29% from a year ago, pushing its stock up 1.4%.

In the tech sector, Texas Instruments fell 1.3% after it reduced its Q1 profit and sales forecasts. Sandisk ((SNDK)), however, rose 2.6% after UBS upgraded it to buy. Revlon said it swung to a Q4 loss, due to lower U.S. sales and restructuring costs. Qualcomm ((QCOM)) also offered support, rising 5% after lifting its Q2 earnings and revenue guidance as well as its quarterly dividend. In late morning trading, the Dow Jones industrial average fell 40.45, or 0.33%, to 12,278.17. The Standard & Poor''s 500 index fell 3.93, or 0.28%, to 1,402.67, and the Nasdaq composite index slid 9.33, or 0.39%, to 2,392.96. The worries surrounding subprime lenders and sluggish retail sales drove up bond prices. The yield on the benchmark 10-year Treasury note fell to 4.51% from 4.56% late Monday.


[R]9:45AM U.S. stock markets opened down on growing subprime mortgage concerns.[/R]
U.S. stocks steeply dropped at opening Tuesday amid growing concerns about the viability of subprime mortgage lenders and worries that their troubles might spread to other sectors too. New Century Financial was again the main drag on the market as the NYSE said it would immediately suspend trading in its shares and move to delist the stock as they tumbled over 50%. New Century ((NEW)) revealed that regulators began investigation into accounting errors that inflated the value of the company''s loan portfolio. Accredited Home Lenders ((LEND)) plunged 48% after it said it''s seeking more capital and exploring strategic options.

However, stronger-than-expected financial results at Goldman Sachs ((GS)) offered some help to the market. The investment bank posted a best-ever Q1 profit of 29% increase, helped by strong revenue from trading and investment banking. The company also said mortgages and credit products remained strong during the quarter. The stock gained 1%. Technology shares were other notable decliners, weighed by a downbeat outlook from Texas Instruments ((TXN)), whose shares fell 1.7%. The biggest maker of chips for mobile phones, reduced its Q1 profit and sales forecasts.

On the economic news front, a week after retailers reported lackluster February sales, the Commerce Department said that sales at the U.S. retailers rose only 0.1%, blaming cold winter weather that kept shoppers away from stores. In the first hour of trading, the Dow Jones industrial average fell 76.42, or 0.62%, to 12,242.20. The Standard & Poor''s 500 index fell 7.43, or 0.53%, to 1,399.17, and the Nasdaq composite index slid 13.64, or 0.57%, to 2,388.65.


[R]9:30AM London equities were lower on Tuesday morning on SABMiller.[/R]
The UK market was lower on Tuesday. The FTSE 100 was 11 points lower to 6,222.3 in early trade in London.

Advancers

Alliance Boots once again led the advancing stocks. The chemist group rejection of Kohlberg Kravis Robert 10 pound a share offer suggested continued surmises that any successful offer would come in above that price. Alliance Boots gained a further 3 per cent.

ICI was up 2.4 per cent and also built on strong gains in the previous session on hopes that Akzo Nobel of the Netherlands could bid for its UK rival. Cadbury Schweppes rose 2.8 per cent on reports of stakebuilding in the soft drinks and confectionary group.

Imperial Tobacco added 0.3 per cent as it transpired that Altadis was keen to link up with the UK group to prevent a private equity takeover by Boots-stalker KKR.

The mining sector was also higher by strong numbers from Antofagasta as the Chilean copper producer reported an 86 per cent rise in profits to just under $3 billion. It rose 0.3 per cent

Decliners

SABMiller lost 3.3 per cent after it admitted that the Dutch company had cancelled its licence to brew Amstel lager in South Africa. The big surprise, though, was music retailer HMV, which plunged 11.6 per cent after it said it had not met cost cutting targets and revealed a 3 per cent fall in group same-store sales.

Financial stocks were also weaker, with Barclays down 1.3 per cent and Royal Bank of Scotland off 1.2 per cent. Amongst small-caps Biofuels Corporation slumped a further 43 per cent. The biodiesel producer said that its current margins were unsustainable and said profits for the year would be materially worse than market expectations.


[R]9:00AM Asian markets finished largely lower Tuesday with Japan down and China up.[/R]
Asian markets finished mostly lower on Tuesday. In Tokyo, the benchmark Nikkei 225 index shed 0.66% to end at 17,178.84. Decliners included Sony, falling 2.1%, and Toyota Motor, which dipped 1.1%. Nikko Cordial was a bright spot, surging 6.1% as the Tokyo Stock Exchange decision Monday to keep the issue listed boosted expectations that Citigroup will make a better takeover offer. Hitachi Ltd rose 0.8% after announcing it would sell a motor-making subsidiary.

In Hong Kong, the benchmark Hang Seng Index fell 0.6% to finish at 19,333.14. Large-cap developer Sino Land closed 2% lower on concerns it is paying too great a price for one of the sites under the joint venture with unlisted Nan Fung Development. Sun Hung Kai Properties added 0.7%, while Henderson Land edged 1.4% higher. Hang Lung Properties advanced 1.9%. China Mobile, the largest mobile operator by subscribers in the world, shed 1.7% on profit-taking after advancing 4.3% on Monday.

Elsewhere, Australian S&P/ASX 200 finished 0.44% lower at 5,865.00 and South Korean Kospi closed 0.37% lower at 1,436.05. Taiwan Weighted Price Index ended 0.72% higher at 7,684.00. China leading benchmark index, the Shanghai Composite, swung from a weaker start, adding 0.33% to end at 2,964.79.


[R]8:00AM NY-7:00PM Mumbai Sensex ends higher Tuesday on strong IT, metals.[/R]
The Sensex on BSE ended 80.35 points higher, or 0.62%, at 12,982.98. The market-breadth was positive as there were two advancers for every decliner. For 1,739 stocks that advanced on BSE, 851 declined and 85 remained unchanged. Of the 30 stocks in the Sensex, 23 advanced, sic declined and one was unchanged. The turnover on BSE was Rs 4,193.74 crore, compared with Rs 3,417.17 crore on Monday. The turnover on NSE was Rs 8,132.81 crore, lower than Rs 8,331.19 on Monday.

Economic news

Finance Minister P Chidambaram today said the RBI and the Indian Banks Association have no objections on raising bank credit to minorities but he added that both sides need to reconcile their differences of opinion before a policy position is reached at. The Finance Ministry was engaged in consultations with the IBA and the RBI to smooth out some differences on raising loans to minorities

Latest data released today showed that 16 out of 17 industry groups registered output growth in January 2007. Manufacturing is leading, but unlike last year mining and electricity, too, have started making significant contributions.

Trading highlights

MindTree Consulting was the most-active stock with a turnover of Rs 687 crore followed by Tech Mahindra and Idea Cellular. MindTree Consulting, surged 12.7% to Rs 879, extending a sharp surge of Monday.

Advancers

It stocks led the gainers on intense buying. Satyam was the most prominent gainer, up 2.2% to Rs 452.2. TCS was 2.1% to Rs 1,264.5. Wipro was up 1.6% to Rs 582. The largest private steel manufacturer in India, Tata Steel, was 1.9% higher to Rs 444.5. Cipla and ONGC gained 1.8% each at Rs 237 and Rs 807, respectively, while Larsen & Toubro was up over 1% to Rs 1,530 and Tata Motors was 1% higher at Rs 773. Index heavy Reliance Industries finished almost flat, up 0.1 to Rs 1,326.9.

Decliners

Hindustan Lever led the decliners, down 2.1% to Rs 181.2. It had slipped to a low of Rs 179.80. Reliance Energy slipped 1.7% to Rs 466, and Ranbaxy declined 1% to Rs 321. It large-cap Infosys was off 0.5% to Rs 2,105.65. Ranbaxy fell after Pfizer, the world biggest pharmaceutical company, sued Ranbaxy to block a generic form of the cholesterol and blood pressure medicine Caduet. Bharti Airtel finished 0.6% lower at Rs 765.2.


[R]7:00AM European markets were lower in early trade Tuesday on selling pressure.[/R]
European markets were lower on Tuesday. The German DAX 30 index fell 0.4% at 6,690.70, the French CAC 40 dipped 0.2% at 5,483.83 and the U.K. FTSE 100 lost 0.4% at 6,208.00.

Advancers

Man AG advanced 2.3% after it was upgraded to buy from neutral at UBS, with the broker also raising its price target. Antofagasta also added, up 0.6% in London after reporting an 87% jump in net profit to $1.35 billion due to record copper prices and higher-than-expected production for the year.

Altadis SA gained 2.9% after it was reported that Imperial Tobacco contacted the Spanish cigarette maker to see if it would be interested in a merger.

Decliners

U.K. brewer SABMiller fell 3.5%, leading decliners on the benchmark index, after the company announced operating profit will be hurt by around $80 million in the financial year that is going to start on April 1. Swisscom lost 1.8% after posting a 21% drop in 2006 net income to $1.3 billion as revenue fell 0.8%. Swisscom on Monday offered to buy Italian rival FastWeb for around $4.9 billion.

Michelin shares lost 1.4% after announcing it plans to issue between 610 million and 700 million euros of 10-year, zero-coupon convertible bonds. Michelin stated it is trying to take advantage of favorable market conditions and diversify its sources of funding.

Oil and gold

Oil prices bounced back Tuesday after a big decline a day earlier as traders reassessed the outlook for energy demand and supplies. Light, sweet crude for April delivery on the New York Mercantile Exchange gained 53 cents to $59.44 a barrel by noon in Europe. Brent crude rose 60 cents to $61.34 a barrel Tuesday on London''s ICE futures exchange. Gold traded at $649.60 an ounce on Tuesday, down $3.50 an ounce from the close of $653.10 on Monday.

Currencies

The euro edged lower against the U.S. dollar on Tuesday. The euro bought $1.3160 in morning European trading, down from $1.3187 in New York late Monday. The British pound slid to $1.9285 from $1.9318. The dollar was lower against the Japanese yen, however, slipping to 117.41 from 117.61.