By Helen Yuan
July 25 (Bloomberg) -- Power cuts in China's Henan province, which accounts for almost half of country's output of lead, have forced some smelters to cut production by as much as half.
The power shortages started from the weekend without any warning, Liu Quanying, a manager of Jiyuan Jinhui Lead Co., said today by phone from Jiyuan city. Jinhui is operating at 50 percent of its capacity, down from 70 percent, Liu said.
China's smaller zinc and lead smelters on July 12 agreed to cut output by 10 percent for three months because of a power shortage. The price of lead, used in making batteries, is down 16 percent this year on concerns of oversupply.
``The power shortage has an impact on production and the lead market at a time the metal inventories are already low,'' said Wu Tianxiao, Shanghai-based analyst with researcher CBI China Co. ``If it lasts until the end of August, the loss will be about 10,000 tons.''
China is in its sixth year of power shortages, as economic growth of more than 10 percent annually for the past five years fuels demand from factories and homes.
Jiyuan and Lingbao cities make up about 60 percent of the provincial output, he said.
Lingbao Cuts
Cheng Guojun, a manager at Jiyuan Wanyang Smelting Co., one of the three biggest producers in Lingbao city, said the power shortage have forced the company and some competitors to cut output by 30 percent.
Xin Ling Refining Co., the biggest lead producer in Lingbao, has cut production of byproducts including gold, silver and zinc oxide, sales manager He Yonggang said.
``We hope the power shortage will ease in mid-August,'' Wanyang's Cheng said by phone today.
Henan Yuguang Gold & Lead Co., the world's largest producer, is running at full capacity and isn't suffering from a power shortage, Li Huiling, an investor relations executive at the Jiyuan-based company, said today over the phone. The company has an annual capacity of 300,000 metric tons a year.
``The larger smelters will have better power supplies than their smaller rivals,'' CBI's Wu said.
To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
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Friday, July 25, 2008
Platinum Heads for Second Weekly Drop as Supply Concern Eases
By Rachel Graham
July 25 (Bloomberg) -- Platinum headed for a second straight weekly drop as concern eased that power cuts in South Africa, the largest producer of the metal, would disrupt supply.
Johnson Matthey Plc, which uses platinum in auto catalysts, said May 19 rising power demand in South Africa's winter between May and August may cause disruption, after mines were forced to close in January. State utility Eskom Holdings Ltd. has curbed power to mining companies by as much as 10 percent of normal use.
``We had expected more issues with electricity in South Africa and that hasn't happened,'' Gerry Schubert, a director at Fortis in London, said by phone from London. ``We've seen a lot of long liquidation in platinum.''
Platinum for immediate delivery climbed $22, or 1.3 percent, to $1,739 an ounce as of 12:13 p.m. in London, the first gain in 10 trading sessions. A close at that level would make for a decline of 6.1 percent this week, after a 9 percent drop last week.
The disruption in South Africa in early 2008 reduced the country's platinum output by 200,000 ounces, or 4 percent of its annual mine supply, according to Johnson Matthey. South Africa produced about 78 percent of world platinum supply last year.
Platinum held in London-listed exchange traded funds managed by ETF Securities Ltd. fell by 0.6 percent earlier this week.
Platinum assets slid to 364,759 ounces on July 22 from 367,014 ounces previously, data posted on the company Web site showed. Platinum assets at the company rose to a record 418,247 ounces on July 4.
Daimler, Trucks
Platinum has also fallen on concern that slowing economic growth may curb demand for the metal, used to make vehicle exhaust filters.
Germany's Daimler AG, the world's second-biggest luxury carmaker, said yesterday it plans to reduce production of the Mercedes-Benz E-Class sedan as sales fall. An industry report today said European heavy-truck sales dropped 3.5 percent in June compared with a year earlier.
``Expectations of slowing global demand'' led platinum lower yesterday, James Moore, an analyst at TheBullionDesk.com, wrote today in a report. ``We anticipate strong bargain hunter interest once prices stabilize.''
Among other metals for immediate delivery, gold gained $3.97, or 0.4 percent, to $932.02 an ounce and silver rose 13.5 cents, or 0.8 percent, to $17.565 an ounce. Palladium dropped $2, or 0.5 percent, to $386.75 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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July 25 (Bloomberg) -- Platinum headed for a second straight weekly drop as concern eased that power cuts in South Africa, the largest producer of the metal, would disrupt supply.
Johnson Matthey Plc, which uses platinum in auto catalysts, said May 19 rising power demand in South Africa's winter between May and August may cause disruption, after mines were forced to close in January. State utility Eskom Holdings Ltd. has curbed power to mining companies by as much as 10 percent of normal use.
``We had expected more issues with electricity in South Africa and that hasn't happened,'' Gerry Schubert, a director at Fortis in London, said by phone from London. ``We've seen a lot of long liquidation in platinum.''
Platinum for immediate delivery climbed $22, or 1.3 percent, to $1,739 an ounce as of 12:13 p.m. in London, the first gain in 10 trading sessions. A close at that level would make for a decline of 6.1 percent this week, after a 9 percent drop last week.
The disruption in South Africa in early 2008 reduced the country's platinum output by 200,000 ounces, or 4 percent of its annual mine supply, according to Johnson Matthey. South Africa produced about 78 percent of world platinum supply last year.
Platinum held in London-listed exchange traded funds managed by ETF Securities Ltd. fell by 0.6 percent earlier this week.
Platinum assets slid to 364,759 ounces on July 22 from 367,014 ounces previously, data posted on the company Web site showed. Platinum assets at the company rose to a record 418,247 ounces on July 4.
Daimler, Trucks
Platinum has also fallen on concern that slowing economic growth may curb demand for the metal, used to make vehicle exhaust filters.
Germany's Daimler AG, the world's second-biggest luxury carmaker, said yesterday it plans to reduce production of the Mercedes-Benz E-Class sedan as sales fall. An industry report today said European heavy-truck sales dropped 3.5 percent in June compared with a year earlier.
``Expectations of slowing global demand'' led platinum lower yesterday, James Moore, an analyst at TheBullionDesk.com, wrote today in a report. ``We anticipate strong bargain hunter interest once prices stabilize.''
Among other metals for immediate delivery, gold gained $3.97, or 0.4 percent, to $932.02 an ounce and silver rose 13.5 cents, or 0.8 percent, to $17.565 an ounce. Palladium dropped $2, or 0.5 percent, to $386.75 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Nickel Heads for Biggest Weekly Drop Since May as Demand Slumps
By Chanyaporn Chanjaroen
July 25 (Bloomberg) -- Nickel headed for the biggest weekly decline in London since May as stainless-steel mills, the biggest users of the metal, said demand is weakening. Copper and aluminum increased.
Jinchuan Group Co., Asia's biggest nickel producer, cut prices by 11 percent from today. Acerinox SA, the world's largest stainless-steel producer, and Finland's Outukumpu Oyj said this week that orders from construction slowed.
Reports from stainless-steel producers reflect ``weaker demand'' for nickel, Leon Westgate, an analyst at Standard Bank Plc in London, said in an e-mailed report late yesterday.
The contract for delivery in three months fell as much as $325, or 1.7 percent, to $18,450 a metric ton on the London Metal Exchange, the lowest intraday price since June 20, 2006. It rebounded to trade up $25 at $18,800 as of 10:15 a.m., still heading for a weekly loss of 7.8 percent.
Nickel has fallen 28 percent this year, the worst among all LME-traded metals. Prices are now below production costs of so- called nickel pig iron, which accounts for about 5 percent of nickel supply, according to Charles Cooper, a mining analyst at Evolution Securities.
``With falling nickel prices we estimate that production of nickel in pig iron may be one of the first to succumb should prices remain at current levels or lower for an extended period,'' Cooper said in an e-mailed note today.
He estimates it costs $22,000 to $26,000 to produce a ton of nickel pig iron, which stainless-steel makers used as a cheaper alternative to pure nickel after the metal surged to a record in 2007.
Betting on Declines
The most recent LME data showed a short position, or a bet on lower prices, accounts for between 20 percent and 29 percent of total shorts for the contract expiring in August. There are three more shorts for the month, each accounting for between 5 percent and 9 percent.
LME-monitored copper stockpiles jumped $2,600 a ton, or 2 percent, to 133,475 tons, the highest since March 7. They have increased 8.9 percent this month. Including those at commodity exchanges in New York and Shanghai, inventories totaled 181,027 tons, or 3.5 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Copper increased $50, or 0.6 percent, to $7,950 a ton.
Among other LME-traded metals, aluminum rose $15.25 to $2,965.25 a ton and zinc added $12, or 0.7 percent, to $1,868. Tin increased $50, or 0.2 percent, to $22,400.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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July 25 (Bloomberg) -- Nickel headed for the biggest weekly decline in London since May as stainless-steel mills, the biggest users of the metal, said demand is weakening. Copper and aluminum increased.
Jinchuan Group Co., Asia's biggest nickel producer, cut prices by 11 percent from today. Acerinox SA, the world's largest stainless-steel producer, and Finland's Outukumpu Oyj said this week that orders from construction slowed.
Reports from stainless-steel producers reflect ``weaker demand'' for nickel, Leon Westgate, an analyst at Standard Bank Plc in London, said in an e-mailed report late yesterday.
The contract for delivery in three months fell as much as $325, or 1.7 percent, to $18,450 a metric ton on the London Metal Exchange, the lowest intraday price since June 20, 2006. It rebounded to trade up $25 at $18,800 as of 10:15 a.m., still heading for a weekly loss of 7.8 percent.
Nickel has fallen 28 percent this year, the worst among all LME-traded metals. Prices are now below production costs of so- called nickel pig iron, which accounts for about 5 percent of nickel supply, according to Charles Cooper, a mining analyst at Evolution Securities.
``With falling nickel prices we estimate that production of nickel in pig iron may be one of the first to succumb should prices remain at current levels or lower for an extended period,'' Cooper said in an e-mailed note today.
He estimates it costs $22,000 to $26,000 to produce a ton of nickel pig iron, which stainless-steel makers used as a cheaper alternative to pure nickel after the metal surged to a record in 2007.
Betting on Declines
The most recent LME data showed a short position, or a bet on lower prices, accounts for between 20 percent and 29 percent of total shorts for the contract expiring in August. There are three more shorts for the month, each accounting for between 5 percent and 9 percent.
LME-monitored copper stockpiles jumped $2,600 a ton, or 2 percent, to 133,475 tons, the highest since March 7. They have increased 8.9 percent this month. Including those at commodity exchanges in New York and Shanghai, inventories totaled 181,027 tons, or 3.5 days of global consumption, according to Bloomberg calculations. Last year's average was 4.9 days.
Copper increased $50, or 0.6 percent, to $7,950 a ton.
Among other LME-traded metals, aluminum rose $15.25 to $2,965.25 a ton and zinc added $12, or 0.7 percent, to $1,868. Tin increased $50, or 0.2 percent, to $22,400.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
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Oil Rises a Second Day on Halt to Dollar's Gains, Iran Concern
By Grant Smith
July 25 (Bloomberg) -- Crude oil rose as the U.S. dollar snapped a three-day rally, bolstering the appeal of commodities, and as supply concerns persisted in Iran and Nigeria.
Commodities such as oil and gold drew investors seeking an inflation hedge when the U.S. currency weakens. Iran, second- largest Middle East producer, may have to be forcibly prevented from acquiring nuclear technology, an Israeli general said. In Nigeria, militants threatened to attack major oil pipelines in response to claims they took payouts from the government.
``U.S. economic data released yesterday doesn't favor a Fed rate hike in the near term, which could mean more dollar weakness and positive sentiment on commodities,'' said Harry Tchilinguirian, senior analyst at BNP Paribas SA in London. ``Any build in geopolitical tension in Nigeria or Iran on top of tight fundamentals will also be supportive.''
Crude oil for September delivery gained as much as $1.02, or 0.8 percent, to $126.51 a barrel in electronic trading on the New York Mercantile Exchange. It was at $126.20 a barrel at 12:36 p.m. London time. Yesterday, oil rose $1.05, or 0.8 percent, to settle at $125.49 a barrel. Futures are up 66 percent from a year ago.
Oil prices have fallen more than $20 a barrel from a $147.27 record on July 11 on signs of falling demand in the U.S. The amount of petroleum products supplied from refiners dropped for a third week to 19.9 million barrels a day last week, the lowest since January 2007. Crude stockpiles have dropped 7.3 percent in the past 10 weeks.
The dollar slipped to $1.5722 against the euro at 10:16 a.m. in London after touching a two-week high yesterday, and to 106.92 yen after reaching its highest in a month yesterday.
Iran Exports
Iran, which produced about 3.85 million barrels of oil a day last month, has warned it may blockade the Strait of Hormuz, the export channel for a quarter of the world's crude, if it's attacked. The country has the second-biggest proved oil reserves and is the second-biggest producer in the Organization of Petroleum Exporting Countries.
``We all realize, both the Americans and us, that all options must be prepared,'' Israeli Lieutenant-General Gabi Ashkenazi said in an interview from Washington on Israel Radio. ``There is no doubt that diplomacy must be given priority.''
``You've got these geopolitical risk factors of a possible strike on Iran by Israel and the intransigence of Iran on the negotiations,'' said Anthony Nunan, the assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``That really keeps a fire under the market.''
Brent Crude
Brent crude oil for September settlement rose as much as $1.07, or 0.9 percent, to $127.51 a barrel on London's ICE Futures Europe exchange. It was at $126.99 a barrel at 12:36 p.m. London time. The contract rose $1.15, or 0.9 percent, to settle at $126.44 a barrel yesterday.
The Movement for the Emancipation of the Niger Delta, a Nigerian militant group, threatened on July 23 to attack a pipeline that feeds two of the country's four refineries.
The group, also known as MEND, disputed claims by Nigerian National Petroleum Corp. head Abubakar Yar'Adua in Nigerian newspapers that it took millions of dollars in payouts for allowing repairs to the Chanomi pipeline. The pipeline was attacked in February 2006 and repairs were completed earlier this year.
The country's main blue-collar oil workers' union will hold off on resuming a strike over rising fuel costs before planned talks with government officials set for July 29, the group's president said today.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
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Asian Stocks Fall Most in Six Weeks on Credit, Profit Concerns
By Chua Kong Ho and Shani Raja
July 25 (Bloomberg) -- Asian stocks fell the most in six weeks, snapping a four-day rally, after National Australia Bank Ltd. said credit losses may surge and Samsung Electronics Co.'s profit missed estimates.
National Australia, the country's biggest bank, and Australian & New Zealand Banking Group, the third largest, plunged the most since the October 1987 stock market crash, dragging financial shares to their biggest drop since March. Samsung, Asia's largest maker of flat screens, tumbled in Seoul. AU Optronics Corp. slumped in Taipei after earnings fell short of estimates and Canon Inc. retreated in Tokyo after profit dropped.
The MSCI Asia Pacific Index lost 2.4 percent to 133.46 as of 7:55 p.m. in Tokyo, the most since June 12 and extending its decline this year to 15 percent. About six stocks fell for each that rose. The index rallied 5.9 percent in the first four days of this week as concerns eased that bank losses will expand and oil tumbled from a record.
``The fear is there's a lot more bad more news to come,'' said Nader Naeimi, a Sydney-based senior investment strategist at AMP Capital investors, which manages about $108 billion. ``Volatility is high; one day investors feel good and the next day you get a writedown. There's a lack of trust at this stage.''
All Asian benchmark indexes dropped, apart from Malaysia, which was little changed. Japan's Nikkei 225 Stock Average fell 2 percent to 13,334.76. Australia's S&P/ASX 200 Index slumped 3.4 percent.
Housing, Ford
In the U.S., Standard & Poor's 500 Index dropped 2.3 percent in the U.S. yesterday. Financial shares tumbled the most in eight years after a report showed sales of previously owned homes fell to the lowest level in a decade and investor Bill Gross predicted losses from the housing slump could reach $1 trillion. Ford Motor Co., the world's third-largest carmaker, plunged after reporting a loss twice as big as analysts estimated. S&P 500 futures gained 0.1 percent.
National Australia slumped 13 percent to A$26.56, the biggest loser by percentage on MSCI's Asian index. The Melbourne- based company said it has set aside funds amounting to 90 percent of the value of its A$1.2 billion ($1.1 billion) of collateralized debt obligations. National Australia took a A$181 million provision in March.
Australia & New Zealand Banking, which increased bad-debt provisions by 71 percent in April, plunged 8.7 percent to A$17.75. Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, sank 5.4 percent to 976 yen.
Today's 4 percent decline in Asian financial shares follows a 9 percent advance in the previous four days after Citigroup Inc. and JPMorgan Chase & Co. reported results that topped analyst estimates and Deutsche Bank AG said financial companies are overcoming credit losses.
`Worrying Investors'
MSCI's measure of Asian financial stocks has tumbled 18 percent this year as the world's largest banks and securities firms reported more than $467 billion of writedowns and credit losses.
``The latest economic numbers coming out of the U.S. are worrying investors,'' said Jack Chang, chief investment officer at the Taiwan unit of HSBC Global Asset Management, which oversees $400 billion worldwide. ``Confidence is getting hit because these problems could hurt earnings, slow demand for exports and sales.''
Samsung and Au Optronics slumped, dragging technology shares down the most in six weeks, after their earnings missed estimates.
Samsung dropped 6.2 percent to 576,000 won, the most since June 2004. Net income in the second quarter climbed 51 percent to 2.14 trillion won ($2.1 billion), missing the 2.36 trillion won median estimate in a Bloomberg analyst survey, as profit from chips unexpectedly fell and losses at the consumer electronics division more than doubled.
Production Cut
AU Optronics, Taiwan's largest maker of liquid-crystal displays, fell 4.4 percent to NT$40.60. The company announced yesterday second-quarter profit of NT$20.4 billion ($670 million), 10 percent less than the median analyst estimate of NT$22.6 billion. The company said it will cut production to 90 percent of capacity this quarter, from full output last quarter, as demand for screens used in televisions slows.
Canon dropped 4.9 percent to 5,100 yen, the biggest decline since April 14. Japan's largest office-equipment maker said yesterday second-quarter profit fell 13 percent to 107.8 billion yen ($1 billion) in the three months ended June 30 as a stronger yen eroded the value of sales in the U.S.
In Singapore, Chartered Semiconductor Manufacturing Ltd., which makes chips that go into Microsoft's Corp.'s Xbox 360 game console, lost 5.8 percent to S$0.65 after forecasting a third- quarter loss on higher cost of materials.
In Hong Kong, Datang International Power Generation Co. slumped 5.9 percent to HK$4.78 after the unit of China's second- biggest electricity producer said first-half profit may fall by more than 70 percent due to rising fuel costs.
Hitachi Kokusai Electric Inc., a Japanese phone and microchip equipment maker, plunged 11 percent to 830 yen, the most since September 1990, after cutting its profit forecast by half as customers slow capital spending.
To contact the reporters for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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French Stocks: Bic, Cap Gemini, Danone, Havas, Saint-Gobain
By Sarah Thompson
July 25 (Bloomberg) -- France's CAC 40 Index fell 26.81, or 0.6 percent, to 4,321.18 at 9:35 a.m. in Paris. The SBF 120 Index decreased 0.8 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Bic SA (BIC FP) dropped 1.23 euros, or 3.6 percent, to 32.59 euros after Deutsche Bank AG lowered the world's biggest maker of disposable pens to ``sell'' from ``hold.''
``The second-quarter 2008 results to be announced August 6 could be another profit warning as we believe consensus underestimates adverse factors,'' analyst David Cerdan wrote in a research note dated July 24.
Cap Gemini SA (CAP FP) decreased 35 cents, or 0.9 percent, to 38.14 euros. Europe's largest computer-services company agreed to buy Getronics PinkRoccade's business-application services unit for 255 million euros ($401 million).
Groupe Danone SA (BN FP) advanced 2.15 euros, or 4.8 percent, to 47 euros. Europe's biggest maker of baby food said first-half profit rose 5.7 percent after the purchase of Royal Numico NV last year boosted sales of infant formula in Asia and the Middle East.
Net income from continuing operations climbed to 701 million euros ($1.1 billion), or 1.47 euros a share, from 663 million euros, or 1.38 euros, in the six months ended June 30, Paris-based Danone said today in an e-mailed statement. That beat the 664 million-euro median estimate of six analysts surveyed by Bloomberg News.
Havas SA (HAV FP) increased 7 cents, or 3.1 percent, to 2.34 euros. The owner of the Euro RSCG Worldwide advertising agency said first-half sales rose 3.6 percent, led by growth in Portugal, Italy and Spain.
Icade SA (ICAD FP) added 1.18 euros, or 1.7 percent, to 69.35 euros. Royal Bank of Scotland Group Plc raised the French property developer controlled by Caisse des Depots et Consignations to ``buy'' from ``hold,'' saying ``we believe Icade's first-half figures show that management is in control of delivering both transparency and growth.''
InfoVista SA (IFV FP) added 2 cents, or 1 percent, to 2 euros. The French provider of VistaInsight management software said it sees 2009 revenue growth of about 10 percent.
Lagardere SCA (MMB FP) slid 77 cents, or 2.2 percent, to 34.90 euros. France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units.
PagesJaunes SA (PAJ FP) decreased 62 cents, or 6.7 percent, to 8.67 euros. The French yellow-pages company bought by Kohlberg Kravis Roberts & Co. said first-half profit dropped 14 percent after a gain a year earlier from an asset disposal and cut its full-year sales outlook.
Sequana Capital SA (VOR FP) slid 9 cents, or 0.8 percent, to 10.68 euros. The French investment company formerly known as Worms & Cie. reported first-half net income of 21 million euros from 101 million euros.
Cie. de Saint-Gobain SA (SGO FP) gained 1.37 euros, or 3.7 percent, to 38.05 euros. Europe's biggest supplier of building materials said first-half profit rose to 1.1 billion euros from 1.07 billion euros a year earlier as higher selling prices outweighed rising energy costs. The company cut its 2008 forecast and announced 4,000 job cuts because of the construction slowdown.
Ubisoft Entertainment SA (UBI FP) added 1.83 euros, or 2.9 percent, to 64.78 euros. Europe's second-largest video-game maker said fiscal first-quarter sales rose 26 percent to 169 million euros, boosted by new titles including ``Assassin's Creed'' and ``Rayman Raving Rabbids 2.''
Vivendi SA (VIV FP) declined 88.5 cents, or 3.3 percent, to 26.1 euros. The owner of France's second-largest wireless company said second-quarter sales rose to 5.99 billion euros ($9.4 billion) from 5.2 billion euros, Paris-based Vivendi said in an e-mailed statement today. Analysts predicted 6.04 billion euros, the median of 14 estimates compiled by Bloomberg News.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net. Sarah Thompson in London at sthompson17@bloomberg.net
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July 25 (Bloomberg) -- France's CAC 40 Index fell 26.81, or 0.6 percent, to 4,321.18 at 9:35 a.m. in Paris. The SBF 120 Index decreased 0.8 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Bic SA (BIC FP) dropped 1.23 euros, or 3.6 percent, to 32.59 euros after Deutsche Bank AG lowered the world's biggest maker of disposable pens to ``sell'' from ``hold.''
``The second-quarter 2008 results to be announced August 6 could be another profit warning as we believe consensus underestimates adverse factors,'' analyst David Cerdan wrote in a research note dated July 24.
Cap Gemini SA (CAP FP) decreased 35 cents, or 0.9 percent, to 38.14 euros. Europe's largest computer-services company agreed to buy Getronics PinkRoccade's business-application services unit for 255 million euros ($401 million).
Groupe Danone SA (BN FP) advanced 2.15 euros, or 4.8 percent, to 47 euros. Europe's biggest maker of baby food said first-half profit rose 5.7 percent after the purchase of Royal Numico NV last year boosted sales of infant formula in Asia and the Middle East.
Net income from continuing operations climbed to 701 million euros ($1.1 billion), or 1.47 euros a share, from 663 million euros, or 1.38 euros, in the six months ended June 30, Paris-based Danone said today in an e-mailed statement. That beat the 664 million-euro median estimate of six analysts surveyed by Bloomberg News.
Havas SA (HAV FP) increased 7 cents, or 3.1 percent, to 2.34 euros. The owner of the Euro RSCG Worldwide advertising agency said first-half sales rose 3.6 percent, led by growth in Portugal, Italy and Spain.
Icade SA (ICAD FP) added 1.18 euros, or 1.7 percent, to 69.35 euros. Royal Bank of Scotland Group Plc raised the French property developer controlled by Caisse des Depots et Consignations to ``buy'' from ``hold,'' saying ``we believe Icade's first-half figures show that management is in control of delivering both transparency and growth.''
InfoVista SA (IFV FP) added 2 cents, or 1 percent, to 2 euros. The French provider of VistaInsight management software said it sees 2009 revenue growth of about 10 percent.
Lagardere SCA (MMB FP) slid 77 cents, or 2.2 percent, to 34.90 euros. France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units.
PagesJaunes SA (PAJ FP) decreased 62 cents, or 6.7 percent, to 8.67 euros. The French yellow-pages company bought by Kohlberg Kravis Roberts & Co. said first-half profit dropped 14 percent after a gain a year earlier from an asset disposal and cut its full-year sales outlook.
Sequana Capital SA (VOR FP) slid 9 cents, or 0.8 percent, to 10.68 euros. The French investment company formerly known as Worms & Cie. reported first-half net income of 21 million euros from 101 million euros.
Cie. de Saint-Gobain SA (SGO FP) gained 1.37 euros, or 3.7 percent, to 38.05 euros. Europe's biggest supplier of building materials said first-half profit rose to 1.1 billion euros from 1.07 billion euros a year earlier as higher selling prices outweighed rising energy costs. The company cut its 2008 forecast and announced 4,000 job cuts because of the construction slowdown.
Ubisoft Entertainment SA (UBI FP) added 1.83 euros, or 2.9 percent, to 64.78 euros. Europe's second-largest video-game maker said fiscal first-quarter sales rose 26 percent to 169 million euros, boosted by new titles including ``Assassin's Creed'' and ``Rayman Raving Rabbids 2.''
Vivendi SA (VIV FP) declined 88.5 cents, or 3.3 percent, to 26.1 euros. The owner of France's second-largest wireless company said second-quarter sales rose to 5.99 billion euros ($9.4 billion) from 5.2 billion euros, Paris-based Vivendi said in an e-mailed statement today. Analysts predicted 6.04 billion euros, the median of 14 estimates compiled by Bloomberg News.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net. Sarah Thompson in London at sthompson17@bloomberg.net
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German Stocks Fall, Led by Munich Re, Deutsche Bank, Lufthansa
By Henrietta Rumberger
July 25 (Bloomberg) -- German stocks declined for a second day, led by banks and insurers, after Munich Re cut its full-year earnings forecast and Hannover Re said reaching targets has become more difficult.
Munich Re, the world's second-biggest reinsurer, slumped the most in five years and Hannover Re had its steepest plunge since September 2001. Deutsche Bank AG, Germany's largest bank, also added to the drop. Deutsche Lufthansa AG and Bayerische Motoren Werke AG paced a retreat among companies sensitive to higher fuel costs as crude oil rose for a second day.
The benchmark DAX Index decreased 91.27, or 1.4 percent, to 6,349.43 as of 11:58 a.m. in Frankfurt. The measure is on course for a weekly loss of 0.6 percent. DAX futures expiring in September fell 1.2 percent, to 6,393.5. The HDAX Index of the country's 110 biggest companies slipped 1.4 percent to 3,225.31.
``The problem with banking shares is that these companies begin to feel the results of the weakening global economy,'' Tilmann Galler, a client portfolio manager who helps oversee about $25 billion at JPMorgan Asset Management in Frankfurt, said in a Bloomberg Television interview today. ``Loan losses are likely to increase which will weigh on their earnings.''
Banks and insurers were the biggest decliners among the 18 industry groups in Europe's Dow Jones Stoxx 600 Index. U.S. financial shares had their worst drop in eight years yesterday.
Munich Re tumbled 13.93 euros, or 12 percent, to 102.50. The reinsurer cut its forecast for earnings this year after second- quarter profit declined 48 percent. Net income was about 600 million euros ($942 million), the company said today, warning of ``substantial'' writedowns on its stock investments.
Ergo, Hannover Re
Ergo Versicherungsgruppe AG, Munich Re's primary insurance unit, lost 6.70 euros, or 4.9 percent, to 130 after lowering its full-year earnings projection.
Hannover Re plunged 5.09 euros, or 16 percent, to 27.20. Germany's second-biggest reinsurer after Munich Re said it has become more difficult to reach its full-year targets because of capital-market turbulence.
``We are currently evaluating our forecast,'' spokeswoman Christine Harms said in a telephone interview today.
Allianz SE, Europe's largest insurer, sank 9.19 euros, or 8 percent, to 105.20.
Deutsche Bank fell 1.66 euros, or 2.8 percent, to 58.54. Commerzbank AG, Germany's second-biggest bank, slipped 1.72 euros, or 7.7 percent, to 20.43 euros. Hypo Real Estate Holding AG, the country's second-biggest commercial-property lender, dropped 65 cents, or 3.7 percent, to 16.92 euros.
Crude Oil
Lufthansa, Europe's second-largest airline, retreated 45 cents, or 2.9 percent, to 15.17 euros. BMW, the world's biggest luxury carmaker, sank 47 cents, or 1.4 percent, to 30.06 euros.
Crude oil gained for a second day in New York on concern supply in Iran and Nigeria may be disrupted.
Separately, Lufthansa faces an open-ended strike by employees starting July 28, putting pressure on the carrier to achieve a pay deal with workers.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Gildemeister AG (GIL GY) retreated for a second day, declining 90 cents, or 4.9 percent, to 17.50 euros. The machine- tool maker had its stock recommendation cut to ``sell'' from ``buy'' at Equinet AG.
Hochtief AG (HOT GY), Germany's biggest builder, declined 3.12 euros, or 5.7 percent, to 51.39 euros after the Australian Financial Review reported that the company may have to invest to avoid losing its controlling stake in Australian business Leighton Holdings Ltd.
``The question is how much Hochtief will have to spend to keep Leighton consolidated,'' said Norbert Kretlow, an analyst at Commerzbank AG with an ``add'' recommendation on the stock.
Infineon Technologies AG (IFX GY) climbed 19 cents, or 3.9 percent, to 5.02 euros, the second advance this week. Europe's second-biggest semiconductor maker said it will cut 10 percent of its workforce to reduce costs after its third-quarter loss tripled. Profit excluding losses and charges linked to its memory chip unit Qimonda AG Europe's second-largest maker of semiconductors was 45 million euros in the third quarter, while analysts had estimated 29 million euros.
Phoenix Solar AG (PS4 GY) advanced 1.31 euros, or 3.2 percent, to 42.71, the biggest gain in more than a week, after the maker of sunlight-powered electricity plants signed a framework supply contract valued at about 450 million euros with Solyndra Inc. of the U.S.
Premiere AG (PRE GY) lost 50 cents, or 4.2 percent, to 11.40 euros. Equinet lowered its recommendation on shares of Germany's biggest pay-television company to ``reduce'' from ``hold.''
To contact the reporters on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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July 25 (Bloomberg) -- German stocks declined for a second day, led by banks and insurers, after Munich Re cut its full-year earnings forecast and Hannover Re said reaching targets has become more difficult.
Munich Re, the world's second-biggest reinsurer, slumped the most in five years and Hannover Re had its steepest plunge since September 2001. Deutsche Bank AG, Germany's largest bank, also added to the drop. Deutsche Lufthansa AG and Bayerische Motoren Werke AG paced a retreat among companies sensitive to higher fuel costs as crude oil rose for a second day.
The benchmark DAX Index decreased 91.27, or 1.4 percent, to 6,349.43 as of 11:58 a.m. in Frankfurt. The measure is on course for a weekly loss of 0.6 percent. DAX futures expiring in September fell 1.2 percent, to 6,393.5. The HDAX Index of the country's 110 biggest companies slipped 1.4 percent to 3,225.31.
``The problem with banking shares is that these companies begin to feel the results of the weakening global economy,'' Tilmann Galler, a client portfolio manager who helps oversee about $25 billion at JPMorgan Asset Management in Frankfurt, said in a Bloomberg Television interview today. ``Loan losses are likely to increase which will weigh on their earnings.''
Banks and insurers were the biggest decliners among the 18 industry groups in Europe's Dow Jones Stoxx 600 Index. U.S. financial shares had their worst drop in eight years yesterday.
Munich Re tumbled 13.93 euros, or 12 percent, to 102.50. The reinsurer cut its forecast for earnings this year after second- quarter profit declined 48 percent. Net income was about 600 million euros ($942 million), the company said today, warning of ``substantial'' writedowns on its stock investments.
Ergo, Hannover Re
Ergo Versicherungsgruppe AG, Munich Re's primary insurance unit, lost 6.70 euros, or 4.9 percent, to 130 after lowering its full-year earnings projection.
Hannover Re plunged 5.09 euros, or 16 percent, to 27.20. Germany's second-biggest reinsurer after Munich Re said it has become more difficult to reach its full-year targets because of capital-market turbulence.
``We are currently evaluating our forecast,'' spokeswoman Christine Harms said in a telephone interview today.
Allianz SE, Europe's largest insurer, sank 9.19 euros, or 8 percent, to 105.20.
Deutsche Bank fell 1.66 euros, or 2.8 percent, to 58.54. Commerzbank AG, Germany's second-biggest bank, slipped 1.72 euros, or 7.7 percent, to 20.43 euros. Hypo Real Estate Holding AG, the country's second-biggest commercial-property lender, dropped 65 cents, or 3.7 percent, to 16.92 euros.
Crude Oil
Lufthansa, Europe's second-largest airline, retreated 45 cents, or 2.9 percent, to 15.17 euros. BMW, the world's biggest luxury carmaker, sank 47 cents, or 1.4 percent, to 30.06 euros.
Crude oil gained for a second day in New York on concern supply in Iran and Nigeria may be disrupted.
Separately, Lufthansa faces an open-ended strike by employees starting July 28, putting pressure on the carrier to achieve a pay deal with workers.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Gildemeister AG (GIL GY) retreated for a second day, declining 90 cents, or 4.9 percent, to 17.50 euros. The machine- tool maker had its stock recommendation cut to ``sell'' from ``buy'' at Equinet AG.
Hochtief AG (HOT GY), Germany's biggest builder, declined 3.12 euros, or 5.7 percent, to 51.39 euros after the Australian Financial Review reported that the company may have to invest to avoid losing its controlling stake in Australian business Leighton Holdings Ltd.
``The question is how much Hochtief will have to spend to keep Leighton consolidated,'' said Norbert Kretlow, an analyst at Commerzbank AG with an ``add'' recommendation on the stock.
Infineon Technologies AG (IFX GY) climbed 19 cents, or 3.9 percent, to 5.02 euros, the second advance this week. Europe's second-biggest semiconductor maker said it will cut 10 percent of its workforce to reduce costs after its third-quarter loss tripled. Profit excluding losses and charges linked to its memory chip unit Qimonda AG Europe's second-largest maker of semiconductors was 45 million euros in the third quarter, while analysts had estimated 29 million euros.
Phoenix Solar AG (PS4 GY) advanced 1.31 euros, or 3.2 percent, to 42.71, the biggest gain in more than a week, after the maker of sunlight-powered electricity plants signed a framework supply contract valued at about 450 million euros with Solyndra Inc. of the U.S.
Premiere AG (PRE GY) lost 50 cents, or 4.2 percent, to 11.40 euros. Equinet lowered its recommendation on shares of Germany's biggest pay-television company to ``reduce'' from ``hold.''
To contact the reporters on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
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Stocks in Europe, Asia Slide; U.S. Futures Are Little Changed
By Adria Cimino
July 25 (Bloomberg) -- Stocks fell in Europe and Asia on concern losses in financial services may worsen and slowing economies will stifle profit growth. U.S. index futures were little changed.
Munich Re slumped the most in five years after the world's second-biggest reinsurer warned of ``substantial'' writedowns on its stock investments. Hannover Re and American International Group Inc. also declined in Europe. National Australia Bank Ltd. tumbled the most since the October 1987 stock market crash after setting aside more money for credit-market losses. UBS AG slipped after New York sued the bank on allegations its promotion of auction-rate securities was fraudulent.
The MSCI World Index lost 0.5 percent to 1,357.13 at 12:40 p.m. in London, dragging the measure down 0.4 percent this week. Futures on the Standard & Poor's 500 Index added less than 0.1 percent.
``What makes investors so uncertain is the question: which financial firms have more skeletons in the closet,'' said Juergen Meyer, a Frankfurt-based fund manager at SEB Asset Management, with the equivalent of $2.2 billion under management.
Financial stocks have led the rout that has erased more than $13 trillion from equities worldwide since October as accelerating inflation and $468 billion in writedowns and credit-related losses threaten to push the U.S. into recession.
``There are still risks on bank finances,'' said Nathalie Pelras, a Paris-based fund manager at Richelieu Finance, which oversees $6.3 billion. ``Growth for companies will weaken as the economy slows.''
Except for Canada, all of the 23 developed markets in the MSCI World experienced bear market plunges of at least 20 percent this year.
Europe, Asia
Europe's Dow Jones Stoxx 600 Index declined 0.9 percent as Lagardere SA, Rentokil Initial Plc and PageJaunes SA slid. The MSCI Asia Pacific Index lost 2.4 percent, the most in six weeks.
Analysts estimate earnings for companies in the Stoxx 600 will drop 2.4 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
Profit at S&P 500 companies fell 16 percent in the second quarter, the fourth straight decline, according to analysts' estimates. That would be the longest streak in six years, Bloomberg data show.
Munich Re sank 11 percent to 103.50 euros. The company cut its forecast for earnings this year after second-quarter profit declined 48 percent.
Hannover Re, AIG
Hannover Re, Germany's second-biggest reinsurer, plunged 10 percent to 28.97 euros. The company said it has become more difficult to reach its full-year targets because of capital- market turbulence.
Storebrand ASA, Norway's largest publicly traded insurer, sank 11 percent to 34.55 kroner.
AIG, the world's largest insurer by assets which has units that originate, insure and invest in home loans, lost 34 cents to $27.08 in Germany.
U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth, according to RealtyTrac Inc.
Stocks fell in the U.S. yesterday, sending financial shares to their worst drop in eight years, after home sales slid more than forecast and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion.
National Australia slumped 13 percent to A$26.56. The country's biggest bank set aside A$830 million ($795 million) for credit-market losses. National Australia took a A$181 million provision in March.
UBS, Saint-Gobain
UBS tumbled 7.8 percent to 21.2 francs. The European bank hardest hit by subprime contagion was sued yesterday by New York Attorney General Andrew Cuomo, alleging the bank's promotion of auction-rate securities as safe, money market-like investments was fraudulent.
UBS spokeswoman Karina Byrne in an e-mailed statement said the bank will ``vigorously defend'' itself against the allegations in the suit, and ``categorically rejects any claim that the firm engaged in a widespread campaign'' to shift auction-rate debt off its books and into client accounts.
Saint-Gobain, Europe's biggest supplier of building materials, added 3.5 percent to 37.96 euros after cutting its 2008 forecast and announcing 4,000 job cuts because of the construction slowdown.
Lagardere declined 0.7 percent to 35.42 euros. France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units.
Rentokil
Rentokil tumbled 32 percent to 69.5 pence after the world's largest pest-control provider cut its forecast for annual profit after margins at its washroom services division shrank.
PagesJaunes slumped 7.4 percent to 8.60 euros. The French yellow-pages company bought by Kohlberg Kravis Roberts & Co. said first-half profit dropped 14 percent to 103.2 million euros after a gain a year earlier from an asset disposal and cut its full-year sales outlook.
Groupe Danone SA gained 4.2 percent to 46.75 euros. Europe's biggest maker of baby food said first-half profit rose 5.7 percent after the purchase of Royal Numico NV last year boosted sales of infant formula in Asia and the Middle East. Net income from continuing operations climbed to 701 million euros. That surpassed analysts' estimates.
YIT Oyj plunged 22 percent to 10.56 euros. Finland's biggest builder, said second-quarter profit fell 19 percent to 42.6 million euros, missing analysts' estimates, on a slowing Baltic real estate market and delays to a Russian project.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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July 25 (Bloomberg) -- Stocks fell in Europe and Asia on concern losses in financial services may worsen and slowing economies will stifle profit growth. U.S. index futures were little changed.
Munich Re slumped the most in five years after the world's second-biggest reinsurer warned of ``substantial'' writedowns on its stock investments. Hannover Re and American International Group Inc. also declined in Europe. National Australia Bank Ltd. tumbled the most since the October 1987 stock market crash after setting aside more money for credit-market losses. UBS AG slipped after New York sued the bank on allegations its promotion of auction-rate securities was fraudulent.
The MSCI World Index lost 0.5 percent to 1,357.13 at 12:40 p.m. in London, dragging the measure down 0.4 percent this week. Futures on the Standard & Poor's 500 Index added less than 0.1 percent.
``What makes investors so uncertain is the question: which financial firms have more skeletons in the closet,'' said Juergen Meyer, a Frankfurt-based fund manager at SEB Asset Management, with the equivalent of $2.2 billion under management.
Financial stocks have led the rout that has erased more than $13 trillion from equities worldwide since October as accelerating inflation and $468 billion in writedowns and credit-related losses threaten to push the U.S. into recession.
``There are still risks on bank finances,'' said Nathalie Pelras, a Paris-based fund manager at Richelieu Finance, which oversees $6.3 billion. ``Growth for companies will weaken as the economy slows.''
Except for Canada, all of the 23 developed markets in the MSCI World experienced bear market plunges of at least 20 percent this year.
Europe, Asia
Europe's Dow Jones Stoxx 600 Index declined 0.9 percent as Lagardere SA, Rentokil Initial Plc and PageJaunes SA slid. The MSCI Asia Pacific Index lost 2.4 percent, the most in six weeks.
Analysts estimate earnings for companies in the Stoxx 600 will drop 2.4 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
Profit at S&P 500 companies fell 16 percent in the second quarter, the fourth straight decline, according to analysts' estimates. That would be the longest streak in six years, Bloomberg data show.
Munich Re sank 11 percent to 103.50 euros. The company cut its forecast for earnings this year after second-quarter profit declined 48 percent.
Hannover Re, AIG
Hannover Re, Germany's second-biggest reinsurer, plunged 10 percent to 28.97 euros. The company said it has become more difficult to reach its full-year targets because of capital- market turbulence.
Storebrand ASA, Norway's largest publicly traded insurer, sank 11 percent to 34.55 kroner.
AIG, the world's largest insurer by assets which has units that originate, insure and invest in home loans, lost 34 cents to $27.08 in Germany.
U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth, according to RealtyTrac Inc.
Stocks fell in the U.S. yesterday, sending financial shares to their worst drop in eight years, after home sales slid more than forecast and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion.
National Australia slumped 13 percent to A$26.56. The country's biggest bank set aside A$830 million ($795 million) for credit-market losses. National Australia took a A$181 million provision in March.
UBS, Saint-Gobain
UBS tumbled 7.8 percent to 21.2 francs. The European bank hardest hit by subprime contagion was sued yesterday by New York Attorney General Andrew Cuomo, alleging the bank's promotion of auction-rate securities as safe, money market-like investments was fraudulent.
UBS spokeswoman Karina Byrne in an e-mailed statement said the bank will ``vigorously defend'' itself against the allegations in the suit, and ``categorically rejects any claim that the firm engaged in a widespread campaign'' to shift auction-rate debt off its books and into client accounts.
Saint-Gobain, Europe's biggest supplier of building materials, added 3.5 percent to 37.96 euros after cutting its 2008 forecast and announcing 4,000 job cuts because of the construction slowdown.
Lagardere declined 0.7 percent to 35.42 euros. France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units.
Rentokil
Rentokil tumbled 32 percent to 69.5 pence after the world's largest pest-control provider cut its forecast for annual profit after margins at its washroom services division shrank.
PagesJaunes slumped 7.4 percent to 8.60 euros. The French yellow-pages company bought by Kohlberg Kravis Roberts & Co. said first-half profit dropped 14 percent to 103.2 million euros after a gain a year earlier from an asset disposal and cut its full-year sales outlook.
Groupe Danone SA gained 4.2 percent to 46.75 euros. Europe's biggest maker of baby food said first-half profit rose 5.7 percent after the purchase of Royal Numico NV last year boosted sales of infant formula in Asia and the Middle East. Net income from continuing operations climbed to 701 million euros. That surpassed analysts' estimates.
YIT Oyj plunged 22 percent to 10.56 euros. Finland's biggest builder, said second-quarter profit fell 19 percent to 42.6 million euros, missing analysts' estimates, on a slowing Baltic real estate market and delays to a Russian project.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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U.K. Stocks Fall, Led by Banks; HSBC, Barclays, Rentokil Fall
By Adam Haigh
July 25 (Bloomberg) -- U.K. stocks dropped, with an index of banking stocks falling the most in nine days, as concern deepened credit losses and the economic slowdown will damp earnings.
HSBC Holdings Plc and Barclays Plc led declines after financial shares in the U.S. slumped the most in eight years yesterday. Rentokil Initial Plc tumbled by a record after the world's largest pest-control provider cut its profit forecast. Rolls-Royce Group Plc slid as Deutsche Bank AG recommended investors sell the shares.
The benchmark FTSE 100 Index declined 20.8, or 0.4 percent, to 5,341.5 at 9:39 a.m. in London. The measure has fallen 0.7 percent this week. The FTSE All-Share Index fell 0.6 percent today and Ireland's ISEQ Index decreased 2.1 percent.
``Banks are a territory to walk away from,'' Steven Pope, chief global strategist at Cantor Fitzgerald in London, said in a Bloomberg Television interview. ``Overall we are in difficult position because central banks are walking a tight line between inflation and recession.'
The FTSE 350 Banks Index fell 3.2 percent, the most since July 15. The index had rallied 6.3 percent this week following better-than-expected results from JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co.
HSBC, the largest U.K. bank, slid 2.1 percent to 820.5 pence. Barclays, the fourth-biggest, lost 4.1 percent to 333.75 pence.
U.S. financial shares retreated yesterday after a report showed sales of previously owned homes fell to the lowest in a decade and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion.
Margins Shrink
Rentokil Initial dropped 28 percent to 73.25 pence after cutting its forecast for annual profit after margins at its washroom services division shrank.
Rolls Royce lost 3.2 percent to 359.5 pence, the most in two weeks. Deutsche Bank cut its recommendation to ``sell'' from ``neutral,'' which said an economic slowdown and record oil prices are curbing demand.
BHP Billiton Plc, the world's largest mining company, added 2.4 percent to 1,577 pence and Rio Tinto Group Plc, the third biggest, climbed 1.7 percent to 4,989 pence. Copper gained 0.5 percent to $7,943 a metric ton in London.
BP Plc advanced 1.2 percent to 518.75 pence. Crude rose in New York on concern supply in Iran and Nigeria may be disrupted.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
U.K. Companies:
Beazley Group Plc (BEZ LN) slid 5 pence, or 4.4 percent to 108.75 pence. The Lloyd's of London insurer said profit fell 23 percent as claims rose and revenue declined.
Britvic Plc (BVIC LN), the U.K. bottler for PepsiCo Inc. soft drinks, declined 7.25 pence, or 2.8 percent, to 248.25. Chief Executive Officer Paul Moody said pub sales of sodas will ``remain challenging'' and anticipated rising costs. Merrill Lynch & Co. analyst Olivier Nicolai described it as a ``cautious outlook.''
KCOM Group Plc (KCOM LN), a seller of phone services in northern England for more than a century, slipped 4.25 pence, or 11 percent, to 35.25 after saying first-quarter sales were lower than the year-earlier period.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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July 25 (Bloomberg) -- U.K. stocks dropped, with an index of banking stocks falling the most in nine days, as concern deepened credit losses and the economic slowdown will damp earnings.
HSBC Holdings Plc and Barclays Plc led declines after financial shares in the U.S. slumped the most in eight years yesterday. Rentokil Initial Plc tumbled by a record after the world's largest pest-control provider cut its profit forecast. Rolls-Royce Group Plc slid as Deutsche Bank AG recommended investors sell the shares.
The benchmark FTSE 100 Index declined 20.8, or 0.4 percent, to 5,341.5 at 9:39 a.m. in London. The measure has fallen 0.7 percent this week. The FTSE All-Share Index fell 0.6 percent today and Ireland's ISEQ Index decreased 2.1 percent.
``Banks are a territory to walk away from,'' Steven Pope, chief global strategist at Cantor Fitzgerald in London, said in a Bloomberg Television interview. ``Overall we are in difficult position because central banks are walking a tight line between inflation and recession.'
The FTSE 350 Banks Index fell 3.2 percent, the most since July 15. The index had rallied 6.3 percent this week following better-than-expected results from JPMorgan Chase & Co., Citigroup Inc., and Wells Fargo & Co.
HSBC, the largest U.K. bank, slid 2.1 percent to 820.5 pence. Barclays, the fourth-biggest, lost 4.1 percent to 333.75 pence.
U.S. financial shares retreated yesterday after a report showed sales of previously owned homes fell to the lowest in a decade and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion.
Margins Shrink
Rentokil Initial dropped 28 percent to 73.25 pence after cutting its forecast for annual profit after margins at its washroom services division shrank.
Rolls Royce lost 3.2 percent to 359.5 pence, the most in two weeks. Deutsche Bank cut its recommendation to ``sell'' from ``neutral,'' which said an economic slowdown and record oil prices are curbing demand.
BHP Billiton Plc, the world's largest mining company, added 2.4 percent to 1,577 pence and Rio Tinto Group Plc, the third biggest, climbed 1.7 percent to 4,989 pence. Copper gained 0.5 percent to $7,943 a metric ton in London.
BP Plc advanced 1.2 percent to 518.75 pence. Crude rose in New York on concern supply in Iran and Nigeria may be disrupted.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
U.K. Companies:
Beazley Group Plc (BEZ LN) slid 5 pence, or 4.4 percent to 108.75 pence. The Lloyd's of London insurer said profit fell 23 percent as claims rose and revenue declined.
Britvic Plc (BVIC LN), the U.K. bottler for PepsiCo Inc. soft drinks, declined 7.25 pence, or 2.8 percent, to 248.25. Chief Executive Officer Paul Moody said pub sales of sodas will ``remain challenging'' and anticipated rising costs. Merrill Lynch & Co. analyst Olivier Nicolai described it as a ``cautious outlook.''
KCOM Group Plc (KCOM LN), a seller of phone services in northern England for more than a century, slipped 4.25 pence, or 11 percent, to 35.25 after saying first-quarter sales were lower than the year-earlier period.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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U.K. Economic Growth Matches Slowest Pace Since 2001
By Svenja O'Donnell
July 25 (Bloomberg) -- The U.K. economy expanded 0.2 percent in the second quarter, matching the slowest pace since 2001, as shrinking manufacturing and construction and the banking slump brought Britain closer to a recession.
Gross domestic product grew 1.6 percent from a year earlier, the least since 2005, the Office for National Statistics said in London today. The quarterly and annual growth figures both matched the median forecast of economists in a Bloomberg News survey.
``A recession is probable,'' said Steven Bell, chief economist at GLC Ltd. in London and a former U.K. Treasury official. ``We'll get negative growth for the next two quarters. We're now looking at quite deep interest-rate cuts next year.''
The economy's weakest outlook since the early 1990s is eroding support for Prime Minister Gordon Brown, whose ruling Labour Party yesterday lost a special election in Glasgow and must call a national vote by 2010. Higher credit costs and falling house prices have choked growth as inflation prevents the central bank from cutting the interest rate from the current 5 percent.
The U.K. is the first of the Group of Seven nations to announce GDP figures for the second quarter. While growth is slowing, the International Monetary Fund still expects the U.K. to perform better than the world's other major economies. Its forecast of 1.8 percent expansion this year compares with 1.3 percent for the U.S., 1.7 percent for the euro region and 1.5 percent for Japan.
Bank Losses
The pound erased an earlier decline and climbed as much as 0.3 percent to $1.9926 after the GDP figures. The 0.2 percent increase on the quarter matched the result for the first three months of 2005, which was the lowest since the second quarter of 2001, the statistics office said.
Business services and finance, which account for 28 percent of the economy, grew 0.1 percent on the quarter, the least in six years, the statistics office said. HSBC Holdings Plc, Royal Bank of Scotland Group Plc and other banks around the world have announced more than $481 billion in writedowns in the past year after the U.S. subprime mortgage slump roiled financial markets.
Manufacturing fell 0.4 percent, and a slowdown in homebuilding pushed construction down 0.7 percent, its first decline in more than two years.
Recession
Overall service industries, which account for about three- quarters of the economy, expanded 0.4 percent, compared with a 0.3 percent gain in the previous three months, the report showed. Industrial production, which includes manufacturing, mining, utilities and oil extraction contracted for a second quarter, fell 0.5 percent. It accounts for 19 percent of the economy.
Niesr, a group whose clients include the central bank and the Treasury, forecast today that Britain's gross domestic product will rise 1.5 percent this year, 1.4 percent in 2009 and 1.9 percent in 2010. That would be the worst performance since the three years through 1992.
Weakening growth may further erode Brown's support after his Labour Party lost a U.K. Parliament seat in Glasgow to the Scottish National Party, the government's biggest defeat in a special election since the invasion of Iraq five years ago.
Higher energy and food costs are curbing consumers' spending power, while the deepening housing market slump hurts their confidence. Retail sales fell 3.9 percent in June, the most since at least 1986, the Office for National Statistics said yesterday.
Faster Inflation
Faster inflation is also limiting the Bank of England's scope to help the economy with rate cuts. Consumer prices jumped 3.8 percent in June, almost double the central bank's 2 percent target. Policy maker Timothy Besley cast the first vote in a year for a rate increase this month. Seven of his colleagues kept the rate unchanged and David Blanchflower wanted a cut, citing the risk of a sharp slowdown.
Bank of England Deputy Governor Charles Bean said yesterday that the economy faces ``considerable'' risks from both growth and inflation.
At the same time, some economists argue that the Bank of England will eventually be forced to cut rates as growth slows. JPMorgan Chase & Co. today cut its rate forecast and now predicts the benchmark will fall to 4.25 percent next year. The implied yield on the June short-sterling futures contract has dropped one percentage point since June 19, falling to 5.48 percent.
``The point at which rates will begin to fall is coming nearer,'' said Malcolm Barr, an economist at JPMorgan in London.
U.K. unemployment jumped the most in June since the aftermath of the last recession in 1992 as the economic slowdown forced homebuilders and financial institutions to cut jobs.
Banks are curbing lending following the credit rout. HBOS Plc, the U.K.'s biggest mortgage lender, said this month that house prices, which tripled in the past decade, dropped in June from a year earlier by the most since 1992.
Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., yesterday said total writedowns could mount to more than $1 trillion, more than double the current estimate.
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
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U.S. Stock Futures Retreat as Oil, Foreclosures Rise; AIG Drops
By Michael Patterson
July 25 (Bloomberg) -- U.S. stock-index futures fell as oil gained for a second day and foreclosure filings more than doubled last quarter, renewing concern that increased energy costs and credit losses will restrain global economic growth.
Boeing Co., the second-largest commercial planemaker, declined as crude futures climbed above $126 a barrel. American International Group Inc. dropped after Australia's biggest bank said its mortgage-related losses may jump fivefold. Western Digital Corp. sank after predicting profit and sales below projections. Juniper Networks Inc. rose on higher forecasts.
Standard & Poor's 500 Index futures expiring in September fell 1.4 to 1,252.4 as of 11:56 a.m. in London. Dow Jones Industrial Average futures declined 13 to 11,338. Nasdaq-100 Index futures slipped 2 to 1,817.5. Asian stocks retreated as National Australia Bank Ltd. plunged the most since the 1987 stock market crash, while financial companies led European shares lower for a second day.
``The reality is starting to set in that there may be another shoe to drop out there,'' Eric Thorne, who helps oversee about $2.6 billion as an investment adviser at Bryn Mawr Trust Co., said in an interview on Bloomberg Television yesterday from Philadelphia. ``You look at some of the housing data and that continues to be really bad.''
The S&P 500 is poised to fall for the seventh week since May after the biggest retreat in bank shares since 2000 sent the index to a 2.3 percent drop yesterday. Investors may get clues on the outlook for economic and profit growth today as the Commerce Department releases its June report on durable goods orders and companies including Black & Decker Corp. report earnings.
Bear Markets
The S&P 500 has dropped 0.7 percent this week and the Dow average has declined 1.3 percent. The Nasdaq Composite Index is down 0.1 percent.
All of the 23 developed nations in the MSCI World Index except for Canada experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation. Brazil became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to enter a bear market yesterday. Only Jordan and Morocco avoided such slumps.
Boeing lost 14 cents to $62.39 in Germany. Crude oil for September delivery gained as much as 81 cents, or 0.7 percent, to $126.30 a barrel in New York on concern supply in Iran and Nigeria may be disrupted.
Western Digital
Western Digital, the second-largest maker of hard-disk drives, sank $3.03 to $30.59 in Germany. Profit will be 81 cents to 89 cents this quarter, the company said. Analysts had estimated 98 cents on average, according to a Bloomberg survey. Sales will rise 3 percent to 8 percent in the period, also falling short of projections.
AIG, which has units that originate, insure and invest in home loans, declined 37 cents to $27.06 in Germany.
U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.
One in every 171 U.S. homeowners lost their house to foreclosure, received a default notice or was warned of a pending auction, an increase of 121 percent from a year earlier and a 14 percent rise from the first quarter, RealtyTrac Inc. said today.
National Australia set aside an additional A$830 million for collateralized debt obligations. The move may cut profit for the fiscal year that ends Sept. 30 by almost A$600 million, Chief Financial Officer Mark Joiner said in an interview. That would equal about 13 percent of 2007 net income.
Crocs, Interactive Brokers
Crocs Inc. plunged $3.97 to $4.98 after the company forecast earnings lower than its previous prediction, raising concern that it may not be able to sell its colored foam clogs profitably.
Interactive Brokers Group Inc. lost $4.20 to $28. The brokerage that handles 14 percent of equity options worldwide posted second-quarter profit that rose less than analysts estimated because of smaller gains from market making.
Juniper Networks gained $2.45 to $25.02. The second-largest maker of networking equipment reported a 40 percent jump in profit and raised its forecasts for the year as phone companies boost spending.
The Commerce Department may report that bookings for goods meant to last several years fell 0.3 percent after being unchanged in May, according to the median estimate in a Bloomberg News survey of 78 economists. Other reports today may show sales of new houses fell and consumer sentiment matched a 28-year low. The durable goods figures are due at 8:30 a.m. New York time.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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July 25 (Bloomberg) -- U.S. stock-index futures fell as oil gained for a second day and foreclosure filings more than doubled last quarter, renewing concern that increased energy costs and credit losses will restrain global economic growth.
Boeing Co., the second-largest commercial planemaker, declined as crude futures climbed above $126 a barrel. American International Group Inc. dropped after Australia's biggest bank said its mortgage-related losses may jump fivefold. Western Digital Corp. sank after predicting profit and sales below projections. Juniper Networks Inc. rose on higher forecasts.
Standard & Poor's 500 Index futures expiring in September fell 1.4 to 1,252.4 as of 11:56 a.m. in London. Dow Jones Industrial Average futures declined 13 to 11,338. Nasdaq-100 Index futures slipped 2 to 1,817.5. Asian stocks retreated as National Australia Bank Ltd. plunged the most since the 1987 stock market crash, while financial companies led European shares lower for a second day.
``The reality is starting to set in that there may be another shoe to drop out there,'' Eric Thorne, who helps oversee about $2.6 billion as an investment adviser at Bryn Mawr Trust Co., said in an interview on Bloomberg Television yesterday from Philadelphia. ``You look at some of the housing data and that continues to be really bad.''
The S&P 500 is poised to fall for the seventh week since May after the biggest retreat in bank shares since 2000 sent the index to a 2.3 percent drop yesterday. Investors may get clues on the outlook for economic and profit growth today as the Commerce Department releases its June report on durable goods orders and companies including Black & Decker Corp. report earnings.
Bear Markets
The S&P 500 has dropped 0.7 percent this week and the Dow average has declined 1.3 percent. The Nasdaq Composite Index is down 0.1 percent.
All of the 23 developed nations in the MSCI World Index except for Canada experienced bear-market plunges of 20 percent or more since September as credit losses surged and record commodity prices stoked inflation. Brazil became the 23rd out of 25 developing countries in the MSCI Emerging Markets Index to enter a bear market yesterday. Only Jordan and Morocco avoided such slumps.
Boeing lost 14 cents to $62.39 in Germany. Crude oil for September delivery gained as much as 81 cents, or 0.7 percent, to $126.30 a barrel in New York on concern supply in Iran and Nigeria may be disrupted.
Western Digital
Western Digital, the second-largest maker of hard-disk drives, sank $3.03 to $30.59 in Germany. Profit will be 81 cents to 89 cents this quarter, the company said. Analysts had estimated 98 cents on average, according to a Bloomberg survey. Sales will rise 3 percent to 8 percent in the period, also falling short of projections.
AIG, which has units that originate, insure and invest in home loans, declined 37 cents to $27.06 in Germany.
U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth.
One in every 171 U.S. homeowners lost their house to foreclosure, received a default notice or was warned of a pending auction, an increase of 121 percent from a year earlier and a 14 percent rise from the first quarter, RealtyTrac Inc. said today.
National Australia set aside an additional A$830 million for collateralized debt obligations. The move may cut profit for the fiscal year that ends Sept. 30 by almost A$600 million, Chief Financial Officer Mark Joiner said in an interview. That would equal about 13 percent of 2007 net income.
Crocs, Interactive Brokers
Crocs Inc. plunged $3.97 to $4.98 after the company forecast earnings lower than its previous prediction, raising concern that it may not be able to sell its colored foam clogs profitably.
Interactive Brokers Group Inc. lost $4.20 to $28. The brokerage that handles 14 percent of equity options worldwide posted second-quarter profit that rose less than analysts estimated because of smaller gains from market making.
Juniper Networks gained $2.45 to $25.02. The second-largest maker of networking equipment reported a 40 percent jump in profit and raised its forecasts for the year as phone companies boost spending.
The Commerce Department may report that bookings for goods meant to last several years fell 0.3 percent after being unchanged in May, according to the median estimate in a Bloomberg News survey of 78 economists. Other reports today may show sales of new houses fell and consumer sentiment matched a 28-year low. The durable goods figures are due at 8:30 a.m. New York time.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.
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Overnight News Recap: Inline UK GDP , EU M3 Slows, Japanese CPI Jumps
| News Recap | Written by CEP News | Jul 25 08 10:40 GMT | | |
| (CEP News) - Inline, albeit concerning, GDP figures for the UK, slowing M3 money supply in the euro zone, declining retail confidence in Italy and comments from Austrian Central Banker Klaus Liebscher were some of the highlights of the European economic session as Japan's CPI report showed some sharp increases in prices. According to advanced estimates from the Office for National Statistics (ONS), the UK economy grew 1.6% year-over-year as expected in the second quarter of 2008, down from the 2.3% growth rate seen in the previous quarter. In quarterly terms, UK GDP increased 0.2%, also in line with expectations, after rising 0.3% in Q1. Breaking down the figures, total services industries, and government and other services both grew 0.4% in Q2 on a quarterly basis, while transportation and communication rose 2.2%. On the other hand, electricity, gas and water supply slipped 1.5% quarter-over-quarter and construction output sank 0.7% over the same period. On Friday, the European Central Bank reported that the euro zone M3 money supply growth rate decelerated to 9.5% in June 2008 compared to the same month one year ago. Economists had expected a rise to 10.3% after M3 had growth 10.0% in the previous month. May's figure was revised down from an initial reading of 10.5%. The ECB also announced that the three-month average M3 growth rate surprised to the downside, growing only 9.9% in the period from April to June. Economists had expected a growth rate of 10.4%, up from the 10.1% increase recorded in the period from March to May. The previous period's increase was revised down from an initially reported 10.4%. According to the Institute for Studies and Economic Analyses (ISAE), retailers' confidence dipped to 98.4 in July after rising to 107.0 in the previous month. Meanwhile, June's reading was revised down from an initial figure of 107.3. July's figure is the lowest recorded since May 2005. The sentiment indicator saw the strongest declines in current sales, falling to -13 in July from -1, and sales outlook, which slipped to 9 from 24. ISAE also reported a fall in the Italian services sentiment in July. According to survey results, the services confidence indicator dropped all the way to -8 in July from 14 in June. On Friday, Statistik Austria reported that industrial output recovered from April's 0.5% fall and rose 1.2% month-over-month in May. The largest contributors to the increase in production came from capital goods output, which rose 2.3% from April to May, and construction output, which saw a gain of 1.9% in monthly terms. In annualized terms, Austrian industrial production increased 5.4%, up from the 3.0% gain seen in April. German import prices rose 8.9% year-over-year in June, the strongest rate since November 2000, according to data released by the Federal Statistics Office (Destatis). Economists had expected an increase of 8.4%, up from May's 7.9% rise. Month-over-month, German import price inflation cooled somewhat to 1.5%, down from the 2.4% rate observed in the previous month. However, the consensus had called for an even greater deceleration to 1.0%. In an interview from his office in Vienna, Austria on July 24, European Central Bank Governing Council member Klaus Liebscher said that he was not surprised by the recent data pointing to deteriorating activity levels in the euro zone and stressed that the ECB still has room to maneuver regarding interest rates. "We expected a weaker second and maybe third quarter," he said. Despite expecting weak activity numbers, Liebscher did concede that the central bank may have to revise down its growth forecasts "by one or the other tenth of a percentage point." According to Statistics Iceland, the inflation rate reached 13.6% in July year-over-year, up from both the 13.2% expected and the 12.7% rate observed in June. On a monthly basis, price growth in Iceland came in at 0.9%, unchanged from June's print. However, Economists had expected a deceleration in the growth rate to 0.6% for the month. On Friday, Statistics Sweden reported that loans to households grew 10.6% in June, down from May's 10.8% rate, as well as from the 11.8% rise observed in June 2007. The Swedish trade surplus fell to SEK 8.2 billion in June from May's SEK 10.0 billion level, according to data released by Statistics Sweden. According to data released by the Japanese Ministry of Internal Affairs and Communications on Friday, inflation in Japan rose slightly faster than expected in June, but nevertheless sharply from the previous month, with headline CPI rising 2.0% year-over-year in June, just higher than estimates for a 1.9% increase and above May's 1.3% gain. CPI excluding fresh food rose 1.9% year-over-year in June, in line with estimates and higher than the previous month's 1.5% increase. Consumer prices excluding fresh food and energy fell 0.1% year-over-year compared to forecasts for no growth and May's 0.1% annual decline. The report also said prices in Tokyo grew 1.6% year-over-year in July, compared to June's 1.5% gain but below forecasts for a 1.8% increase. Excluding fresh foods, CPI was up 1.6%, in line with expectations and higher than the previous month's 1.3% gain. Tokyo CPI excluding fresh foods and energy advanced 0.3% against calls for a 0.4% annual growth rate and the 0.3% rise seen in June. Japanese corporate services price index advanced 1.2% year-over-year in June compared to forecasts for a 0.7% increase and May's 0.7% advance was revised down to a gain of 0.6%. The foreign purchase of Japanese stocks fell ¥297.2 billion in the week ending July 18 after selling off ¥242.3 billion in the previous week. Buying of bonds advanced ¥333.5 billion following the previous week's ¥527.6 billion buy-up. Meanwhile, the Japanese bought ¥71.1 billion in foreign stocks following the ¥13.1 billion purchased in the prior week. The Japanese also purchased ¥172.3 billion in foreign bonds following the previous week's ¥59.5 billion sell-off. JP Tokyo CPI (Y/Y) July +1.6% vs. Exp: +1.8% Prior: +1.5% JP Tokyo CPI Ex-Fresh Food (Y/Y) July +1.6% vs. Exp: +1.6% Prior: +1.3% JP Tokyo CPI Ex Food, Energy (Y/Y) July +0.3% vs. Exp: +0.4% Prior: +0.3% JP National CPI (Y/Y) June +2.0% vs. Exp: +1.9% Prior: +1.3% JP National CPI Ex-Fresh Food (Y/Y) June +1.9% vs. Exp: +1.9% Prior: +1.5% JP National CPI Ex Food, Energy (Y/Y) June +0.1% vs. Exp: 0.0% Prior: -0.1% JP Foreign Buying Japan Bonds W/E July 18 +¥333.5B vs. Revised: +¥527.6B Prior: +¥528.2B JP Foreign Buying Japan Stocks W/E July 18 -¥297.2B vs. Revised: -¥242.3B Prior: -¥242.4B JP Japan Buying Foreign Stocks W/E July 18 +¥71.1B vs. Revised: +¥13.1B Prior: +¥12.9B JP Japan Buying Foreign Bonds W/E July 18 +¥172.3B vs. Revised: -¥59.5B Prior: -¥58.4B JP Corporate Services Price (Y/Y) June +1.2% vs. Exp: +0.7% Revised: +0.7% Prior: +0.6% DE Import Price Index (M/M) June +1.5% vs. Exp: +1.0% Prior: +2.4% DE Import Price Index (Y/Y) June +8.9% vs. Exp: +8.4% Prior: +7.9% IT Retailers' Confidence General July 98.4 vs. Revised: 107.0 Prior: 107.3 IT Services Survey July -8 vs. Prior: 14 EU Euro-Zone M3 (Y/Y) (SA) June +9.5% vs. Exp: +10.3% Revised: +10.0% Prior: +10.5% EU Euro-Zone M3 3 month average (SA) June +9.9% vs. Exp: +10.4% Revised: +10.1% Prior: +10.4% GB GDP (Q/Q) Q2 Advance +0.2% vs. Exp: +0.2% Prior: +0.3% GB GDP (Y/Y) Q2 Advance +1.6% vs. Exp: +1.6% Prior: +2.3% GB Index of Services (3month/3month) May +0.4% vs. Exp: +0.4% Prior: +0.3% By Erik Kevin Franco and Todd Wailoo, twailoo@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.ca CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer. | |
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Euro Rebounds As Safe Haven Bid Returns - Will US Data Disappoint?
| Daily Forex Fundamentals | Written by DailyFX | Jul 25 08 10:24 GMT | | |
| Talking Points
EURUSD stabilized and regained its footing in early European trade retaking the 1.5700 level after falling sharply yesterday. Yesterday's horrid IFO results drove the pair to within 20 points of the 1.5600 figure in late North American trade, but the overnight weakness in global equities and rumors of central bank buying reversed the decline, as the unit continues to attract safe haven flows. The economic data in the EZ shows incontrovertible signs of a slowdown, but the news from the other side of the Atlantic is not much better. Yesterday's US jobless claims climbed above the key 400K barrier while Existing homes sales slowed more than forecast. Thus the race between the euro and the dollar these days is not a measure of who is better but rather a question of which economy is performing worse. Add to that equation the recent negative correlation between the EURUSD and global equities and it is easy to see why the unit rebounded tonight's trade as all the major stock indices fell by more than 1%. Meanwhile cable also roared back trading above 1.9950 as UK GDP data printed in line with expectations. UK GDP fell sharply from the period prior expanding only at 1.6% annual rate, but the markets were relieved to see that the reading was not worse given the recent weakness in UK economic data. As a result, the consensus assumption that UK rates will be 5% for the rest of the year remained in place and traders pushed sterling back towards the 2.000 level.
Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
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U.K. GDP Falls, ECB Liebscher Says Room For Rate Hike
| Daily Forex Fundamentals | Written by DailyFX | Jul 25 08 10:49 GMT | | |
|
Fundamental Headlines GBPUSD - U.K. economic growth slowed to 1.6% year-over-year from 2.3% in the first quarter, which was the slowest pace since 2001. Gross domestic product rose 0.2% in the three months through June, as the housing slump and fall out from the subprime crisis saw construction, manufacturing and financial services fall. The economy is steadily approaching a recession as overall production fell 0.5% in the second quarter. Slow growth and rising inflation is expected to leave the BoE on Hold. EURUSD - German import prices rose 8.9% in June on the back of higher energy costs. It was the fastest pace in more than seven years and surpassed economist predictions of 8.4%. Meanwhile, the M3 money supply in July fell to 9.5% from 10.4% due to slowing growth. As growth declines the ECB will be hard pressed to raise rate sfurther. USDJPY- Japanese inflation rose to 2.0% in May after a 1.3% increase the month prior, on soaring gas and food prices. The higher costs are curbing consumer and business spending is impacting growth. Although prices are near the higher end of the BoJ's target band, the central bank will most likely leave rates unchanged as the country heads towards a recession.
Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
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Yen Selling On Rallies
Daily Forex Fundamentals | Written by Investica | Jul 25 08 10:15 GMT |
Strong interest in carry trades will lead to further yen selling pressure on rallies with volatility levels set to increase
The dollar pushed to highs of 108.0 against the yen on Thursday, but was then dragged back by renewed weakness on Wall Street. The yen recovered to 107.30 and also moved away from record lows against the Euro with a recovery back to 168.0.
Japanese underlying consumer inflation data recorded a further increase to an annual rate of 1.9% in June from 1.5% which represented a fresh 10-year high as gasoline prices continued to rise strongly. The impact should still be measured with markets not expecting the Bank of Japan to respond with higher interest rates.
Equity markets were back on the defensive on Friday following Wall Street losses while sharply increased bad-debt provisions by National Australia Bank also unsettled regional markets. These fears provided more significant yen support with the currency pushing to 106.60 against the dollar while the yen also edged stronger against the Euro before weakening again in Europe.
Investica
http://www.investica.co.uk
Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.
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Strong interest in carry trades will lead to further yen selling pressure on rallies with volatility levels set to increase
The dollar pushed to highs of 108.0 against the yen on Thursday, but was then dragged back by renewed weakness on Wall Street. The yen recovered to 107.30 and also moved away from record lows against the Euro with a recovery back to 168.0.
Japanese underlying consumer inflation data recorded a further increase to an annual rate of 1.9% in June from 1.5% which represented a fresh 10-year high as gasoline prices continued to rise strongly. The impact should still be measured with markets not expecting the Bank of Japan to respond with higher interest rates.
Equity markets were back on the defensive on Friday following Wall Street losses while sharply increased bad-debt provisions by National Australia Bank also unsettled regional markets. These fears provided more significant yen support with the currency pushing to 106.60 against the dollar while the yen also edged stronger against the Euro before weakening again in Europe.
Investica
http://www.investica.co.uk
Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.
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No Surprise in European Data, While dollar Still Soft
| Daily Forex Fundamentals | Written by Crown Forex | Jul 25 08 10:18 GMT | | |
| The dollar continues to lose grounds as today's data is to further confirm the ongoing weakness in the housing sector that is to prevail on the US economy, while the European data came much inline with expectations not much offsetting their rise against the depreciating greenback. The euro continued to find support from the 50.0% Fibonacci correction that the euro was not able to close below that level yesterday and continued to trade above it today, where it lead the rise today from there after setting the low at 1.5661 slightly below it the mentioned level which resides at 1.5670; the euro set the high at 1.5731 while facing now the upcoming strong level at 1.5756 which is the 38.2% correction for the last upside wave that took the euro to set a new all time high above 1.60 mark. The sluggish pace of growth in the second quarter at 0.2% was inline with expectations yet though still the very week it is better than the expected contraction. The pound continued to gain against the dollar especially after the momentum in gained from yesterday till today's lows of 1.9830 levels. The pound struck the high at the major resistance level at 1.9960 and to extend the upside the pound needs to breach above that level to target 2.0000 once more. Risk aversion and surging inflation in Japan both did the toxic combination to help the yen gain; though the pair reverted to the upside after setting the low at 106.57 though the strong support helped the pair bounce higher trading at 107.10s though short of its highest set at 107.30 over intraday terms the pair was heavily oversold and needed to head to the upside to gather momentum as still daily momentum indicators and direction support the downside that will set the pair to breach its lows to then extend till 105.50s. disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk. | |
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European Market Update
| Daily Forex Fundamentals | Written by Trade The News | Jul 25 08 10:13 GMT | | |
| Long is the way and hard... ECONOMIC DATAGE June Import Price Index: M/M 1.5% v 1.0%e || Y/Y 8.9% v 8.4% IT July Retailers Confidence: 98.4 v 107.0 prior || Prior revised from 107.3 to 107.0 SW June Trade Balance (sek): 8.3B v 10.0B prior || Prior revised from 10.3B to 10.0B EU June M-3 Y/Y: 9.5% v 10.3%e UK Q2 Advanced GDP: Q/Q 0.2% v 0.2%e || Y/Y 1.6% v 1.6%e IC July CPI: M/M 0.9% v 0.6%e || Y/Y 13.6% v 13.2%e SPEAKERS/COMMENTS/FIXED INCOME/FX/ERRATUMIn equity news Belgacom [BELG.BE] reported 1H net income of €471M, in line with consensus estimates, EBITDA of €1.02B in line with estimates of €1.04Be, and revenue of €2.B, also in line with estimates. The company guided FY08 revenue down 2%; the company had previously guided revenue down 1%. Infineon [IFX.GE] reported a Q3 net loss of €592M, well below the expected loss of €270M, however the company noted that the headline net included a charge related to a Qimonda writedown. Revenue was in line with consensus estimates at €1.03B. The company also announced that it plans to cut 3,000 jobs. Infineon anticipates €200M in savings within five quarters following the staff reduction. Groupe Danone [BN.FR] reports 1H net income of €701M, above estimates of €670M, and revenue of €7.7B, in line with consensus forecasts. Danone guided FY08 revenue growth of 8%-10%, and EPS growth of 'at least 15%'. The company also expects its FY08 operating margin target to improve to a range of 40bps-50bps, up from its previous expectations of 30bps. Rentokil Initial [RTO.UK] cut its FY08 pretax forecast by £35M overnight. The company said that problems associated with the restructuring of the its UK washrooms business and the integration of its washrooms and pest control acquisitions in Australia have continued throughout the second quarter. Rentokil added that trading has deteriorated in the company's Textiles & Washrooms division during the quarter, noting that it expects problems to continue for at least the remainder of the year. Munich Re [MUV2.GE] cut its profit guidance overnight citing instability in the global markets. The company guided FY08 profit of 'well over €2.0B,' which compares to the €3.75B consensus estimate. The company had previously guided €3.0B-€4.0B. Munich Re said that its long-term targets remain unchanged. In currencies, dealers noted that the reality of 'gloom and doom' brought back the risk aversion theme back into the picture. Multiple corporate profit warnings, soft housing data coupled with higher foreclosures and ongoing financials woes continued to simmer on the front burner. The JPY Carry related currency pairs were softer at the European open as EUR/JPY tested 167.50 and USD/JPY dipped back below its 200-day moving average. The EUR/USD was firmer by 35 pips to 1.5725 during the session as German import prices were above expectations and the ECB's Leibscher reiterated his hawkish stance afterwards. On the speaker front the ECB's Liebscher said overnight that the ECB has further room to maneuver on interest rates, adding that it is better to act preventively. Liebscher said that the interest rate level is good for now, adding that he does not expect recession in Europe. Liebscher noted that the ECB is far from giving the 'all clear' on inflation. In the UK overnight NIESR forecasted GDP growth of 1.5% in 2008, and 1.4% in 2009. The research institute said that the Bank of England should raise interest rates in order to contain inflation expectations, forecasting inflation of 4.1% by the fourth quarter. NOTESAll was relatively quiet in Europe overnight. The import price index data rose to its highest y/y level since November of 2000 as a result of energy price inflation, while advanced Q2 GDP readings in the UK were at their lowest levels since 1H of 2005. While we're all well aware of the growth vs. inflation scenario by this point, I would just like to point out once again that inflation is leading to multi-year highs in most of the inflation gauging economic data, while growth data is at multi year lows. As has been the case over the past couple of weeks the ECB has stepped up its hawkish tone. The ECB's Liebscher maintained that the ECB does not have any bias going forward, but reminded us that the ECB still had room to maneuver on rates, and seeks to act in a preventive manner. Now, we saw lower than expected M3 data in Europe overnight, with readings back below the 10% level. Coupled with declining commodity prices (if sustained) declining M3 could by the ECB some time to pause. Simultaneously we must consider the threat of second round effects, with particular emphasis on wage developments. According to the Verdi Union Lufthansa's ground and cabin staff are set to commence a strike on Monday. If we continue to encounter more employer-employee scuffles over wage rates the materialization of second round effects cannot be ruled out. Munich Re, the world's largest reinsurance company, hacked its outlook overnight citing market conditions, leading to similar comments by other companies including Hannover Re. A number of other big European reinsurance companies promptly declined to discuss their respective situations. If the reinsurance companies begin to get wobbly in the knees, theoretically, it could lead to higher systemic risk. RealtyTrac data released for the US was depressing as it show that US foreclosure filings rose by 121% y/y. According to RealtyTrac 1 out of every 171 homes in the US is in default. Although statistically less than 1% of homes are in default the outlook is still quite grim. If things continue to progress in the same manner over the next year then what? Dogs dating cats? That's insanity! Before we can all mull this over this weekend we'll see a few notable earnings in the US this morning including Black & Decker (BDK), Coventry Health Care (CVH), Fortune Brands (FO), ITT Corp. (ITT), and Netflix (NFLX). 'Put me back on my bike!' - Tom Simpson (last words before dying on Mont Ventoux during the 1967 Tour de France) Trade The News Staff Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing. | |
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Sponsor Forex Brokers Asia-Pacific Market Recap: Stocks Lower, Bonds Higher After Japanese CPI
| Market Updates | Written by CEP News | Jul 25 08 10:51 GMT | | |
| (CEP News) - A sharp but mostly below-forecast increase in consumer prices for Japan had Asia-Pacific fixed income markets higher and equities closing lower with yields on Australian 10-year bonds down 14.0 bps to 6.26% and Japanese 10-year government bonds down 8.0 bps to 1.58%. According to data released by the Japanese Ministry of Internal Affairs and Communications on Friday, inflation in Japan rose slightly faster than expected in June, but nevertheless sharply from the previous month, with headline prices in Tokyo growing 1.6% year-over-year, compared to June's 1.5% gain however below forecasts for a 1.8% increase. Excluding fresh foods, CPI was up 1.6%, in line with expectations and higher than the previous month's 1.3% gain. Tokyo CPI excluding fresh foods and energy advanced 0.3% against calls for a 0.4% annual growth rate and the 0.3% rise seen in June. National Japanese CPI rose a sharp 2.0% year-over-year in June, just higher than estimates for a 1.9% increase and above May's 1.3% gain. CPI excluding fresh food rose 1.9% year-over-year in May, in line with estimates and higher than the previous month's 1.5% increase. Consumer prices excluding fresh foods and energy fell 0.1% year-over-year compared to forecasts for no growth and May's 0.1% annual decline. Sydney's S&P ASX 200 closed down 173.60 points to 4970.5. The Japanese Nikkei closed down 268.55 points to 13334.76 and the Hang Seng down 347.01 points to 22740.71. Yields on three-year Australian bonds were down 0.7 bps to 7.35 and the Australian 90-day September 08 contract was flat at 92.26. The Euroyen September 08 contract was up 0.5 ticks to 99.15. The Australian dollar was down 0.03 cents to 0.9583 against the USD and down 0.19 cents to 0.9709 against the Canadian dollar. Against the yen, the U.S. dollar was down 0.09 points to 107.24 and the Canadian dollar was up 0.07 points to 105.84. The euro was up 0.70 cents to 1.5748 USD. All data taken at 6:48 a.m. EDT. Generated by CEP Newswires, edited by Nancy Girgis, ngirgis@economicnews.ca CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer. | |
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Technical Analysis Daily: USD/JPY
| Daily Forex Technicals | Written by iFOREX.bg | Jul 25 08 11:04 GMT | | |
USD/JPY 107.37USD/JPY Open 106.87 High 107.95 Low 106.58 Close 107.28 The US Dollar retrieved also against the Japanese Yen from yesterday's top 107.95 to today's bottom 106.58, which are the first resistance and support levels respectively for the currency couple today. If the negative trend continues, next support further down is expected at 106.00, the break of which would open potential drop towards 105.50. In upward direction next resistance further up is expected at 108.90, followed by 109.50. Technical resistance levels: 107.95 108.90 109.50 Trading range: 107.50 - 106.85 Trend: Downward Sell at 107.37 SL 107.67 TP 106.97
iFOREX.bg Forecasts and Trading Signals | |
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Foreign Exchange Market Commentary
| Daily Forex Technicals | Written by HY Markets | Jul 25 08 10:08 GMT | | |
| EUR/USD gapped down and closed lower on Wednesday hinting that a short-term top has likely been posted. The low-range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are neutral hinting that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. Closes above last week's high crossing are needed to renew this month's rally.
USD/JPY closed higher on Wednesday as it consolidates above the reaction high crossing. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are turning neutral hinting that sideways to higher prices are possible near-term. If it extends today's rally, last week's high crossing is the next upside target. Multiple closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.
GBP/USD closed higher on Wednesday as it consolidates above the reaction high crossing. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are turning neutral hinting that sideways to higher prices are possible near-term. If it extends the recent rally, last week's high crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.
USD/CHF closed higher on Wednesday as it consolidates above the reaction high crossing. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI are turning neutral hinting that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.
HY Markets | |
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Areva, Danone, Havas, M6, Saint-Gobain: French Stocks Preview
By Simon Kennedy
July 25 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index fell 60.75, or 1.4 percent, to 4,347.99 in Paris. The SBF 120 Index also decreased 1.4 percent.
Areva SA (CEI FP): The world's largest nuclear reactor builder said second-quarter sales advanced 17 percent to 3.4 billion euros on nuclear power-plant projects. The company's investment certificates dropped 14.19 euros, or 1.9 percent, to 739.42 euros.
Groupe Danone SA (BN FP): The food company that bought Royal Numico NV last year reports first-half profit before the market opens in Paris. Net income probably rose to 664 million euros, according to the median of six analyst estimates, on higher sales of baby formula and increased demand for dairy products in eastern Europe. The company will also restate last year's figures. The shares rose 38 cents, or 0.9 percent, to 44.85 euros.
Havas SA (HAV FP): The owner of the Euro RSCG Worldwide advertising firm reports first-half revenue before the market opens in Paris. The shares dropped 5 cents, or 2.2 percent, to 2.27 euros.
Lagardere SCA (MMB FP): France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units. The shares added 44 cents, or 1.3 percent, to 35.67 euros.
M6-Metropole Television SA (MMT FP): France's second- largest commercial television company said first-half profit fell 27 percent to 79.2 million euros on costs for broadcasting soccer's European Championship in June. The shares rose 3 cents, or 0.2 percent, to 14.27 euros.
PagesJaunes SA (PAJ FP): The yellow-pages company reports first-half earnings before the market opens in Paris. The shares added 20 cents, or 2.2 percent, to 9.29 euros.
Cie. de Saint-Gobain SA (SGO FP): Europe's biggest supplier of building materials said first-half profit rose to 1.1 billion euros from 1.07 billion euros a year earlier as higher selling prices outweighed rising energy costs. The company cut its 2008 forecast and announced 4,000 job cuts because of the construction slowdown. The shares declined 1.14 euros, or 3 percent, to 36.68 euros.
Ubisoft Entertainment SA (UBI FP): Europe's second-largest video-game maker said fiscal first-quarter sales rose 26 percent to 169 million euros, boosted by new titles including ``Assassin's Creed'' and ``Rayman Raving Rabbids 2.'' The shares dropped 22 cents, or 0.4 percent, to 62.95 euros.
Vivendi SA (VIV FP): The owner of France's second-largest wireless company posted a 15 percent jump in quarterly sales to 5.99 billion euros, boosted by the purchase of telephone and Internet provider Neuf Cegetel. The shares added 59 cents, or 2.3 percent, to 26.98 euros.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net.
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July 25 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index fell 60.75, or 1.4 percent, to 4,347.99 in Paris. The SBF 120 Index also decreased 1.4 percent.
Areva SA (CEI FP): The world's largest nuclear reactor builder said second-quarter sales advanced 17 percent to 3.4 billion euros on nuclear power-plant projects. The company's investment certificates dropped 14.19 euros, or 1.9 percent, to 739.42 euros.
Groupe Danone SA (BN FP): The food company that bought Royal Numico NV last year reports first-half profit before the market opens in Paris. Net income probably rose to 664 million euros, according to the median of six analyst estimates, on higher sales of baby formula and increased demand for dairy products in eastern Europe. The company will also restate last year's figures. The shares rose 38 cents, or 0.9 percent, to 44.85 euros.
Havas SA (HAV FP): The owner of the Euro RSCG Worldwide advertising firm reports first-half revenue before the market opens in Paris. The shares dropped 5 cents, or 2.2 percent, to 2.27 euros.
Lagardere SCA (MMB FP): France's largest publisher said first-half revenue fell 3.8 percent to 3.8 billion euros on an advertising slowdown in the U.S. and the sale of retail and newspaper units. The shares added 44 cents, or 1.3 percent, to 35.67 euros.
M6-Metropole Television SA (MMT FP): France's second- largest commercial television company said first-half profit fell 27 percent to 79.2 million euros on costs for broadcasting soccer's European Championship in June. The shares rose 3 cents, or 0.2 percent, to 14.27 euros.
PagesJaunes SA (PAJ FP): The yellow-pages company reports first-half earnings before the market opens in Paris. The shares added 20 cents, or 2.2 percent, to 9.29 euros.
Cie. de Saint-Gobain SA (SGO FP): Europe's biggest supplier of building materials said first-half profit rose to 1.1 billion euros from 1.07 billion euros a year earlier as higher selling prices outweighed rising energy costs. The company cut its 2008 forecast and announced 4,000 job cuts because of the construction slowdown. The shares declined 1.14 euros, or 3 percent, to 36.68 euros.
Ubisoft Entertainment SA (UBI FP): Europe's second-largest video-game maker said fiscal first-quarter sales rose 26 percent to 169 million euros, boosted by new titles including ``Assassin's Creed'' and ``Rayman Raving Rabbids 2.'' The shares dropped 22 cents, or 0.4 percent, to 62.95 euros.
Vivendi SA (VIV FP): The owner of France's second-largest wireless company posted a 15 percent jump in quarterly sales to 5.99 billion euros, boosted by the purchase of telephone and Internet provider Neuf Cegetel. The shares added 59 cents, or 2.3 percent, to 26.98 euros.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net.
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Japan Stocks Fall, Snap 3-Day Rally, on Overseas Sales Concern
By Masaki Kondo and Toshiro Hasegawa
July 25 (Bloomberg) -- Japan's stocks dropped, snapping a three-day rally, on concern overseas earnings will shrink after Canon Inc. said profit declined on the stronger yen and slowing sales in the U.S. and Europe.
Canon, which derives 80 percent of its revenue from abroad, fell the most in three months after reporting a third-straight drop in earnings. Fanuc Ltd., the world's top industrial robot maker which counts Asia as its biggest export market, sank the most in more than four months after analysts said profit may drop. Consumer lender Aiful Corp. tumbled after gaining 17 percent over the three days through yesterday.
``It's the worst-case scenario for Japanese stocks if Europe and emerging markets slow even as the U.S. slump deepens,'' said Hiroshi Sato, president of Tokyo-based Sato Asset Management Co.
The Nikkei 225 Stock Average declined 268.55, or 2 percent, to close at 13,334.76 in Tokyo, halting its longest winning streak since June 2. The broader Topix index fell 34.29, or 2.6 percent, to 1,298.28, the deepest dive since March 17. The Nikkei gained 4.2 percent for this holiday-shortened week, the biggest weekly advance since Feb. 15, while the Topix rose 3.7 percent.
Signs that overseas markets are slowing coincided with a report today showing Japanese inflation rose the most in a decade, crimping domestic demand. U.S. sales of existing homes fell to the lowest in a decade in June, while separate reports showed German business confidence plunged the most since the Sept. 11 terrorist attacks and European manufacturing and services shrank.
Nikkei futures expiring in September retreated 2.3 percent to 13,350 in Osaka and slumped 2.2 percent to 13,345 in Singapore.
To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.
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