Europe Sinks on Weak Earnings

Ivaylo
03 May, 2007
New York City

European markets were mostly lower mid-morning on Thursday as weakness in automakers and technology companies countered some well-received earnings from oil company Royal Dutch Shell and food group Unilever. Also, UBS, the world biggest asset manager, and German carmaker BMW posted earnings that missed analysts estimates. The German DAX Xetra 30 index lost 0.2% and the French CAC-40 index slipped 0.1%. However, the U.K. FTSE 100 index rose 0.4%.

[R]6:30AM European shares declined Thursday on weak earnings reports from UBS and BMW.[/R]
European markets declined in mid-morning trade on Thursday. National benchmarks fell in 10 of the 17 western European markets that were open.

The German DAX Xetra 30 index lost 0.2% at 7,442.43 and the French CAC-40 index slipped 0.1% at 5,987.37. However, the U.K. FTSE 100 index rose 0.4% to 6,507.30.

Advancers

Royal Dutch Shell advanced 1.6% after saying that its first-quarter profit rose 6% to $7.28 billion, with improving profit in its gas and power, oil products and chemicals units countering declining profits at its largest arm, exploration and production. Competitor BP rose 1.5% in London, while Total climbed 0.8%.

Unilever rose 5.1%. It posted an unexpected increase in first-quarter profit, as cost savings and strong sales volumes outweighed currency effects and higher raw material prices. Dutch supermarket chain Ahold shares rose 2.8% in Amsterdam, after it agreed to sell its U.S. Foodservices business to private equity firms for $7.1 billion.

Decliners

Automaker BMW led the car making sector lower. Its shares declined 2.6% after the first-quarter profit of the company slipped just below analyst expectations and it reported a weaker margin. In IT news, Infineon Technologies lost 1.4%.

UBS fell the most in six months after the biggest Swiss bank reported a third straight decline in quarterly profit. UBS sank 2.7%. Shares in UBS competitor Credit Suisse lost 2.4%, also in Switzerland.

Sanofi-Aventis shares also lost ground. The first-quarter sales of the company grew 2% to 7.12 billion euros, or up 7% on a comparable basis; slightly lower than analyst estimates. Combined with lack of news on the status of a U.S. review of its weight-loss drug, Acomplia, Sanofi shares slipped 1.3%.

Commodities

Crude oil advanced after rebels attacked an oil facility for the third time this week in Nigeria, where unrest has cut about a quarter of the output of the country. Crude oil for June delivery rose 32 cents, or 0.5%, to $64 a barrel on the New York Mercantile Exchange, and traded for $63.88 early in London. Brent crude for June settlement gained 45 cents, or 0.7%, to $66.70 a barrel on London ICE Futures exchange.

Gold gained for the first time this week after Gold Fields Ltd., the world fourth-biggest producer of the metal, announced output declined at seven of its eight mines. Silver also increased. Gold for immediate delivery rose $2.85, or 0.4%, to $676 an ounce, after declining $8.40 in the first three days of this week. Silver rose 11.5 cents to $13.33 an ounce, its first gain this week.

Currencies

The dollar was mostly lower against other major currencies in European trading Wednesday. The euro traded at $1.3609, up from $1.3598 late Wednesday in New York. The British pound traded at $1.9924, up from $1.9896. The dollar fetched 120.12 Japanese yen, unchanged.

[R]5:00AM Corn gains on Wednesday, while gold, silver, energy stocks decline.[/R]
May corn gained 4.50 cents to end at $3.72 per bushel, while July settled 4.50 cents higher at $3.82, and December gained 1.75 cents to $3.8025. The front-month July soybeans settled 7.75 cents lower at $7.4850, and November soybeans ended 6.50 cents lower at $7.77. July wheat closed7.50 cents lower at $4.9350 a bushel.

June gold lost $2.20 to settle at $675.10 a troy ounce on the New York Mercantile Exchange, while July silver shed 3.5 cents to $13.335. July platinum lost $1.80 to $1,299.10 an ounce, while June palladium recorded an 80-cent gain to $374.95 an ounce. The most-active July copper contract advanced 1 cent to settle at $3.6445 per pound.

The June crude oil contract declined 725 cents at $63.68 a barrel after reaching $65.50 a barrel. The June heating oil contract dipped 3.03 cents to close at $1.8526 a gallon and June gasoline slipped 1.21 cents to finish at $2.2326 a gallon. June natural gas settled up 1.2 cents at $7.730 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures for May delivery settled down 0.15 cent at $1.0170 a pound, with July off 0.15 cent at $1.0470. Most-active July cocoa added $21 to end at $1,855 a metric ton. Futures on raw sugar in foreign ports for July settled unchanged at 9.14 cents a pound, with October off 0.01 cent at 9.43 cents.