Shell, Premiere Help Europe Rebound

Elena
06 Jul, 2007
New York City

European stock markets regained ground on Friday, as higher crude oil prices boosted oil companies and stronger-than-expected jobs growth in the U.S. also generated positive mood. Shares of Royal Dutch Shell rose 2.9%, following an upgrade to buy from reduce at Deutsche Bank. BP shares gained 1.1%. The French CAC-40 gained 0.7%, the U.K.''s FTSE 100 advanced 0.8%, and the German DAX rose 0.8%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets gained ground on strong energy stocks.[/R]

European stock markets regained ground on Friday, as higher crude oil prices boosted oil companies and stronger-than-expected jobs growth in the U.S. also generated positive mood. The French CAC-40 gained 0.7% at 6,102.69, the U.K.''s FTSE 100 advanced 0.8% at 6,690.10 and the German DAX rose 0.8% at 8,048.32.

In Frankfurt Premiere AG, the biggest pay television company broadcaster, climbed 5% on speculations that it may get back the rights to broadcast Germany''s Bundesliga soccer league. Shares of German steelmaker ThyssenKrupp gained 4% after Goldman Sachs upgraded its stock to buy. The banking sector was supported by 1% increase in shares of Swiss investment bank UBS as investors welcomed a decision to remove CEO Peter Wuffli.

In Paris the automotive sector moved higher, helped by Peugeot-Citroen, which rose 5.8% after the company said it expects new vehicle launches to bolster second-half performance. Rhodia SA rose 6.1% after Morgan Stanley raised its rating on France''s largest specialty chemicals maker to 42 euros from 40.8 euros.

In London oil and gas shares benefited from higher crude oil prices, as well as a broker upgrade of several heavyweights. Shares of Royal Dutch Shell rose 2.9%, following an upgrade to buy from reduce at Deutsche Bank. BP shares gained 1.1%. Miners also drew attention, due to commodity prices and continued deal speculation. BHP Billiton climbed 3.7%. Among other notable gainers, SIG Plc surged 8.4% on first-half profit jump.


[R]11:30AM Market averages received a boost from strong oil and gold stocks.[/R]

U.S. stock averages turned to the upside in late morning trading, helped by strength among resource stocks. Gains in shares of oil companies offset worries about higher borrowing costs after strong employment data. Exxon Mobil ((XOM)) advanced 0.6% and Chevron Corp. ((CVX)) gained 1.5%after U.S. crude oil climbed to $72.79 a barrel. Gold stocks posted particularly strong gains on the back of higher gold prices.

The retail sector also showed considerable strength, followed by some computer hardware and housing stocks. Macy''s Inc. ((M)) largely contributed to the strength in the retail sector with a rise of 6%. Sears Holdings ((SHLD)) and Big Lots ((BIG)) alsio helped, rising 2.7% each. The utilities and biotech sectors traded in the negative.

In corporate news, Dow Jones & Co. ((DJ)) on Friday denied a press report that its board and Rupert Murdoch''s News Corp. ((NWS)) reached an agreement on terms of a takeover for $5 billion, or $60 a share. Advanced Medical Optics ((EYE)) offered a higher cash-and-stock bid for rival Bausch & Lomb ((BOL)) to $4.23 billion from $3.67 billion from a private equity firm.

In late morning trading, the Dow Jones industrial average rose 37.31, or 0.28%, to 13,603.15, after falling in earlier trading. The Standard & Poor''s 500 index rose 2.20, or 0.14%, at 1,527.60, while the Nasdaq composite index rose 3.65, or 0.14%, to 2,660.30.



[R]Jobs growth came in above expectations on June.[/R]
Friday morning, the Department of Labor released its closely watched report on employment in the month of June, showing that job growth for the month came in a little above economist estimates while the unemployment rate remained unchanged. The report showed that employment increased by 132,000 jobs in June following an upwardly revised increase of 190,000 jobs in May. Economists expected an increase of about 125,000 jobs compared to the increase of 157,000 jobs originally reported for the previous month. The Labor Department noted that employment rose in several service-providing industries, while manufacturing employment continued to decline.

Strong job growth in the education and health services, leisure and hospitality, and government sectors contributed to an increase of 135,000 jobs in the service sector. At the same time, a decrease in manufacturing jobs more than offset an increase in construction jobs, resulting in a decrease of 3,000 jobs in the goods-producing sector. The report also showed that the unemployment rate remained at a relatively low 4.5 percent for the third straight month. Economists had been expecting the unemployment rate to remain at 4.5 percent. The unemployment rate matched a five-year low of 4.4 percent in March. The Labor Department also said that employees'' average hourly earnings increased by $0.06 or 0.3 percent to $17.38 in June.


[R]10:00AM New York – Revised U.S. payroll data suggest tight labor market, fueling speculation of inflation.[/R]

Monthly payroll data left investors worried that challenging labor market and rising wages may stoke inflation in the coming months. For the month of June 132,000 workers were added to payroll by U.S. companies and wages edged 0.3% higher. The May month payroll growth was revised to 190,000 from 157,000, higher than forecasted by most economists and April growth was revised to 122,000 from 80,000. Average hourly worker wage increased to $17.38, 3.9% increase from a year ago or 0.3% gain from April. The recent payroll growth has been driven by hiring in the healthcare and service sectors and government jobs.


[R]8:00AM New York, 5:30PM Mumbai – Sensex in India closes at record high, weekly inflation rebounds, and rupee eases in international trading.[/R]

Sensex gained 102.23 or 0.7% to close at 14,964.12 after reaching 15,007 in intra-day trading. The index jumped in seventeen months to 15,000 from 10,000 and gained the last 1,000 points in seven months. Trading turnover on BSE was 5,850 rupees, a decline from 6,515 rupees from previous session. Of the less than 3,000 shares changing hands 1,490 gained, 1,176 declined, and 86 remained unchanged. Of the 30-stocks Sensex, 25 gained and the rest declined.

Software exporters and cement companies rebounded but bank stocks fell. The rupee traded slightly below 40.50 rupees for one dollar on speculation of intervention from Reserve Bank.

Economy News

Weekly wholesale inflation index, at the end of the June 23rd week, rose to 4.13% from 4.03%. The inflation rose on the rising food and energy costs but remained at 13-month low level. The low inflation prompted the debate the further rate revision from Reserve Bank of India may be halted for two months.

IPO News

Recently priced Vishal Retail surged 9.5% to 758 rupees on heavy volume and DLF gained 0.2% to 571 rupees. ICICI Bank plans to raise nearly 6,000 crore rupees debt to fund its expansion. The recently priced offering of 20,000 crore rupees from the bank began trading today.

Gainers of the Day

Ahead of fiscal first quarter earnings from the software exporters, investors are worried of the impact of rising wages, strengthening rupee, and higher cost of travel and work visa on company earnings.

Tech Mahindra jumped nearly 6% to 1,475 rupees leading the rally in software exports. Satyam Computer jumped 4.6% to 485.60 rupees on 13 lakh (1.3 million) stock trading volume, Infosys advanced 3% to 1,974 rupees, TCS jumped 4.2% to 1,157 rupees, and Wipro increased 3% to 519 rupees. Infosys is expected to release earnings on July 11.

Cement stocks rebounded for the second day in a row. Birla Corporation jumped 3.5% followed by 3% gain in India Cements, and 2.2% rise in ACC, and 1.9% advance in Ambuja Cements.

Larsen & Toubro jumped 1.7% to 2,371 and traded intra-day record high of 2,385 rupees.

Reliance Communications gained 1.2% to 551 rupees and Bharti Airtel jumped 1.4% to 865 rupees.

Bajaj Auto jumped 1% to 2,110 rupees on the company restructuring announcement. The five division business structure is planned to improve company decision making and new products design.

Mahindra & Mahindra increased 3% on the news that the company is to replace Hero Honda in BSE Sensex on July 9th. Hero Honda gained 1.5%.

Decliners of the Day

ICICI bank fell nearly 2.7% to 978.25 rupees on trading volume of 32.47 lakh (3.2 million) shares. The recently priced secondary offering of 5.81 crore shares, raising nearly $5 billion, was priced at 940 rupees. The stock was offered to retail investor at 50 rupees discount.

Other banks traded lower. Indian Overseas Bank and Vijaya Bank fell 1.7%, HDFC Bank dropped 1.7%, and Punjab National Bank declined 0.9%.