Rio Tinto, Shell Pace European Gains

Elena
24 Aug, 2007
New York City

European stock markets finished mostly higher Friday for a sixth session in a row, as stronger-than-expected U.S. economic data helped ease concerns about imminent recession, giving a boost to metals and oils producers. Steelmaker Arcelor Mittal and oil giant Royal Dutch Shell were leading advancers. Across the region, France climbed 0.8%, the U.K. gained 0.4%, while Germany closed down 0.1%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets closed mostly higher, boosted by mining and oil stocks.[/R]

European stock markets finished mostly higher Friday for a sixth session in a row, as stronger-than-expected U.S. economic data helped ease concerns about imminent recession, giving a boost to metals and oils producers. Steelmaker Arcelor Mittal and oil giant Royal Dutch Shell were leading advancers. Across the region, France climbed 0.8%, the U.K. gained 0.4%, while Germany closed down 0.1%.

In Frankfurt stocks declined, with banks and insurers standing out as the worst performers. Europe''s largest insurer Allianz lost 0.9% and Commerzbank declined 1%. Premiere AG tumbled 7.8% after Germany''s biggest television broadcaster said it plans to sell new shares. On the positive side, truck maker Man AG rose 4.5% on speculation of an imminent joint venture agreement in China.

In Paris gainers were led by Arcelor Mittal, with the miner rising 6.2% after Merrill Lynch & Co. upgraded the stock. Carrefour, Europe''s largest retailer, paced the advance, rising 2.2%. Among other notable movers, Bourse Direct surged 7.2% on strong first-half net income, while Coil climbed 4.6% in upbeat profit outlook.

In London metals stocks posted solid gains after Lehman Brothers advised clients to increase holdings of European mining stocks. BHP Billiton rose 1.5% and Rio Tinto Group jumped 2.4%. Oil giant Royal Dutch Shell rose 1%. Wolseley Plc advanced 2.6% on strong sales data in U.S. Kingfisher, home-improvement retailer, rose 1.7%. Banks including the Royal Bank of Scotland declined amid continuous credit markets concerns.


[R]11:30AM Market averages advanced on strong home sales in July.[/R]

U.S. stocks were pushed higher Friday by easing concerns about credit markets and economic recession on the back of a larger-than-expected increase in new home sales in July and surging durable-goods orders. At the same time, upbeat economic reports diminish investor optimism that the Fed Reserve will intervene by cutting its key interest rate before the official meeting on 18 September.

In corporate news, Home Depot ((HD)) added 1.3% on reports that it may receive $1.2 billion less than anticipated for the sale of its wholesale distribution business. Bank of China fell over 5% in Hong Kong after officials disclosed the bank had almost $10 billion of exposure to securities backed by U.S. subprime mortgages.

Morgan Stanley ((MS)) cut its forecast for retail sales growth in 2008, saying that the current credit markets woes will affect consumer spending. Retail stocks were given a boost by strong earnings in the sector. Ann Taylor ((ANN)) rallied 6%, despite posting a 27% decline in Q2 profit. Gap ((GPS)) shares rose 5.5% after posting 19% in Q2 profit on lower costs.

H. J. Heinz Co. ((HNZ)) posted 6% earnings rise in Q1 to 63 cents per share, up from 58 cents per share, a year ago, helped by 9% sales growth to $2.25 billion. Analysts had expected profit of 63 cents per share on revenue of $2.23 billion. Burger King Holdings ((BKC)) swung to profit in Q4 to 26 cents per share, versus a loss of 8 cents per share a year ago. Sales rose 11% to $590 million.

In midday trading, the Dow Jones industrial average rose 15.29, or 0.12%, to 13,251.17. The Standard & Poor''s 500 index rose 1.10, or 0.08%, to 1,463.60. The Nasdaq composite index rose 2.83, or 0.11%, to 2,544.53. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.62% from 4.63% late Thursday.


[R]11:00AM New York, 8:30PM Mumbai – Sensex in Mumbai trading recovered after political worries on ruling coalition receded.[/R]

Sensex gained 260.89 or 1.8% to close at 14,455.59 as market focused on stocks and not on political worries. CNX Nifty rose 75.20 or 1.83% to close at 4,190.15.

Of the stocks listed on the Bombay Stock Exchange, 1,581 gained, 1,112 declined, and 62 were unchanged. Daily turnover on the exchange fell to 3,608 crore rupees from 4, 914.46 crore rupees. Turnover on National Stock Exchange

Of the 30 stocks in the Sensex, 27 gained and 3 fell.

Financial Technologies has acquired 4.5 lakh shares (or 450,000 stocks) in National Stock Exchange at average price of 2,778 rupees. The block trade was carried out at a total price of 125 crore rupees to purchase the stake in the exchange from ICICI Bank. FTIL stock drifted 0.5% lower to 2,040 rupees on the news.

State Bank of India jumped 3.8% to 1,469 rupees after Parliament of India approved the transfer of Reserve Bank of India to the Union Government. On a separate note, a block trade for the stock priced at 1,750 rupees, at a premium of 24% was executed today.

Tata Motors soared 6% to 660.15 rupees after launching two new light commercial vehicles. Bharat Heavy Electricals jumped 5.3% to 1,750 rupees after falling in the previous session. Two days ago company received power equipment order of 6,500 crore rupees from Damodar Valley.

Larsen & Toubro is seeking shareholder approval to raise $700 million in international markets. The stock jumped 1.6% to 2,435 rupees on the news. Madhucon Projects soared 8.8% to 243.80 crore rupees after block trading in stock worth 3% of company equity changed hands at 229 rupees. Areva T&D India gained 4.9% to 1,480 rupees on the news that the company has received 63 crore rupees order from Essar Steel and 34 crore rupees.

Cement stocks advanced for the second day in a row. Birla Corporation and India Cements jumped 5.7%, ACC gained 3.8%, and Ambuja Cement rose 2.3%. Grasim edged higher 0.4% to 2,762 rupees. The open bid from Holcm for Ambuja Cement sparked the rally.

Western India Shipyard soared 4.8% to 17.25 rupees after ABG Shipyard agreed to buy 40% stake in the company at 200 crore rupees from ICICI Bank. ABG Shipyard fell 6% on the news.

Gujarat State Petronet increased 3.5% to 55.55 rupees after the company board approved a sale of 22 million shares to International Finance Corporation. The private placement is likely to raise $30 million.


[R]09:45AM Wall Street opened little changed ahead of housing data.[/R]

Wall Street opened near the flat line, reflecting a stronger-than-expected durable goods data and nervousness ahead of new home sales report. However, market sentiment received a boost from a larger-than-expected increase in new home sales in July which helped ease recent worries about credit markets.

The Commerce Department said that sales of new home rose 2.8% in July to a seasonally adjusted annual rate of 870,000, stronger than the 820,000 annualized pace expected by economists. According to another Commerce Department report released earlier today, orders for durable goods surged 5.9% in July, by far above the expected 1.5% gain.

Home Depot ((HD)) shares rose 2% amid reports that the company may receive $1.2 billion less than anticipated for the sale of its wholesale distribution business to private equity firms.

Tech stocks were weak in early trading, with Marvell Technology Group ((MRVL)) falling 11% after it offered a soft gross margin forecast. Other notable decliners were Research In Motion ((RIMM)) and Microsoft ((MSFT)), losing 1.4% and 0.5%, respectively. Cisco Systems ((CSCO)) edged down 0.4%.

In the retail sector, Gap ((GPS)) rose 3.4% after it said its profit jumped 19% in Q2 on lower costs, closed stores and laid off workers. In the first hour of trading, the Dow Jones industrial average fell 7.31, or 0.06%, to 13,228.57. The Standard & Poor''s 500 index slipped 0.83, or 0.06%, to 1,461.67. The Nasdaq composite index fell 5.08, or 0.20%, to 2,536.62.


[R]09:00AM U.S. stock futures advanced, lifted by strong durable goods orders in July.[/R]

U.S. stock futures were indicating a positive opening Friday, as stronger-than-expected durable goods orders helped offset concerns about slowing housing market. The Commerce Department said that July orders for durable goods surged 5.9% on higher demand for airplanes, vehicles, computers, machinery, steel. Investors were also expecting a report on new home sales for July which is likely to show they continued falling at an annual rate of 820,000 homes.

Among companies in focus, Marvell Technology Group ((MRVL)) slipped 7.5% before the opening bell after the chipmaker posted a quarterly net loss, due to higher spending on research and development. Brocade Communications ((BRCD)) fell 1.7% amid disappointing results.

In the retail sector, Gap ((GPS)) rose 3% after reporting a 19% profit increase on reduced costs and improved its annual earnings outlook. The retailer also announced an additional $1.5 billion stock buyback. Ann Taylor ((ANN)) added 3.5% in pre-open trade as a new marketing chief and a $300 million stock repurchase program offset a 27% drop in Q2 profit.

In deal-related news, Home Depot ((HD)) is reportedly likely to receive $1.2 billion less than its originally agreed $10.3 billion for its wholesale distribution arm. S&P 500 futures fell 1.30 points, roughly in line with fair value. Dow Jones industrial average futures slipped 4 points, and Nasdaq 100 futures fell 4 points. U.S. stock futures were indicating a positive opening Friday, as stronger-than-expected.


[R]8:30AM New York, 8:30PM Hong Kong – Asian markets weaken today, but rose sharply for the week.[/R]

The end of the week and subprime mess in the U.S. was on the mind of traders.

Across the region most markets closed lower except in India, China, and Indonesia. Australia led the region with a loss of 1.02% followed by 0.7% decline in Philippines, 0.5% losses in Korea and Taiwan. Japan fell 0.4%, Hong Kong dropped 0.2%, and Thailand decline 0.1%. India led the region with a gain of 1.8% followed by rise of 1.5% in Shanghai trading, and 1.2% in Indonesia.

For the week Hong Kong led the region after soaring 12% followed by rises of 9.7% in Shanghai, 9.4% rise in Korea, 7.4% in Australia, and 6.4% in Japan. The CSI 300 index in China, for the week soared 13%.

The new funds from retail investors keep pouring in the stock market, despite a rise in bank interest rate this week. CSI 300 index is now up whopping 155%, the best performer among all world indexes.

The Bank of China fell 6.6% in Hong Kong trading but gained 1% in Shanghai. Industrial & Commercial Bank increased 0.7% as the CSI index reached a record close for the fifth day in a row. Shanghai Pudong jumped 5.5% and China Merchants Bank soared 4% in the bank sector rally. Shanghai Composite index rose 1.5% to close at 5,107.67.

The Bank of China led Hong Kong trading with a turnover of HK$5.6 billion followed by China Life with HK$3.8 billion, and China Mobile with HK$3.5 billion.

The Bank of China reported that it has subprime exposure of $9.7 billion and has placed in reserve $132 million to cover losses in the investment. The bank raised, in largest IPO in the world, $11 billion in the year 2006. While the bank contends that the portfolio of securities in subprime loans is highly rated, traders expressed skepticism. The quality of ratings from bond market rating agencies have become a suspect and several investors are worried that many of the so call high quality securities may not accurately reflect underlying deteriorating assets.

In Sydney trading stocks fell on Friday but closed higher for the week. The ASX 200 closed 1.02% lower and jumped 7.4% for the week. Mining and commodities stocks led the decline after comments from two executives at mortgage lending companies in the U.S. The comments sparked worries that housing market worries may lead to recession in the U.S. and slow down the demand for commodities from Australia. BHP Billiton fell 2.9% to A$36.60 and Rio Tinto lost 2.1% to A$89.10. Insurance Australia Group lost 7% after reporting second half profit decline of 31% to A$207 million. PaperlinX, largest local paper company, fell 3.6% after reporting annual profit decline of 23% to A$80 million.


[R]7:00AM New York, 8:00PM Tokyo-Japanese shares reverse earlier gains on fresh concern global stocks will resume their slide. Yen continues firm against American dollar. Trade Ministry to spend more on energy sources in 2008. Bank of Japan says company service prices hit 15-year highs.[/R]

Japanese shares fell on the worries that economic growth in the U.S. likely to slow. Comments from two executives at mortgage lenders sparked new round of worries. Tokyo lost 0.41% reversing yesterday sharp gains at 2.61%. Of the 225 Nikkei shares, 158 dropped, 58 gained and 9 were unchanged. Topix Index dropped 5.96 to 1,585.85.

In Tokyo trading Nikkei 225 dropped 0.41% or 67.35 to 16,248.97 in shaky trading, dragged by investor concerns that U.S. economy is heading for a slow growth period. Yen firmed to 115.90 against the dollar from 116.19 previously.

For the week Nikkei 225 jumped 6.4% and broader index Topix soared 7% after a week of volatile trading.

The Bank of Japan said Friday prices paid by companies for a variety of services such as transportation rose 1.6% in July from a year earlier. In June, Japan corporate price index stood at 1.5%. Analysts predict higher company costs will result in higher retail prices and higher inflation.

Japan, United States, and Australia in talks trying to host a first trilateral summit on the sidelines of a meeting of Asia-Pacific Economic Cooperation forum leaders, scheduled in Sydney for Sept 8-9 Japanese media reported Friday. Prime Minister Shinzo Abe, U.S. President George W Bush, and Australian Prime Minister John Howard are expected to confirm coordination on the issue of North Korea''s nuclear programs as well as on the abduction issue at the projected summit, the reports added.

The Social Insurance Agency said Thursday it began work Monday this week with a team of private-sector experts to identify over 50 million pension accounts with errors. The Agency said it will separate accounts with errors from accounts of dead pensioner.

Industrial, electric and bank shares fell. Of the stocks in Nikkei 225 index, Sekisui House led decliners dropping 3.4% followed by Nisshin Seifun down 3.11% and T&D Holding Inc fell 3.06%. Kumajai Gumi Co lost 2.99% while Yahoo Japan eased 2.89%. Financial shares Mitsubishi UFJ, Mitsui Trust Holdings, Chiba Bank and Marubeni Corp lost over 1%. Sumitomo Electric In, Yokogama Electric, Electric Industries and Toray Industries fell as well. Film manufacturing and motor stocks rose. Daikin Industries led gainers rising 3.83% followed by Nippon Sheet Gla up 3.70%. Canon Inc pushed higher 3.67% while Nikon Corp added 2.74%. Konica Minolta and Fujifilm rose over 1%. Hino Motors gained 3.30% while Isuzu Motors rose 1.99%.

Isuzu Motors Ltd and Toyota Motor Corp said Thursday they had concluded an agreement to jointly develop small diesel engines for the European market. Production of the 1.6-liter engine for Toyota vehicles sold in Europe is scheduled to begin around 2012, with Isuzu heading its development, production and supply. Toyota Motor Corp dropped 0.30%.