Lower Oil Contributes to European Gains

Elena
21 Aug, 2007
New York City

European stock markets finished a volatile Tuesday session slightly higher, as lower oil prices boosted the shares of automakers and chemicals firms helping them to offset losses from retailers, insurers and banks, generated by persisting worries about the strength of the global economy. Across the region, France closed up 0.4%, followed by Germany with 0.2% advance and the U.K., up 0.1%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets closed slightly higher, boosted by automakers and chemicals.[/R]

European stock markets finished a volatile Tuesday session slightly higher, as lower oil prices boosted the shares of automakers and chemicals firms helping them to offset losses from retailers, insurers and banks, generated by persisting worries about the strength of the global economy. Across the region, France closed up 0.4%, followed by Germany with 0.2% advance and the U.K., up 0.1%.

In Frankfurt automakers were leading gainers, with Volkswagen moving up 2.1% after posting a 10% increase in July sales. Chemicals firms were also supported by retreating oil prices, sending BASF shares up 1.7%. In deal-related news, Bayer gained 3.8% on speculation the company will get a takeover bid from Swiss drug maker Novartis.

In Paris Arcelor Mittal gained 2.6% after Credit Suisse Group raised its recommendation on global steel stocks. The maker of steel tubes Vallourec rose 2.7%. Tire maker Michelin and airline France-KLM benefited from lower oil prices, moving up 3% and 3.7%, respectively.

In London oil-sensitive stocks also gained, with British Airways rising 1.5% and Ireland''s Ryanair Holdings adding 0.8%. Mining giant BHP Billiton climbed 2% as the price of nickel rallied. Xstrata, copper producer, climbed 1.2%. In the financial sector, Northern Rock declined 2.1% on negative comment from Bear Stearns. Shares of mortgage lender Northern Rock slipped 2% on worries about how it funds its mortgage lending.


[R]11:30AM Market averages traded in a volatile fashion.[/R]

U.S. stock averages rebounded in a volatile trading after Senate Banking Committee Chairman Christopher Dodd said Fed Chairman Ben Bernanke is ready to use all tools at his disposal to help relieve the liquidity issues shaking Wall Street.

The measures taken by the Fed so far included injecting more liquidity into the banking industry and cutting the discount rate. Investors keep optimism that the Fed will make a step further and will cut the more important federal funds rate.

In corporate news, Countrywide Financial ((CFC)) jumped 8% on speculations the U.S. biggest mortgage lender could be bought out by Berkshire Hathaway. TXU Corp. ((TXU)) was also sent higher by speculations that Warren Buffett''s Berkshire Hathaway might acquire it.

The housing sector extended losses posted in the previous session.
Standard Pacific ((SPF)) and Toll Brothers ((TOL)) were downgraded by Bank of America, sending them down 7.8% and 3.6%, respectively.

Transportation stocks also moved notably down after two consecutive sessions of significant gains. Landstar Systems ((LSTR)) led the sector down with a decline of 3%. At the same time, internet stocks gained, led by RealNetworks ((RNWK)) after it announced that it will join forces with MTV by merging their online digital downloading services. The stock rose 5.9%.

In late morning trading, the Dow Jones industrial average rose 14.71, or 0.11% to 13,136.06, having moved in and out of positive territory. The Standard & Poor''s 500 index was up 5.23, or 0.36%, at 1,450.78, and the Nasdaq composite index rose 8.98, or 0.36%, to 2,517.57.


[R]10:00 AM NY, 9:00PM Hong Kong – Stocks in Shanghai and Hong Kong lost its early momentum in trading at close. Earnings and rising metal prices dominated trading sentiment.[/R]

Asian markets diverged as regional news and events dominated trading. Thailand led the region with a loss of 3.5% followed by declines of 3.1% in India, 2.8% in Singapore, 2.4% in Indonesia, and 2% in Philippines. Japan led the gainers in the region with a rise of 1.1% followed by 0.9% close after volatile trading in Australia, and 0.6% increase in Hong Kong.

The composite index in Manila jumped 9.8% or 283.18 points to close at 3,167.52. The market opened after a holiday and surged to its one-day best gain since 2001. The rate cut in the U.S. helped the market rebounds when other markets in the region rebounded in Monday trading. The broader All-share index jumped 8% to 2,016.16.

In Shanghai trading CSI 300 Index increased 1.8% to close at 4,972.70 on earnings news and pilot program to let local investors invest in Hong Kong.

Bank of China jumped 1.5% after the government agency allowed local residents to invest in Hong Kong listed companies in a pilot program.

China Southern Airlines reported first half profit of Rmb308 million compared to a loss of Rmb854 million loss. The airlines also said that it has signed a deal with Boeing to buy 55 Boeing 737 planes to be delivered in the years 2011 and 2013. The company carried 49.2 million passengers in 2006.

Chalco, the largest aluminum maker in China, jumped 9.4% to Rmb39.70 after it reported net income decline of 5.2%. The company also agreed to buy 49% stake in Yunnan Copper. The third largest copper company stock increased 5.3%. Other copper companies rallied on the news and rising copper prices in the international trading. Jiangxi Copper jumped 5% and Anhui Tongdu Copper increased 4%.

In Hong Kong trading Hang Seng index closed 0.6% or 133.72 higher to settle at 21,729.35 after gaining as much as 4.7% in the day. Of the 39 stock in the index, 23 gained and 14 declined. The daily turnover was recorded at HK$116.8 billion and GEM market was HK$724 million.

Hong Kong Exchanges & clearing Limited soared 6.2% to HK$123 on the news that the pilot program with a China controlled bank will allow its local residents to invest its foreign currency in Hong Kong stock market. China controls $2.2 trillion in foreign reserves and is planning to allow local companies and citizens to invest in international markets and assets. Credit Suisse revised its rating on the exchange operator to ''neutral'' on the news.

China Unicom and China Mobile jumped 2% and 1% respectively in the trading. Hong Kong traded shares of Chinese banks increased in trading. China Life jumped 3% and Industrial & Commercial Bank of China rose 2.4%.


[R]09:45AM Wall Street lacked direction at opening amid further credit markets problems.[/R]

Wall Street lacked direction at opening hours, reflecting further credit problems and uncertainty about what the Fed Reserve''s next move might be to steady the markets and the economy.

Countrywide Financial ((CFC)) rose 2.9% on speculations it might be a takeover target due to losses related to subprime mortgages. Capital One Financial ((COF)) added 1.9% announced a decision to close its wholesale mortgage business and reduce 1,900 jobs.

Better-than-expected earnings reports from several retailers provided some boost to the market sentiment. Target Corp. ((TGT)) added 0.6% after the discount giant reported 13% earnings increase and improved gross margins. BJ''s Wholesale Club ((BJ)) said Q2 profit jumped 37% on 8% sales growth, beating expectations. The stock rose 5%.

However, shares of Staples ((SPLS)) fell 1.8% after posting a lower-than-expected 11% profit rise. Shares of Saks ((SKS)) dropped 2.5% after the retailer said it narrowed Q2 losses to 17 cents a share, from 15 cents a share a year ago.

In the first hour of trading, the Dow Jones industrial average fell 14.80, or 0.11%, to 13,106.55, having moved in and out of positive territory. The Standard & Poor''s 500 index was down 0.87, or 0.06%, at 1,444.68, and the Nasdaq composite index edge up 2.02, or 0.08%, to 2,510.61. Bonds were flat, with the yield on the benchmark 10-year Treasury note at 4.60%.


[R]09:00AM U.S. stock futures advanced, lifted by hopes the Fed Reserve will cut interest rates.[/R]

U.S. stock futures advanced on Tuesday, boosted by optimism that the Federal Reserve will make further steps by cutting its main base rate in order to relieve continuous global credit worries.

Banc of America Securities ((BAC)) downgraded a number of home builders, including Toll Brothers ((TOL)), Hovnanian Enterprises ((HOV)) and Standard Pacific ((SPF)), saying cancellations jumped as lenders pulled commitments from buyers already in the backlog and new buyers failed to qualify.

At the same time, Capital One Financial ((COF)) announced a decision to close its wholesale mortgage business and reduce 1,900 jobs as the credit card giant loses confidence in the profitability of originating home loans. The stock gained 1.2% in pre-market trading.

On the earnings news front, Target Corp. ((TGT)) said its Q2 net income rose 13% to $686 million, or 80 cents a share, up from $609 million, or 70 cents a share a year ago, meeting estimates. Company’s revenue increased 9.5% to $14.62 billion, slightly below expectations of revenue of $14.67 billion. The company''s same-store sales rose 4.9%.

Among other retailers posting financial results, American Eagle Outfitters ((AEO)) reported a 13% profit rise and Staples ((SPLS)) posted 11% earnings rise.

After early losses, S&P 500 futures rose 3.8 points at 1,452.90 and Nasdaq 100 futures climbed 2.5 points at 1,900.25. Dow industrial futures rose 26 points.


[R]7:00PM Mumbai, 9:30AM New York – A lack of transparency in nuclear pact with the U.S. left the ruling Congress party coalition in chaos. Sensex fell 3% on the worries that general election may be called ahead of schedule.[/R]

Sensex in Mumbai trading dropped 438.44 points or 3.04% to close at 13,989.11 after rebounding from the low of the day with a loss of 485 points. CNX Nifty lost 134 points or 3.2% to close at 4,074.90. The fragile coalition between Congress party and Communists parties appear to be divided on nuclear pact with the U.S. Rupee in international trading recovered against the U.S. dollar to 41.10 from 41.33.

Communists controlled parties provide a support with 60 members in the parliament to Congress party with only 226 seats, 47 seats short of majority in 545 -member Lok Sabha.

The daily turnover on BSE increased to 4,201 crore rupees from 3,877.61 crore rupees and on NSE turnover gained to 10,779 crore rupees from 8,959 crore rupees. All 30 stocks in the Sensex fell.

Gokaldas Exports soared 10.2% to 252 rupees after the U.S. private equity firm Blackstone agreed to acquire 50% from the controlling Hinduja family and 20% from the public investors. After the deal Blackstone will control 70% in the company and Hinduja family will lower its stake from 69% to 19%.

Banks declined for the second day in a row led by 5.5% fall to 1,465.30 rupees in State Bank of India followed by 4.2% decline to 835.45 rupees in ICICI Bank, and 2% decrease to 1,105 rupees in HDFC Bank.

Reliance Industries is reported to have discovered oil reserve, one of the largest discoveries on the east coast so far, in the drilling of third well in Krishna Godavari basin. The stock in the general market decline fell 2.8% to 1,742 rupees.

Reliance Communications fell 4.2% to 486 rupees after jumping a day ago on market speculation that it is negotiating with Aircel. Reliance denied the rumors today. Reliance has a total of 37 million or 3.7 crore subscribers. Bharti Airtel plans to double its network towers to 80,000 in the next the six months. The stock dropped 0.7% to 821 rupees.

Software exporters fell as market worried that the current credit market volatility in the U.S. may affect earnings in the sector. Tata Consultancy Service fell 4% to 1,012 rupees, Satyam Computer declined 4.1% to 415 rupees, and Wipro lost 5% to 446.30 rupees.

Central Bank of India priced its IPO at 102 rupees and raised 820 crore rupees. The stock closed up 13% to close at 115.40 rupees on heavy volume of 2.4 crore shares. The issue was oversubscribed 62 times at the close on July 27th.

Real estate developers suffered in the market decline. Sobha Developers fell 4.7% to 750 rupees, Unitech declined 3.3% to 477 rupees, DLF lost 3.6% to 558 rupees, and Ansal API decreased 3% to 257 rupees. TCI Industries, the owner of Mukesh Mill properties in Colaba area of Mumbai jumped upper end of the daily limit 5% to 4,318 crore rupees. The stock has surged 5% every day for the last 28 trading sessions on the expectations that the mill will be acquired at a premium price by one of realtor companies. DLF recently agreed to pay 1,600 crore rupees for 38 acre land complex of DCM Shriram in New Delhi. Gayatri Projects fell 7.7% to 255 rupees after the company plans to raise foreign investor limit to 49%.