BNP Paribas Weighs Europe down 2%

Elena
09 Aug, 2007
New York City

European stock markets closed steeply in the red on Thursday on growing concerns of slowing global economy due to troubles in U.S. credit markets. The subprime jitters were sparked by news that French bank BNP Paribus will suspend redemptions from three U.S. security backed funds because it was unable to properly value their assets. France led decliners with a drop of 2.2%, followed by Germany, down 2%, and the U.K. losing 1.9%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets tumbled on subprime worries.[/R]

European stock markets closed steeply in the red on Thursday on growing concerns of slowing global economy due to troubles in U.S. credit markets. The subprime jitters were sparked by news that French bank BNP Paribus will suspend redemptions from three U.S. security backed funds because it was unable to properly value their assets.

Following the news, European Central Bank stepped into the money market by allocating 94.841 billion euros in a quick tender at 4.0%. The Fed Reserve followed suit, adding $12 billion to U.S. markets. In the currency markets, the euro fell 0.7% at $1.37 and the British pound lost 0.4% at $2.0277 against the dollar. After two consecutive sessions of solid gains, European markets tumbled. France led decliners with a drop of 2.2%, followed by Germany, down 2%, and the U.K. losing 1.9%.

Dutch financial-services provider Fortis lost 2.1% despite higher Q2 profit. Shares of Aegon lost 1%. After the Dutch financial-services firm announced Q2 profit drop and a surprise share-buyback program amounting to 1 billion euro. Credit Suisse declined 2.4%.

In Frankfurt financials were also under pressure, with Deutsche Bank falling over 2.4%. Commerzbank said its Q2 net income more than doubled, beating expectations. However, Commerzbank shares slipped 4.3%. Elsewhere, water company RWE dropped 1.4% after recent gains. The company posted 59% profit growth in the first half and prompted an upward revision to its 2007 earnings forecast.

In Paris bank BNP Paribas sank 3.4% after it said it suspended three funds, blaming a lack of liquidity in the U.S. subprime mortgage market. Shares of French bank Natixis slid 5.6%. Among companies posting earnings results, insurance giant AXA fell 3.6%, despite higher first-half net income. Air France-KLM posted a 70% increase in fiscal first-quarter profit, but shares of the airline declined 6.3%, as investors cited weak cargo activity and lower gross margins.

In London financial stocks were also notable loser, with Royal Bank of Scotland, falling 2.4%. Man Group, the world''s largest publicly traded hedge fund manager slipped 6.7%, while Standard Life lost 6.5%.


[R]11:30AM Market averages tumbled, hurt by credit markets worries.[/R]

Renewed mortgage markets worries sent U.S. market averages sharply in the red, with the Dow Jones sliding more than 240 points. The subprime jitters were sparked by news that French bank BNP Paribus will suspend redemptions from three U.S. security backed funds because it was unable to properly value their assets.

Tension intensified after a move by the ECB to provide more cash to credit markets. The Fed Reserve followed suit, adding $12 billion to U.S. markets to help ease liquidity constraint. Citigroup ((C)) fell 3.7% to lead a slump in the financial sector. JP Morgan Chase ((JPM)) dropped 3.5%, while Bear Stearns ((BSC)) dropped 2.6%.

Retailers’ monthly sales results built on the negative sentiment. Pacific Sunwear ((PSUN)) tumbled 11.2% after posting decline in its same-store sales. American Eagle Outfitters ((AEOS)) dropped 3.4% amid lower-than-forecast same-store sales in July. However, there was upbeat news, too, with Children''s Place Retail Stores ((PLCE)) jumping 7.7% on stronger-than-expected results.

In other corporate news, Internet telephone company Vonage Holdings ((VG)) posted a narrower Q2 loss on lower marketing costs. The stock rose 9%. In late morning trading, the Dow fell 107.96, or 0.79%, to 13,549.90 after earlier falling as much as 241 points. The broader Standard & Poor''s 500 index fell 12.10, or 0.81%, to 1,485.39, while the Nasdaq composite index fell 3.63, or 0.14%, to 2,609.35.


[R]10:00AM New York, 7:30PM Mumbai – Sensex in Mumbai trading reversed its earlier gains and fell sharply in the afternoon trading.[/R]

Sensex in Mumbai trading fell 207.83 points or 1.36% to close at 15,100.15 on weak trading sentiment. In the broader market 1,660 stocks fell, 1,065 increased, and 51 were unchanged.

Daily turnover on the Bombay Stocks Exchange increased to 5,036 crore rupees from 4,732 crore rupees. Of the thirty stocks in index, 23 lost ground while seven increased in value.

Reliance Communication declined 1.3% to 536 rupees after completing its private placement offer of $340 million in Reliance Telecom Infrastructure. The 5% private placement values the company at $6.75 billion.

Banks and software export stocks led the decliners.

Bank of Baroda plunged 5% to 298 rupees, followed by 4% loss in State Bank of India to 1,645 rupees, 3.1% loss in Kotak Mahindra Bank to 768 rupees, and 3% decrease in Allahabad Bank to 92 rupees. ICICI Bank fell 0.4% to 887 rupees on the news that the company has still not received the clearance for international offering to raise capital.

Infosys fell 2% to 1,931 rupees and TCS dropped 1.1% to 1,141 rupees. Satyam dropped 3% to close at 466 rupees.

Auto stocks fell in the volatile trading. Maruti Udyog fell 1.7% to 823 rupees, Mahindra & Mahindra lost 0.4% to 687 rupees. Tata Motors jumped 0.45% to 664 rupees and Hero Honda increased 0.36% to 680 rupees.

Hindustan Copper jumped 5% to close at 120 rupees, third successive rise of 5% in three days. The company is in negotiation with government agency to restructure its balance sheet involving 637 crore rupees.


[R]09:45AM Wall Street opened steeply down, pressured by weak financial stocks.[/R]

Wall Street posted heavy losses at opening Thursday, pressured by renewed global worries about credit markets. The jitters were sparkled by news that French bank BNP Paribas suspended three funds, blaming a lack of liquidity in the U.S. subprime mortgage market. After the news, the ECB said it allocated 94.841 billion euros to 49 bidders in a one day quick tender at 4% to add liquidity to the money market.

Citigroup ((C)) and Goldman Sachs Group ((GS)) helped lead declines of financial firms, losing 3% and 2.3%, respectively. Other decliners included Morgan Stanley ((MS)) and Merrill Lynch ((MER)), both falling 3%. Lehman ((LEH)), the biggest U.S. underwriter of mortgage bonds, declined 2.2%, while Bear Stearns ((BSC)) dropped 2.6%.

American International Group ((AIG)) was a leading loser on the Dow, falling 1% after after the global biggest insurer said residential mortgage delinquencies and defaults are rising, prompting that damage in the mortgage market could be expanding.

Wal-Mart Stores ((WMT)) was another drag on the blue-chip average, despite posting better-than-forecast sales. The retailer fell 1.4% after it said its July same-store sales rose 1.9%, exceeding forecast of an increase by 1.5%.

In early trading, the Dow fell 169.82, or 1.24%, to 13,488.04 after falling more than 200 points. The broader Standard & Poor''s 500 index fell 19.11, or 1.28%, to 1,478.38, while the Nasdaq composite index lost 17.22, or 0.66%, to 2,595.76. The yield on the benchmark 10-year note falling to 4.78% from 4.89% late Wednesday.


[R]09:00AM U.S. stock futures indicated a steeply lower start, due to BNP Paribas renewed credit worries.[/R]

U.S. stock futures pointed steeply lower in pre-market trading Thursday, as credit market worries resurfaced after French bank BNP Paribas suspended three funds, blaming a lack of liquidity in the U.S. subprime mortgage market.

After market close Wednesday, AIG ((AIG)) posted stronger-than-forecast Q2 profit but also added that one of its units was hit by the continuing weakness in the U.S. housing market. News Corp. ((NWS)) reported Q4 profit increase, led by higher revenue and income at its cable networks.

The latest same-store sales data also attracted investor attention. Discounters and children''s retailers were expected to posted the strongest July retail sales, while teen retailers are likely to report weak results.

Wal-Mart Stores ((WMT)) said its July same-store sales rose 1.9%, exceeding forecast of an increase by 1.5%. The stock dropped 1.3% in pre-market trading. Among other discount retailers Costco ((COST)) said same-store sales rose 7%, beating estimates of 5.5%. Company’s shares declined 1.8% in the pre-open. At the same time Stage Stores ((SSI)) said its same-store sales fell 1.7%, missing expectations for a 0.7% rise.

In the economic news front, initial jobless claims advanced 7,000 to 316,000, reaching the highest level since June 30. S&P 500 futures lost 15.90 points at 1,488.00 and Nasdaq 100 futures fell 13 points at 1,986.25. Dow industrial futures gave up 115 points.


[R]8:30AM New York, 8:30 PM Hong Kong – Asian markets rebounded led by a rise in Shanghai, Japan, and Australia.[/R]

Asian markets closed higher tracking New York and European markets. Singapore led the region with a gain of 3.37% followed by 1.03% rise in Australia, 0.91% gain in Taiwan, and 0.83% increase in Japan. Pakistan led the decliners with a loss of 2.8% followed by 2.38% fall in Thailand, and 1.4% decline in India. Indonesia fell 0.94% and Hong Kong lost 0.4%.

In Hong Kong trading stocks fell after rising sharply in the previous session. Daily turnover on the main board was recorded at HK$ 85.2 billion and on GEM market was reported at HK$ 1.1 billion. Hang Seng held higher ground in the morning hours but fell in the last thirty minutes of trading. Banks led the decliners. ICBC declined 0.8% and HSBC dropped 0.1%. China Life led the listed stocks in daily turnover with a loss of 0.32% and CCT Tech International jumped 7.5% leading the stocks with a volume of 895 million shares.

Shanghai Composite Index jumped 2% to close at 4,754.10, third record high in as many days. Banks led the gainers in the hope of better earnings.

In Sydney trading ASX 200 gained 64.8 or 1.06% to 6,165.60. Of the total 201 stocks in the index, 143 gained, 56 declined, and 2 remained unchanged.

Adelaide Bank led the stocks in the index with a rise of 14.6% followed by 8% gain in Straits Resources, ROC Oil, and Bank Queensland. Monadelphous Group led the decliners in the index with a fall of 7% followed by 6% decline in Telstra, 4.6% loss in Pacific Brands, and 4% decrease in PMP Ltd and SIMS Group.

Employment report for the month of July showed that 21,700 new jobs added to payroll on top of 21,800 in June. Unemployment level held steady at 4.3%. New Zealand second quarter unemployment level fell to 3.6% according a report released today.


[R]7:00AM New York, 8:00PM Tokyo – Market indexes in Tokyo climb for the third day tracking rises in New York. Strong earnings reports have lifted market sentiment.[/R]

Nikkei 225 index closed up 141.32 or 0.83% to 17,170.60 at close on strength in export sensitive stocks. Topix index increased 14.77 or 0.9% to close at 1,683.81. The trading on the first section of the exchange was heavy with 5.3 trillion yen value.

Of the 225 stocks in the index, 144 advanced, 79 declined, and 2 were unchanged.
Oki Electric led the index stocks with a gain of 11.5% followed by 10.5% rise in Fast Retailing, and 8% surge in Heiwa Real Estate and Toto Ltd. Nippon Soda led the decliners with a loss of 7.35% followed by 7% fall in Tosho Corporation, 6% decline in Kyowa Hakko, Nisshin Oil, and Meiji Dairies.

Arabic Oil Company known as AOC lifted its annual earnings forecast to 8 billion, up 60% from a year ago.

Weaker yen helped export sensitive stocks. Trend Micro surged 7% for the third day in a row after revising sales and earnings forecast for the current quarter. Citizen Holdings jumped 5% and Casio Computer surged 7%. Toshiba jumped 2.3%, Canon gained 1%, and Sony added 0.8%.

Real estate companies led the advancing stocks with 8.5% gain in Heiwa Real Estate, 7.3% gain in Mitsubishi UFJ, and 4.6% increase in Mitsui Sumitomo.

Yahoo Japan jumped 5.2%. The news report in the local press lifted Inpex Holdings 1.9%. The company is exploring LNG import terminal project in the northern Japan.

NTN Corp, Nippon Express, Japan Tobacco, and Kyocera fell 4% in the trading today.

Japan Tobacco reported its first quarter sales of 1.2 trillion yen, a decline of 5.4% from a year ago and net income fell 15.2% to 64.4 billion yen. Domestic sales fell 13% but international sales rose 25.3% limiting the net profit decline. The company revised its sales forecast for the year to 6.41 trillion yen from 4.89 trillion yen and net income was revised to 256 billion yen from 186 billion yen.

Fast Retailing soared 11% after the news that the company plans to drop its bid for the U.S. based retailer Barneys New York.

eAccess reported its earnings for the quarter ending in June 30. The earnings rose to 1,5 billion yen from 0.969 billion yen. Revenue jumped to 15 billion yen from 14.29 billion yen. The stocks surged 8% on the news.