ADVFN III Morning Euro Market Briefing For Wednesday, 22 August 2012

ADVFN III	Morning Euro Markets Bulletin
Daily world financial news

Wednesday, 22 August 2012

London Market Report

FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts

Japanese data dents the miners Market Movers techMARK 2,110.31 -0.84% FTSE 100 5,801.79 -0.95% FTSE 250 11,534.65 -0.90% Japan swings to massive trade deficit Greece to ask officials for more time BHP and the miners fall steeply early on Following a strong rise for mining stocks on Tuesday, the sector was providing a drag in London this morning after gloomy economic data from Japan dampened sentiment and scaled back risk appetite. "Weaker equity markets across the board in Asia due to disappointing trade data out of Japan and renewed concerns about sharply falling corporate profits in China is also taking a toll on European equity markets this morning with most major indices handing back yesterday’s gains putting them firmly back into the old trading ranges seen during past few days," said analyst Markus Huber from ETX Capital. Japan swung to a trade deficit of 517.4bn yen (£4.14bn) in July, from a surplus of 60.3bn yen in July, on the back of slowing demand in Asia and the Eurozone crisis. Analysts were expecting a deficit of 270bn yen. Meanwhile, eyes will be kept on Greece today as Prime Minister Antonis Samaras speaks with Eurozone officials this week to renegotiate the terms of the bailout. He is expected to request a two-year extension to Greece's fiscal-adjustment programme. “All we want is a bit of 'air to breathe' to get the economy running and to increase state income. More time does not automatically mean more money," Samaras said. Markets will also be focusing on the US later today as the minutes of the latest Federal Open Market Committee (FOMC) are due for release. FTSE 100: Miners tank early on; Kingfisher falls after broker downgrade Metals and mining stocks dropped on Wednesday morning after Japanese trade data disappointed, weighed on the outlook for demand. BHP Billiton fell after saying that weakness in commodity markets and industry-wide cost pressures resulted in earnings declining in the first half. The group also decided against spending up to $30bn on a uranium and copper mine extension in South Australia. Evraz, Fresnillo, Kazakhmys and Rio Tinto were also heavy fallers, while ENRC was lower after going ex-dividend and being downgraded by Deutsche Bank to 'neutral'. FTSE 100 counterparts CRH, InterContinental Hotels, Prudential and Standard Life also went ex-div today. B&Q owner Kingfisher was a heavy faller after Deutsche Bank lowered its recommendation for the stock to 'hold' and cut its target price from 340p to 315p. FTSE 250: Spirax-Sarco falls as first-half profits decline Steam trap and pump maker company Spirax Sarco was out of favour after reporting a decline in first-half pre-tax profits following higher material costs, the impact of lower volumes in its main European factories and the economic downturn in Latin America. Bus and rail group Stagecoach fell after revealing a decline in like-for-like revenue at its UK bus operations as all of its other divisions grew in the twelve weeks ended July 22nd. FTSE 100 - Risers Tullow Oil (TLW) 1,396.00p +1.53% Gemfields (GEM) 37.00p +0.68% United Utilities Group (UU.) 718.00p +0.21% Diageo (DGE) 1,686.50p +0.15% Pennon Group (PNN) 740.50p +0.07% Centrica (CNA) 326.20p +0.06% FTSE 100 - Fallers Fresnillo (FRES) 1,505.00p -4.81% Evraz (EVR) 254.60p -4.21% Eurasian Natural Resources Corp. (ENRC) 355.90p -3.86% Kingfisher (KGF) 282.90p -3.78% Kazakhmys (KAZ) 708.00p -3.67% Vedanta Resources (VED) 937.50p -3.00% CRH (CRH) 1,133.00p -2.66% IMI (IMI) 888.00p -2.63% Randgold Resources Ltd. (RRS) 6,150.00p -2.61% Anglo American (AAL) 1,932.00p -2.57% FTSE 250 - Risers Barr (A.G.) (BAG) 455.00p +2.22% Shanks Group (SKS) 86.25p +1.41% Gem Diamonds Ltd. (DI) (GEMD) 190.40p +1.38% Hochschild Mining (HOC) 441.00p +1.15% Chemring Group (CHG) 382.60p +0.90% Big Yellow Group (BYG) 305.20p +0.79% Phoenix Group Holdings (DI) (PHNX) 496.20p +0.77% Kentz Corporation Ltd. (KENZ) 352.00p +0.57% Carillion (CLLN) 269.30p +0.56% Interserve (IRV) 351.90p +0.54% FTSE 250 - Fallers Homeserve (HSV) 203.60p -11.98% Spirax-Sarco Engineering (SPX) 1,924.00p -6.60% Aquarius Platinum Ltd. (AQP) 38.14p -3.93% Heritage Oil (HOIL) 198.00p -3.41% Man Group (EMG) 77.70p -3.30% Yule Catto & Co (YULC) 156.00p -3.29% Henderson Group (HGG) 108.90p -3.03% Brewin Dolphin Holdings (BRW) 150.70p -2.77% St James's Place (STJ) 351.60p -2.60% Bwin.party Digital Entertainment (BPTY) 97.45p -2.50% FX round-up FTSE 100 Euronext Dax perf CAC 40 ECB hopes fuel euro rally The euro surged to a seven-week high on Tuesday on speculation that the European Central Bank will take action to help struggling economies in the Eurozone. The euro bounced to $1.2463 from $1.2346 on Monday on hopes the central bank will lower Spanish and Italian borrowing costs. There has been much uncertainty about what action the ECB will take to tackle the region's debt crisis. At the weekend a report in Germany's Der Spiegel magazine said the ECB planned to put a cap on Spanish and Italian bond yields. ECB officials said reports that it was considering capping bond yields for struggling economies was "absolutely misleading." However a subsequent report by the UK's Daily Telegraph boosted hopes of action after it reported echoes comments made in Der Spiegel. The dollar index, which measures the US dollar against a basket of six major currencies, declined to 81.939 from 82.475 on Monday. Sterling rose to $1.5779 from $1.5712 as it tracked strong euro gains on growing expectations that the ECB will take action to ease Spanish and Italian borrowing costs. The euro rose 0.6% against the pound to 79.09p. In UK economic news the UK government borrowed more than expected in July, according to the Office for National Statistics. In a separate report factory orders fell sharply this month as demand for consumer goods deteriorated. UK Event Calendar INTERIMS Carillion, Clarkson, Derwent London, Elringklinger AG, Frutarom Industries Ltd GDR (Reg S), Hardy Oil & Gas, Kenmare Resources, London Capital Group Holdings, Melrose Resources, office2office, Plaza Centers NV, Soco International, Spirax-Sarco Engineering, TT Electronics INTERIM DIVIDEND PAYMENT DATE IDOX INTERIM EX-DIVIDEND DATE BlackRock World Mining Trust, Brewin Dolphin Holdings, Capital & Counties Properties , Catlin Group Ltd., CRH, Dragon Oil, Eurasian Natural Resources Corp., Fidessa Group, Henderson Opportunities Trust, InterContinental Hotels Group, Mondi, PPHE Hotel Group Ltd, Prudential, Puma VCT V, Rights & Issues Inv Trust Income Shares, Secure Trust Bank, St James's Place, Standard Life, Stanley Gibbons Group, Synectics, Taylor Wimpey, UBM, Witan Inv Trust, Xaar QUARTERLY EX-DIVIDEND DATE Canaccord Financial Inc., Carnival INTERNATIONAL ECONOMIC ANNOUNCEMENTS Crude Oil Inventories (US) (15:30) Existing Home Sales (US) (15:00) FOMC Interest Rate Minutes (US) (19:00) MBA Mortgage Applications (US) (12:00) Q2 Frutarom Industries Ltd GDR (Reg S) FINALS BHP Billiton ANNUAL REPORT Immofinanz AG SPECIAL EX-DIVIDEND PAYMENT DATE PHSC AGMS Aberdeen New Dawn Inv Trust, Latham (James) FINAL DIVIDEND PAYMENT DATE Halma FINAL EX-DIVIDEND DATE Cohort, Eckoh, First Property Group, iEnergizer Ltd., NWF Group, PHSC US Market Report Wall Street and Apple fall back Dow Jones: -0.51% S&P 500: -0.35% Nasdaq -0.29% Wall Street started the day brightly but ended the session with moderate losses. The S&P 500 set a new high for 2012 of 1426 in intraday trading, but then fell back to 1413. Smartphone and computer goliath, Apple, saw a similar trajectory. On Monday it became the most valuable company  in history, with market cap hitting $623bn, on Tuesday it rose further in early trading before dropping to $656.22 per share, leaving the market cap at $615.15bn. COMPANIES Best Buy (-1.4%) revealed lower first half earnings than analysts had been expecting while also declining to forecast 2012 full year numbers. The company says it wants to give its new Chief Executive, Hubert Joly, enough time to make an impact. Clothing retailer, Urban Outfitters (+18%), posted second quarter earnings per share of 42 cents, much better than the consensus forecast of 33 cents. Renowned investor, George Soros, has taken a minority stake of 7.85% in Manchester United according to a document filed with the Securities and Exchange Commission. The club’s stock rose 1% on the news. SECTORS The biggest gains were recorded in precious metals (+2.7%) and nonferrous metals (+2.6 %). The biggest losses were in shipping stocks (-2%) and tobacco (-1.7%). The NYSE saw 3.223bn shares traded, while on the Nasdaq the figure was 1.556bn. Fallers outnumbered risers by 3 to 2 on both exchanges. OTHER MARKETS September futures contracts on a barrel of West Texas crude rose 0.5% to $96.55 on the NYMEX. The euro gained 0.9% against the dollar to stand at $1.2464 by the close. S&P 500 - Risers Urban Outfitters Inc. (URBN) $36.98 +18.22% First Solar Inc. (FSLR) $24.14 +7.48% Alpha Natural Res (ANR) $6.90 +6.15% Peabody Energy Corp. (BTU) $23.79 +3.71% Freeport-McMoRan Copper & Gold Inc. (FCX) $36.49 +3.20% Citigroup Inc. (C) $30.73 +2.50% Metropcs Communications Inc. (PCS) $10.15 +2.42% Hartford Financial Services Group Inc. (HIG) $18.55 +2.37% Allegheny Technologies Inc. (ATI) $33.35 +2.33% Federated Investors Inc. (FII) $20.23 +2.12% S&P 500 - Fallers Limited Brands Inc. (LTD) $48.05 -4.21% Phillips 66 Common Stock (PSX) $41.55 -3.53% Cliffs Natural Resources Inc. (CLF) $40.64 -2.40% Coach Inc. (COH) $54.83 -2.28% Lennar Corp. Class A (LEN) $31.18 -2.20% Altria Group Inc. (MO) $34.42 -2.16% Dentsply International Inc. (XRAY) $37.86 -2.07% Davita Inc. (DVA) $96.01 -2.02% Mead Johnson Nutrition Co. (MJN) $70.93 -1.96% CF Industries Holdings Inc. (CF) $211.40 -1.94% Dow Jones I.A - Risers JP Morgan Chase & Co. (JPM) $38.04 +1.79% Cisco Systems Inc. (CSCO) $19.16 +1.16% Kraft Foods Inc. (KFT) $41.11 +0.83% Bank of America Corp. (BAC) $8.19 +0.49% McDonald's Corp. (MCD) $88.52 +0.40% Alcoa Inc. (AA) $8.82 +0.23% Microsoft Corp. (MSFT) $30.80 +0.20% Johnson & Johnson (JNJ) $67.78 +0.12% Procter & Gamble Co. (PG) $66.77 +0.03% Dow Jones I.A - Fallers Verizon Communications Inc. (VZ) $42.89 -1.85% Merck & Co. Inc. (MRK) $42.94 -1.85% Walt Disney Co. (DIS) $49.64 -1.61% Wal-Mart Stores Inc. (WMT) $71.43 -1.20% United Technologies Corp. (UTX) $79.27 -1.01% International Business Machines Corp. (IBM) $198.65 -0.92% Pfizer Inc. (PFE) $23.69 -0.92% AT&T Inc. (T) $36.59 -0.81% Hewlett-Packard Co. (HPQ) $19.93 -0.80% Boeing Co. (BA) $73.27 -0.76% Wednesday newspaper round-up RBS, Dell, Economic recovery Royal Bank of Scotland is under investigation by US authorities for potential breaches of sanctions against Iran. The taxpayer-backed UK bank is understood to be being scrutinised by the US Federal Reserve and the Department of Justice, after it provided information to them and to the UK regulators. RBS tonight would not comment on the nature of the alleged failings or the investigation. However it said in its half-year results earlier this month that it was conducting a “review of its policies, procedures and practices” around its processing of US dollar payments outside the US, according to The Telegraph. Falling sales of traditional PCs and laptops have undermined the earnings of one of the world’s biggest computer makers. Dell, based in Texas, said that first-half earnings had slumped by 26% to $1.4m (£887m) compared with the same period a year ago. The company also warned of a “challenging” second half because customers were cutting back on computer purchases, partly in anticipation of the launch of Microsoft Windows 8 late this year. The shares were off almost 5% in after-hours trading before recovering. America’s second-biggest PC manufacturer had been expected to show slower growth, but comments by the company that sales could be down by as much as 5% in the current quarter took the market by surprise. It also guided earnings estimates down to well below analysts’ already reduced forecasts, The Times reports. Britain’s company directors are turning against the Government, accusing it of doing “too little, too slowly” to engineer an economic recovery. In their latest quarterly survey, members of the Institute of Directors, traditionally natural supporters of the Tory party, have delivered withering criticisms of the Government’s economic and industrial policies. Unrest over issues such as taxation and red tape is compounded by frustration and doubt that the coalition can get Britain out of recession by the end of the year. The continuing chronic uncertainty, say the directors surveyed, is strangling business investment and halting hiring decisions, The Times writes. Royal Dutch Shell plans to spend at least $1bn (£633m) a year exploiting China's potentially vast resources of shale gas, the firm's top China executive has said, in an aggressive strategy to expand in the world's biggest energy market. Shell in March secured China's first product sharing contract for shale gas, hoping that getting in early will allow it to be a big beneficiary from the sort of boom in shale that has transformed the US energy market. Asked if the firm remained committed to a plan to invest $1bn a year in China's shale gas over the coming few years, Lim Haw Kuang said: "Yes, yes and yes." "If there has been an adjustment to that pledge, it could only be an upward revision," added Lim, a Malaysian national and Shell veteran of 34 years, The Guardian reports. The latest survey of hedge funds by the FSA has concluded they pose little risk to the financial system. Funds continue to report a strong ability to manage the liquidity of their assets and liabilities in aggregate,” said the report. Nevertheless, the FSA warned that its survey results were based on self-assessments by individual managers and that it was difficult for regulators to gauge exactly how funds would be affected in the event of a new market downturn. “Risks to hedge funds remain from a sudden withdrawal of funding, resulting in forced asset sales. This is of particular concern if funds have significant footprints,” said the FSA. The reduction which has taken place in the risk posed by hedge funds in part reflects moves by their counterparties, largely the prime broking desks of banks that provide short-term loans to managers, to tighten their lending criteria and increase the amount of margin they must provide to place trades with them. Whitehall departments are braced for more spending cuts after plunging tax receipts left the Treasury facing the prospect of a new black hole in the public finances this autumn. Proceeds from corporation tax sank 20% in July compared with the same month last year, while spending on benefits was 6.2% higher. This forced the Government to borrow £600m in July, compared with a surplus of £2.8bn in the same month last year. The numbers shocked the City, which had been expecting a £2.5bn surplus. July is usually the second biggest month for tax receipts. George Osborne, the Chancellor, is now waiting for the government spending watchdog, the Office for Budget Responsibility, to rule in October on whether this gap must be filled by additional cuts. A Treasury source said the data showed a “pretty terrible four months which, for each one since April, has been worse than expected,” The Times says. Generali has become the latest European insurer to plan an exit from the US after Italy’s largest insurer by annual premiums put its US life reinsurance business up for sale, according to a person familiar with the matter. Citigroup is advising the company on a sale of its Generali USA Life Reinsurance unit, which could be worth as much as $1bn. The sale process is in its early stages, with potential buyers likely to receive sale documents next month. Citi and Generali declined to comment. The move, first reported by Bloomberg, comes as some of Europe’s biggest life assurers are rethinking their strategy in the face of regulatory concerns and highly competitive market conditions, The Financial Times reports.