Europe Benefits from Miners, Telecoms

Elena
13 Sep, 2007
New York City

European stock markets finished in the positive Thursday for a third consecutive session, boosted by upbeat U.S. jobs data, as well as strength among automotive, mining and telecoms shares. Alcatel-Lucent limited the upward move after the mobile phone maker lowered its full-year revenue outlook. Among regional markets, France led advancers with a gain of 1.1%, followed by the U.K., up 0.9% and Germany, rising 0.8%.

[R]1:00PM NY, 5:00 PM Frankfurt European markets ended higher for a third session in a row, led by mining and telecoms stocks.[/R]

European stock markets finished in the positive Thursday for a third consecutive session, boosted by upbeat U.S. jobs data, as well as strength among automotive, mining and telecoms shares. Alcatel-Lucent limited the upward move after the mobile phone maker lowered its full-year revenue outlook. Among regional markets, France led advancers with a gain of 1.1%, followed by the U.K., up 0.9% and Germany, rising 0.8%.

In Frankfurt automakers were leading gainers, with Porsche rising 3.2% and DaimlerChrysler moving up 1.2% Other notable movers to the upside included Deutsche Boerse which added 3.3%, steelmaker ThyssenKrupp, up 2%, and RWE, moving up1.4%.

In Paris mining stocks gained, paced by ArcelorMittal which rose 4.5% after announcing a share buyback program. Vallourec surged 8.8% on reports that Russia''s OAO Gazprom is in advanced talks to buy the company. Among other top gainers, Lagardere climbed 4.7% after the magazine publisher reported a 78% profit rise for the first half and lifted its annual operating profit guidance. France Telecom which gained 1.5%. The upward move was limited by Alcatel-Lucent which dropped 8.7% after the telecom equipment maker cut its sales outlook.

In London miners paced the gains. American gained 3.3%, while BHP Billiton Ltd., the world''s largest mining company, rose 2.6%. Oil companies continued to benefit from surging oil prices, with Royal Dutch shell rising 1.8%. Telecoms company Cable & Wireless rose 4.5% after it received an analyst upgrade from Cazenove.


[R]11:30AM U.S. market averages rallied. Financial stocks gained[/R]

U.S. market averages rallied, with the Dow Industrial posting triple-digit gains. Stocks advanced, as upbeat corporate news and growing optimism of interest-rate cuts offset surging oil prices and record-low U.S. dollar. Investors also cheered news of lower-than-anticipated increase in the initial jobless claims last week.

The blue chips were led higher by more than 6% increase in the shares of both General Motors ((GM)) and McDonald''s. The car maker advanced on a broker upgrade and progress in talks between automakers and workers over health care costs. Fellow member Ford ((F)) climbed 3.3% on the news. Macdonald''s ((MCD)) shares rose after the fast-food retailer lifted its dividend by 50%.

By sectors, steel and oil stocks moved significantly higher. Alcoa ((AA)) climbed 2.9% and Exxon Mobil ((XOM)) rose 1.3%, helping to push the Dow higher. Financial stocks gained, driven by interest-rate reduction optimism. Merrill Lynch ((MER)) rose 3.2%, Bear Stearns ((BSC)) climbed 4%, and Goldman Sachs ((GS)) added 2.8%. Pharmaceutical stocks continued their recent upward move, with Merck & Co. ((MRK)) rising 1.1% on broker upgrade of its stock. Technology stocks and small-capitalization issues showed weakness.

Light, sweet crude fell 66 cents to $79.25 a barrel. The dollar gained some ground vs. the euro which recently traded at $1.3874.In late morning trading, the Dow rose 144.45, or 1.09%, to 13,436.10. The Standard & Poor''s 500 index rose 14.48, or 0.98%, to 1,486.04, and the Nasdaq composite index rose 13.08, or 0.50%, to 2,605.15. Bond prices fell. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.46% from 4.41% late Wednesday.

[R]10:00AM New York - 7:30PM Mumbai – Suzlon plan to double its production in three years. Reliance and government agree on natural gas price.[/R]

Sensex in Mumbai trading gained 109.08 or 0.70% to close at 15,614.44. CNX Nifty gained 0.7% or 32.10 to close at 4,528.95. Rupee recovered to 40.60 against dollar from 40.65 in Friday trading. Market indexes opened higher at the opening but closed lower in a familiar pattern in the last three months of trading. Political worries dogged traders.

Of the stocks trading on BSE, 1,647 gained, 1,123 declined, and 66 closed unchanged. Daily turnover on the exchange declined to 5,257 crore rupees compared to 5,391 crore rupees a day ago. In trading on National Stock Exchange volume increased to 11,075 crore rupees from 10,835 crore rupees a day ago. Oil price at record level lifted stocks of sugar companies.

Of the 30 stocks in the Sensex 20 rose and 10 fell. Maruti Suzuki led the gainers with a rise of 3.7% to 891 rupees. Hindustan Lever led the decliners with a fall of 1.0% to 215 rupees.

Reliance Industries and a group of ministers appointed by the Government of India agreed on natural gas purchase price of $4.20 Mbtu for five years. The natural gas from Krishna Godavari basin will be distributed by government agencies. Reliance had asked for $4.33 Mbtu and negotiations between the government and the company had dragged for more than a year. Reliance in trading increased 0.6% to 2,025 rupees on 6.2 lakhs shares trading volume.

Jindal Steel & Power surged 8% to 4,690 rupees on the enthusiasm that the Bolivian iron ore mining project will receive government approval. Suzlon Energy jumped 3% to 1,379 rupees after the company said that it plans to invest 1 billion euros to double its wind turbine production capacity to 5,700 mw from 2,700 mw.

Western India Shipyard jumped 5% to 19 rupees after a deal with ABG Shipyard. The secured lenders committee and ABG are looking for ways to revive the ailing Western India Shipyard.
Auto stocks jumped higher led by 1.3% increase in Mahindra & Mahindra to 707 rupees and Tata Motors to 694 rupees, and 1.1% gain in Baja Auto to 2,418 rupees.

Reliance Communications jumped 1.9% to 552 rupees after the news that the company is selected to provide super high speed Internet data bandwidth between Tata Institute of Fundamental Research in Mumbai and CERN, European Organization for Nuclear Research in Geneva, Switzerland.

Software export companies rebounded after two weeks of slump. Tata Consultancy Services increased 1.36% to 1,030 rupees, followed by Satyam Computers gaining 1.27% to 434 rupees, and Wipro up 1.2% to 458 rupees. Infosys Technologies added 0.7% to 1,833 rupees. Of the smaller companies Mphasis led the gainers with a rise of 4% to 295 rupees and Tech Mahindra advanced 2.2% to 1,309 rupees.

August shipment data suggested strong rise in shipments for cement companies. ACC, Ambuja Cements, and Grasim added 2% or more.

Unitech, real estate company, jumped 7.8% to 285 rupees, the company will replace IPCL in CNX Nifty index on October 5th. Other real estate companies advanced on the news as well. Omaxe added 4% to 333 rupees, Orbit Corporation increased 2.6% to 512 rupees, and DLF jumped 1.6% to 645 rupees.

Ajanta Pharmaceuticals surged 10% to 110 rupees after the company entered in marketing collaboration with Canadian company Prollenium Medical to sell skin products in India.

Local subsidiary of Honda Motor Company jumped 2% to 665 rupees on the news that the company is planning to release new motorcycle products. Batliboi, machinery group, surged 10% to 168 rupees. The company will split stock face value from 10 rupees to 5 rupees on Oct 4tth.


[R]09:45AM Wall Street opened higher. The Dow rallied, boosted by GM and McDonald’s.[/R]

Wall Street rallied at opening Thursday, with Dow Jones surging 100 points on lower-than-expected increase in weekly jobless claims and upbeat corporate news from McDonald''s and General Motors. Although the market grew more optimistic about interest-rate cuts, many investors refrained from making big moves before Tuesday''s meeting of the Fed Reserve.

McDonald''s ((MCD)), fast-food retailer, rose 4.6% after it lifted its dividend to shareholders by 50%, while car maker General Motors ((GM)) jumped 6% after Citigroup raised its rating on the stock. Reportedly, the UAW may agree to establish a union-controlled trust fund for employee health care costs. Shares of rival Ford ((F)) rose 2%.

Among other stocks in the spotlight, Target Corp. ((TGT)) rose 1.9% on speculations of a possible sale of $7 billion in credit-card receivables. The Nasdaq was given a boost by software maker Microsoft ((MSFT)) which rose 0.5% after lifting its quarterly dividend by a penny, to 11 cents a share.

Tech stocks dropped sharply, with disk drive and networking stocks posting the largest losses. Alcatel-Lucent ((ALU)) declined 10.2% after it lowered its full-year revenue growth guidance, blaming the change in capital spending by wireless customers in North America.

In the commodities market, crude oil prices fell 37 cents to $79.54. Gold prices fell as the U.S. dollar reversed from an all-time low vs. the euro on Thursday. In early trading, the Dow rose 107.79, or 0.81%, to 13,399.44. The Standard & Poor''s 500 index rose 8.59, or 0.58%, to 1,480.15, and the Nasdaq composite index rose 5.53, or 0.21%, to 2,597.60. Bond prices fell. The yield on the 10-year Treasury note rose to 4.44% from 4.41% late Wednesday.


[R]09:00AM U.S. stock futures advanced on better-than-expected jobs data.[/R]

U.S. stock futures were pointing to recovery Thursday on better-than-anticipated jobs data. The Labor Department said that initial jobless claims rose by 4,000 last week to 319,000, less than the 325,000 claims analysts expected. The report also stated low unemployment rate of 4.6%. On the one hand, the unexpected drop in employment raised some concerns about the health of the economy, but on the other, it built on optimism that the Fed Reserve will cut interest rates at its next meeting on Sept. 18.

Among pre-market highlights, McDonald''s ((MCD)) rose 2% after it said it would increase its dividend by 50%. Microsoft ((MSFT)) gained 0.7% after it raised its quarterly dividend by a penny to 11 cents a share.

Dow member General Motors ((GM)) jumped 5.5% in pre-open trade on news that the car maker is planning a wage syste that would allow it to pay newly-hired workers less than veterans. Reportedly, the UAW are willing to create a union-controlled health-care trust fund.

The retail sector received a boost from Target Corp. ((TGT)) which rose 2% after saying it considers selling its $7 billion in credit-card receivables. Among companies driven by analyst comments, Merck & Co. ((MRK)) rose 1% in pre-open trade, following an upgrade to buy from neutral at Banc of America Securities.

In other corporate news, telecom equipment maker, Alcatel-Lucent (ALU)) declined as a result of another reduction of its revenue guidance. Syntax-Brillian ((BRLC)) dropped 22% after posting lower-than-forecast quarterly revenue.

After early declines, S&P 500 futures rose 5.6 points at 1,481.80 and Nasdaq 100 futures rose 7.75 points at 2,004.00. Dow industrial futures rose 40 points.

[R]U.S. jobless claims rose less than expected in the latest week.[/R]

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended September 8, showing that jobless claims rose less than economists had been expecting compared to the previous week. The report showed that jobless claims rose to 319,000 from the previous week''s revised figure of 315,000. Economists had expected jobless claims to rise to 325,000 from the 318,000 originally reported for the previous week. The Labor Department also said that the less-volatile four-week moving average edged down to 324,000 from the previous week''s revised average of 325,000.

Additionally, the report showed that continuing claims in the week ended September 1 fell to 2.585 million from the preceding week''s revised level of 2.591 million. The smaller than expected increase in weekly jobless claims may help to offset some of the recent concerns about the labor market that were raised by the release of the August employment report last Friday. The August report showed that non-farm payrolls unexpectedly fell by 4,000 jobs following a downwardly revised increase of 68,000 in July. Economists had expected an increase of about 110,000 jobs compared to the increase of 92,000 originally reported for the previous month.


[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks rebound from Wednesday’s slump led by commodities and pharmaceuticals stocks on record oil price. Japans five-year government note plummeted.[/R]

Japanese stocks rebounded led by commodity stocks as oil price soared to record highs at $80 per barrel. Pharmaceuticals stocks also rallied as Japan closed up 0.2%. Of the 225 Nikkei index stocks, 109 gained, 105 declined, while 11 traded unchanged. Engineering firms and technology stocks fell sharply on rising steel prices and falling demand. Of the index stocks, ten closed more than 3%. 13 slipped more than 2%.

In Tokyo trading the Nikkei 225 edged up 0.15%, or 23.59 to 15,821.19. Investors opted for the attractive stock in oil and drug manufacturing companies, shunning buying debt as yields on the Japanese five-year government notes slipped. The notes fell as yields reach their lowest since March 2006. Ten-year bond futures for December delivery fell 0.14 to 136.19. Bonds surged on Wednesday after the resignation of Prime Minister Shinzo Abe stocked expectations that the Bank of Japan will keep interest rates on hold next week. Bank of Japan’s base rate at 0.5% is the lowest among industrialized countries.

Japanese Ministry of Finance revealed today that the Japanese investors’ bond purchases rose to a two-year high. Weekly bond sale increased by 1,391.5 billion-yen than during the week ended September 8th. Higher yen is likely to draw investors into international mutual funds to channel investment into overseas assets.

Of the index shares, diversified pharmaceuticals and construction company paced gainers, climbing 4.29%, followed by Nippon Mining House at 4.20%. Dainippon Sumitomo Pharmaceuticals added 4.11%, while Eisai Co and Kyowa Hakko Kog swelled 3.72% and 3.66% respectively.

Engineering and construction firms led the decliners shedding 5.46% and 4.80% respectively. Toshiba Corporation slipped 3.86% on news of sluggish demand of PCs and a 11% shrink in the price of flash memory chips. Advantest Corp and Canon anchored the top five losers dropping 3.86% and 3.74 respectively.

It is forecasted that pharmaceuticals companies will continue on the upside after predictions that Japan’s four largest drug-makers will probably spend more on share buy-backs this year.

Takeda pharmaceuticals rose 1.92% after it was projected that the drug maker will increase expenditure on share buy backs to132.5 billion yen by the end of the year.