ProSiebenSat Limits European Losses

Elena
27 Jun, 2007
New York City

European stock markets finished in the negative territory on Wednesday, pressured by weakness among banks and miners amid much weaker-than-expected U.S. durable goods data. British mortgage lender Northern Rock dropped 12%, insurer AXA fell 0.9%, while miner BHP Billiton lost 2.8%. The U.K.''s FTSE 100 declined 0.5%, the German DAX lost 0.8%, and the French CAC-40 slipped 0.2%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets closed down, dragged by rate worries. Banks and miners led decliners.[/R]

European stock markets finished in the negative territory on Wednesday, pressured by weakness among banks and miners amid much weaker-than-expected U.S. durable goods data.

Rate-sensitive mining and financial-services stocks led decliners, with shares of miner BHP Billiton down 2.8% and insurer AXA falling 0.9%. Interest rates also dragged British mortgage lender Northern Rock. Shares of the lender dropped 12% after it said it expects growth of about 15% in underlying attributable profit for 2007, lower than the 17% growth rate expected by analysts. Rivals Bradford & Bingley and Alliance & Leicester also posted losses, falling more than 2.6% in London.

In merger-and-acquisition news, ProSiebenSat.1 Media climbed 4.1% after the German broadcaster agreed to buy SBS Broadcasting Group from private-equity groups and the Dutch government for 3.3 billion euros. Among other stocks posting gains, shares of utilities Gaz de France and Suez rose 3.7% and 1%, respectively, after the French government said all options remain open for reviewing the merger talks between the two companies.

The U.K.''s FTSE 100 closed down 0.5% at 6,527.60, the German DAX lost 0.8% at 7,801.23 and the French CAC-40 slipped 0.2% at 5,941.76.


[R]11:30AM Market averages turned mixed on rate worries. The Nasdaq advanced, helped by Oracle, AMD.[/R]

U.S. market averages traded in a lackluster fashion, reflecting strength in the tech sector, weak economic data, as well as continuous worries about the subprime mortgage market and hedge fund woes. Investors were also unwilling to make big moves ahead of the Fed Reserve’s decision on interest rates.

The Nasdaq moved notably higher, as Oracle ((ORCL)) gave tech shares a boost with 2% gain on better-than-expected earnings. The tech-heavy average was also supported by strength in the semiconductor sector. Advanced Micro Devices ((AMD)) rose 2.5%, standing out as one of the sector''s best performances. At the same time, Dow components Caterpillar ((CAT)), down 2.2%, Boeing ((BA)), down 0.6%, and Alcoa ((AA)), down 0.7% dragged the blue-chip average.

Banking, oil and hardware stocks moved to the downside, while semiconductors and utilities gained. The weakness in the oil sector continued despite rallying crude oil futures after weekly data showed a drop in gasoline inventories. In merger-and-acquisition news, Guitar Center ((GTRC)) soared 19% after it agreed to be bought by affiliates of Bain Capital Partners LLC, a private investment company, in a deal worth approximately $2.1 billion.

The Dow Jones industrial average fell 5.61, or 0.04%, to 13,332.05, after dropping about 80 points in earlier trading. The Standard & Poor''s 500 index gained 0.41, or 0.03%, to 1,493.30, and the Nasdaq composite index advanced 6.55, or 0.25%, to 2,580.71. Treasury bonds rose following the weak durable goods. The 10-year Treasury note''s yield fell to 5.06% from 5.09% late Tuesday.


[R]Durable goods orders dropped 2.8% in May.[/R]

Wednesday morning, the Department of Commerce released its report on durable goods orders in the month of May, showing that orders for manufactured goods meant to last at least three years fell much more than economists had been expecting. The report showed that durable goods orders fell 2.8 percent in May following an upwardly revised 1.1 percent increase in April. Economists had been expecting orders to fall by 1.0 percent compared to the 0.8 percent increase originally reported for the previous month. The bigger than expected drop in durable goods orders was largely due to a steep drop in orders for transportation equipment, which fell 6.8 percent in May after falling 1.8 percent in April. A 22.7 percent drop in orders for commercial aircraft and parts contributed to the decline.

The Commerce Department said that excluding orders for transportation equipment, durable goods orders fell by a more modest 1.0 percent in May compared to a 2.5 percent increase in the previous month. Notable decreases in orders for primary metals, heavy machinery, and electrical equipment, appliances, and components also contributed to the bigger than expected drop in durable goods orders. At the same time, the report showed a notable increase in orders for defense capital goods, which rose 6.7 percent in May after coming in unchanged in April. Excluding orders for defense, durable goods orders showed a 3.2 percent drop. The report also showed that shipments of durable goods rose 0.4 percent in May following a 2.0 percent increase in April, while inventories or durable goods edged up 0.2 percent after a 0.4 percent increase in the previous month.


[R]9:45AM Wall Street opened lower on weak durable goods orders and nervousness ahead of Fed’s decision on rates.[/R]

Wall Street opened in the negative, pressured by much weaker-than-expected durable goods orders and cautiousness ahead of the Fed Reserve''s two-day meeting on interest rates. The Commerce Department reported that durable goods orders in May dropped by 2.8%, a steeper drop than the decline of 1.7%, anticipated by investors. The weak data sparked concerns that the U.S. economy will not recover from its recent slowdown.

The downward trend was bucked by positive earnings releases, indicating stronger corporate profit growth in Q2. Conagra ((CAG)) added 1.7% after reporting a Q4 profit of $192 million, or 39 cents per share, vs. a profit of $59.2 million, or 11 cents, a year ago. Quarterly results beat estimates of earnings of 31 cents per share on revenue of $2.83 billion.

Among other earnings-related movers, Nike Inc. ((NKE)) posted 325 profit increase in the most recent quarter compared to the year-ago period. Nike rose 4%. Among tech stocks, Oracle Corp. ((ORCL)) reported 23% profit rise and said that said sales in the current quarter may rise more than expected. Shares gained 2%.

The Dow Jones industrial average fell 56.99, or 0.43%, to 13,280.67. The Standard & Poor''s 500 index fell 7.77, or 0.52%, to 1,485.12, and the Nasdaq composite index fell 5.19, or 0.20%, to 2,568.97. Treasury bonds rose after the weak durable goods data drove investors to the safe-haven assets. The 10-year Treasury note''s yield fell to 5.04% from 5.09% late Tuesday.


[R]9:30AM The FTSE 100 is lower in mid-morning trade Wednesday.[/R]

The UK market is down on Wednesday. In late morning trade, the FTSE 100 lost 32.2 points to 6,527.1.

Political news

Tony Blair stepped down as prime minister today to make room for Gordon Brown, Chancellor of the Exchequer in Mr. Blair’s cabinet, to head the UK Government.

Advancers

Bus and train group Stagecoach was one of the very few advancers in the morning, reporting a big rise in full year profits Wednesday tracking strong growth in its bus and rail operations in the UK and North America. The stock rose 5.3%.

Hikma Pharmaceuticals surged after saying that first half revenues are expected to increase about 40%. The shares of the company advanced 5.4%.

Decliners

Northern Rock, a mortgage bank, plummeted 9.6% as it downgraded its profit guidance quoting a rise in funding costs. The bank added that annual profits would grow by 15 %, less than the 17 % anticipated by the market.

The lender was also responsible for the sharp decline in the mid-cap index, where Paragon Group, a specialist mortage lender, fell 6.4% and Bradford & Bingley lost 3.7%.

Other banks followed suit and plunged. Alliance & Leicester was off 2.9%, HBOS declined 2.3% and Lloyds TSB was down 2.1%.

Seven FTSE 100 constituents were trading without further rights to their latest dividend payment. Among them were United Utilities which lost 4 %, Tate & Lyle falling 2.7 % to 568p and Yell Group retreating 2.8 %.


[R]9:00AM Market futures declined amid weak durable goods orders.[/R]

U.S. stock futures moved to the downside Wednesday, weighed down by an unexpectedly steep decline in durable-goods orders in May. However, better-than-forecast earnings from Nike Inc. and Oracle Corp. bucked the downward trend.

Nike ((NKE)) jumped 5% in pre-open trade after posting a 32% profit rise and the fastest growth in orders in the last four years. Oracle ((ORCL)) gained 0.5% after reporting a 23% profit rise in Q4, helped by acquisition deals.

In other corporate news, Nuvelo ((NUVO)) slipped 22% after the biopharmaceutical terminated its collaboration with Bayer on a blood-clot drug. Guitar Center ((GTRC)) soared 19.9% after agreeing to be bought by Bain Capital in a deal worth $1.9 billion. S&P 500 futures dropped 4.1 points at 1,493.70 and Nasdaq 100 futures dropped 4.5 points at 1,921.00. Dow industrial futures fell 26 points.


[R]8:30AM Asian markets decline Wednesday with only China bucking the downtrend.[/R]

Asian markets declined Wednesday. The Nikkei 225 Average settled 1.2% lower at 17,849. Toyota Motor Corp., the largest automaker in Japan, lost 1.7%, a record in almost three weeks. Another exporter, which declined was Nikon, down 2.8%. Brokerage houses lost on concern over energy projects in Russia and Venezuela, involving high geopolitical risk. Marubeni declined 3.2%, while Mitsui & Co. shed 3.6%.

Hong Kong Hang Seng Index fell 0.4% to close at 21,705. China Mobile declined 1.6%, and HSBC lost 0.8%. Oil companies also lost. Sinopec declined for a third straight day, 0.7% lower, in the wake of the surprise resignation of its chairman, and Cnooc lost 1.63%.

In South Korea, the Kospi Index lost 0.9% to 1,733. Banks declined on worries of further measures on the side of the central bank to cool down liquidity. Kookmin Bank closed down 1.7% and Korea Exchange Bank fell 3%. Hyundai bucked the trend and rose 2.1%. Australian S&P/ASX 200 plunged 2% to 6,184. Weak commodities weighed on the market with mining company BHP Billiton, down 1.8.

China bucked the trend and advanced on bargain hunting of oversold companies. High-tech company Beijing Centergate Technologies and FAW Car both advanced by the daily limit of 10%. The Shanghai Composite Index rallied 2.7% to end at 4,078..


[R]8:00AM Oracle reported better-than-forecast Q4 profit and sales.[/R]

Oracle ((ORCL)), software giant, announced after the closing bell Thursday a better-than-expected 23% earnings increase in Q4. The company said that net earnings rose to $1.6 billion, or 31 cents per share, compared with $1.3 billion, or 24 cents per share a year earlier. Quarterly revenues jumped 20% to $5.8 billion. Excluding charges, it would have earned 37 cents a share, exceeding analyst forecast for operating earnings per share at 35 cents and revenues at $5.61 billion.

The business software maker also said that sales are expected to accelerate in the current quarter. Oracle has spent $25 billion buying other software makers. The strategy of bundling these products together and offering a comprehensive suite of software has proved successful, leading to bigger deals and a larger number of customers. Shares of Oracle Corp. added 1.3% in pre-market trading Wednesday.


[R]7:30AM NY-6:30PM Mumbai Sensex ends 70 points lower on weak auto and metal shares.[/R]

The Sensex on BSE finished 70.02 points lower, or 0.48%, at 14,431.06.

The market-breadth turned negative in the latter part of trading. As 1,245 stocks advanced, 1,388 stocks declined and 64 were unchanged. Of the 30 stocks in the Sensex, only 10 advanced, while the rest declined. The turnover on BSE was Rs 4,685 crore, compared to Rs 4,706 crore on Tuesday. On NSE, the turnover was Rs 9,375 crore, slightly lower than Rs 9,557 crore on Tuesday.

Economic news

The rupee declined for the fourth straight day on talks that financial inflows from abroad will shrink after foreign companies had completed buying new shares offers that drew money from overseas. The rupee fell 0.2% to 41.005 against the dollar in morning trading in Mumbai.

Air India Ltd., the biggest carrier overseas, opened freighter operations with two Airbus SAS planes to meet the increasing demand for transporting goods in India, the second-fastest in growth major economy. The weekly schedule of four flights to Frankfurt and Paris via Bangalore and Saudi Arabia will tap into rising air cargo traffic. India total international trade including imports and exports is expected to cross $250 billion in the current fiscal year.

Trading highlights

GMR Infrastructure was the most active stock with a turnover of Rs 297 crore followed by India Infoline and new issue Nelcast.

Advancers

Software exporting companies stocks advanced on weaker rupee. Satyam Computers spurted 2.6% to Rs 468, and led the gainers while Wipro advanced 0.2% to Rs 510, TCS gained 0.9% to Rs 1,133 and Infosys Technologies added 0.7% to Rs 1,936. TCS announced on Tuesday, June 26 2007, that it had struck an agreement with Scuderia Ferrari to provide the complete software to the Formula one cars of the Italian carmaker.

Auto stocks traded mixed. Hero Honda advanced 0.9% to Rs 676 and Bajaj Auto gained nearly 0.2% to Rs 2,131. Other gainers included Grasim up 0.3% to Rs 2,503 and Gujarat Ambuja Cements, 0.3% higher to Rs 116.

Decliners

NTPC led the decliners, down 2.1% to Rs 150. Reliance Communications declined 2% to Rs 515 and Reliance Energy lost also 2% to Rs 578. Aluminium and copper large-cap Hindalco Industries declined 0.6% to Rs 170 on a decline in global metal prices on Tuesday, June 26 2007.

Tata Motors declined 1.8% to Rs 672 and Maruti Udyog lost 0.7% to Rs 752 but Hero Honda and Bajaj Auto fell.

Ranbaxy Laboratories lost 1.4% to Rs 343 and index heavy Reliance Industries lost 0.3% to Rs 1,698. HDFC Bank and Tata Steel lost over 1% each to Rs 1,091 and Rs 596, respectively.


[R]7:00AM European markets decline Wednesday on weak Northern Rock, Sacyr Vallehermoso.[/R]

European markets declined on Wednesday. By mid-day, Frankfurt Xetra Dax fell 0.8% to 7,796.86, the CAC 40 in Paris lost 0.6% to 5,915.36 and London FTSE 100 slid 0.7% to 6,512.1. National benchmarks fell today in all of the 17 western European markets that were open.

Advancers

Banca Popolare di Milano Scrl surged 4.5%. The northern Italian lender failed to approve changes to its company rules that would have allowed the planned takeover of Banca Popolare dell''Emilia Romagna Scrl to take place

Gaz de France, the operator of biggest natural-gas network in Europe, rallied 1.8%. The French government could approve in coming days a long-planned merger between Gaz de France and Suez.

Decliners

Northern Rock plummeted more than 10%. Deutsche Bank AG, the biggest bank in Germany, and Axa SA, the second-largest insurer in Europe, also tracked the decline. Deutsche Bank lost 1.6%. UBS AG, the biggest bank by assets in Europe, declined 1.4%. Axa fell 1.3%, and Allianz, the largest insurer in Europe, dropped 1.6%.

Sacyr Vallehermoso fell 7.4%. The Spanish builder seeking to acquire French competitor Eiffage SA broke stock-market rules in an attempt to take control of the company and must make a fresh takeover bid.

Commodities

Gold for immediate delivery climbed $1.60, or 0.3%, to $642.50 an ounce after earlier trading at $639.50, the lowest since March 14. Silver increased 0.5 cent to $12.255 an ounce.

Platinum declined for a third consecutive day in London on speculation wage talks will avert a strike in South Africa. Platinum for immediate delivery dropped $1, or 0.1%, to $1,266.50 an ounce and palladium rose $1.50, or 0.4%, to $367.50 an ounce.

Crude oil declined, trading below $68 a barrel in New York, on expectations that U.S. gasoline supplies rose for an eighth straight week. Crude oil for August delivery fell to $67.35 a barrel, a decline of 42 cents, in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for August settlement fell as low as $70.01 a barrel, a decline of 16 cents on the ICE Futures exchange in London.

Currencies

The euro slipped Wednesday against the U.S. dollar. The euro declined slightly to $1.3433 in morning trading in Europe, from $1.3456 Tuesday evening. The dollar also rose against the pound, which fell to $1.9942 from US$1.9987. Meanwhile, the dollar fell against the Japanese yen, to 122.58 yen from 123.24 the previous evening.