ADVFN III Evening Euro Markets Bulletin -September 12th, 2012-.

	ADVFN III	Evening Euro Markets Bulletin
	Daily world financial news

Wednesday, 12 September 2012

London Market Report

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

Stocks sink late on ahead of Fed Market Movers techMARK 2,128.21 +0.92% FTSE 100 5,782.08 -0.17% FTSE 250 11,811.05 +0.26% Following a stint in the blue after Germany’s decision to approve the Eurozone rescue fund, the Footsie had sunk firmly into the red by the close with ex-dividend stocks and mining companies providing a drag. Stocks were lifted higher after the German Constitutional Court approved the European Stability Mechanism (ESM) this morning, the last major challenge before the ESM can replace the temporary European Financial Stability Facility (EFSF). However, as market analyst Michael Hewson from CMC Markets explains: “Momentum soon started to wane as equity markets, led by the FTSE, started to drift off with the UK index struggling to make any ground at all as investors scrutinised the small print.” First, Germany's contribution must be limited to €190bn unless there is parliamentary approval; and second, both chambers of Congress - the Bundestag and Bundesrat - must be informed of the ESM's decisions. “The ruling clears the way for the German President to sign the agreement into law, but having overcome this particular hurdle it doesn't change the fact that economic data in Europe remains pretty woeful and the European leaders don't have anything resembling a growth plan,” Hewson said. With one key ‘event-risk’ out of the way, the focus will undoubtedly turn to the upcoming Federal Open Market Committee (FOMC) two-day meeting in the US which kicks off today. Sluggish labour figures on Friday have increased hopes that the Fed may move to ease monetary policy further when the meeting concludes. However, figures for wholesale inventories were solid today “which causes uncertainties over tomorrow’s Fed outcome”, according to market strategist Ishaq Siddiqi from ETX Capital. In domestic news, the number of people claiming jobless benefits in the UK fell by 15,000 in August, better than the consensus forecasts for a stable reading. The unemployment rate was 8.1% of the economically active population, down 0.1 percentage points on the quarter. Asian stocks jumped overnight after China's Premier Wen Jiabao reassured that his country would hit its gross domestic product (GDP) growth target of 7.5% this year. FTSE 100: BAE surges on potential EADS tie-up Defence group BAE Systems jumped this afternoon after confirming that it is in discussions with aerospace giant EADS regarding a “possible combination” of the businesses in which BAE would own 40% and EADS would own 60% of the enlarged group. “The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA,” BAE said in a statement. UK banking stocks advanced after the ESM was approved by Germany: Lloyds, Royal Bank of Scotland, Barclays, Standard Chartered and HSBC were making gains by midday. RBS was benefiting after Liberum Capital lifted its target price for the stock from 260p to 270p and reiterated its 'buy' rating. However, it was the ex-div stocks and mining companies that were weighing heavily on the blue-chip index today. Insurance group Admiral and financial services firm Hargreaves Lansdown were heavy fallers this morning after going ex-dividend. Other FTSE 350 stocks going ex-div today include: 888, Antofagasta, bwin.party, Capita, Cookson, Ladbrokes and Rentokil. Miners were hit as metals prices tanked and concerns over the South African mining industry weighed on sentiment. Anglo American’s 80%-owned platinum subsidiary, Amplats, has been forced to suspend its operations in South Africa as a wave of labour unrest continues to hit the country’s mining industry. British telecoms giant BT advanced after sealing a “ground-breaking” £152m deal on afternoon for a range of exclusive live rights for Premiership Rugby, dealing a massive blow to current broadcaster BSkyB. Shares in Petrofac crept higher this after the oilfield services firm signed a new $1.2bn five-year revolving credit facility for more than it had first expected ($1bn). Meanwhile, oil giant Shell was in the red after acquiring $1.935bn-worth of assets in Texas from US peer Chesapeake Energy. FTSE 250: Barratt drops after first-half results House-builder Barratt Developments sank despite revealing a 159.3% rise in pre-tax profit in the year to June 30th. The group signalled its intention to pay a final dividend in respect of the current financial year, but there was no pay-out for the financial year just gone. Oil and gas group Afren edged higher after saying that it has started drilling at its Simrit-3 well on the East Simrit prospect in the Kurdistan region of Iraq, just 10km east of the successful Simrit-2 well which was drilled a few months back.  FTSE 100 - Risers BAE Systems (BA.) 363.60p +10.62% Lloyds Banking Group (LLOY) 38.51p +3.89% BT Group (BT.A) 235.20p +3.84% Royal Bank of Scotland Group (RBS) 274.70p +3.78% Sage Group (SGE) 315.30p +3.11% Evraz (EVR) 269.00p +3.03% Weir Group (WEIR) 1,725.00p +2.74% GKN (GKN) 229.10p +2.60% Petrofac Ltd. (PFC) 1,638.00p +2.57% Aberdeen Asset Management (ADN) 294.30p +2.19% FTSE 100 - Fallers Hargreaves Lansdown (HL.) 630.00p -3.67% Anglo American (AAL) 1,901.50p -2.74% Admiral Group (ADM) 1,091.00p -2.50% BG Group (BG.) 1,239.50p -2.44% Xstrata (XTA) 993.60p -1.77% Randgold Resources Ltd. (RRS) 6,830.00p -1.73% British American Tobacco (BATS) 3,127.50p -1.71% Whitbread (WTB) 2,236.00p -1.71% Eurasian Natural Resources Corp. (ENRC) 334.50p -1.59% Diageo (DGE) 1,672.50p -1.56% FTSE 250 - Risers Aquarius Platinum Ltd. (AQP) 40.70p +6.77% Talvivaara Mining Company (TALV) 156.40p +4.90% Ruspetro (RPO) 104.00p +4.00% RPS Group (RPS) 254.70p +3.96% Cable & Wireless Communications (CWC) 35.53p +3.83% EnQuest (ENQ) 123.70p +3.78% JD Sports Fashion (JD.) 724.00p +3.50% Computacenter (CCC) 408.90p +3.31% Essar Energy (ESSR) 108.10p +3.15% Ferrexpo (FXPO) 198.50p +3.06% FTSE 250 - Fallers Premier Farnell (PFL) 171.80p -6.58% Barratt Developments (BDEV) 158.80p -6.42% Lonmin (LMI) 575.00p -5.89% Dixons Retail (DXNS) 19.20p -4.00% Centamin (DI) (CEY) 82.20p -3.35% African Barrick Gold (ABG) 452.00p -3.11% International Public Partnerships Ltd. (INPP) 120.00p -2.60% Bellway (BWY) 913.00p -2.20% Stobart Group Ltd. (STOB) 112.80p -2.08% Taylor Wimpey (TW.) 54.65p -1.97% Sector movers: FTSE 100 Euronext Dax perf CAC 40 Burberry warning takes down personal goods stocks With shares in Burberry sinking by more than a fifth after a profit warning, the personal goods sector was steeply lower on Tuesday afternoon. Shares were down around 21% after the iconic British fashion house said profits would be at the lower end of expectations this year. The firm is now taking steps to cut costs and maintain short-term profitability. Burberry, which has 196 retail stores, 207 concessions, 48 outlet shops and 58 franchise stores worldwide, said that trading conditions were becoming more challenging with like-for-like sales flat in the second quarter. While most brokers today reiterated their positive longer-term stances on the business today, they chose to downgrade their ratings on the stock, citing limited near-term visibility. Nomura, Seymour Pierce and Investec all cut their ‘buy’ recommendations for the shares today to adopt a more cautious view. Posh handbag maker Mulberry fell lower in sympathy, as the personal goods sector as a whole sank over nearly 18%. Bucking the trend was SuperGroup, the AIM-listed owner of the Superdry clothing brand, which jumped over 8% after saying that group sales increased by 10% in the first quarter. The firm said that while trading conditions remain volatile, it is confident of meeting its financial objectives. Top performing sectors so far today Tobacco 35,612.50 +1.48% Beverages 12,459.22 +0.37% Pharmaceuticals & Biotechnology 9,734.13 +0.34% Banks 3,833.81 +0.33% Oil Equipment, Services & Distribution 25,395.94 +0.33% Bottom performing sectors so far today Personal Goods 17,206.44 -17.77% Support Services 5,092.20 -1.33% General Retailers 1,832.20 -1.26% Fixed Line Telecommunications 2,652.92 -1.16% Media 4,559.44 -1.16% US Market Report Stocks Remain Mostly Positive In Mid-Day Trading While buying interest has waned from earlier in the session, stocks remain mostly positive in mid-day trading on Wednesday. The latest news out of Europe helped to drive stocks higher, but uncertainty about the U.S. Federal Reserve has limited the upside for the markets. The major averages are currently posting modest gains, well off their highs for the session. The Dow is up 29.64 points or 0.2 percent at 13,353.00, the Nasdaq is up 6.82 points or 0.2 percent at 3,111.35 and the S&P 500 is up 3.50 points or 0.2 percent at 1,437.06. News of the German Federal Constitutional Court's decision clearing the way for the ratification of the European Stability Mechanism helped to drive stocks higher in early trading, with the court rejecting temporary injunctions against the European bailout fund. At the same time, the court imposed certain conditions, including capping Germany's liability. The court said Germany must cap its bailout fund liability at 190 billion euros and said further expansion of the country's share needs to get the backing of Parliament. Peter Boockvar, managing director at Miller Tabak, said, "Buy the rumor, buy the news continues to be the market pattern as long as participants have their central bank beer goggles on which turns all news into good news." "The German Constitutional Court did what all expected them to do and blessed the ESM but did put a 190 billion euro limit on Germany's exposure that can only be exceeded with parliamentary approval," he added. "All the other 16 euro nations have approved the ESM." Buying interest waned not long after the open, however, with many traders reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Thursday. Uncertainty about whether the central bank will announce another round of quantitative easing helped to keep many traders on the sidelines. Stocks have subsequently pulled back well off their best levels of the day but continue to see modest strength amid optimism about further stimulus. Sector News While many of the major sectors are showing only modest moves in mid-day trading, significant strength remains visible among housing stocks. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index is up by 2.1 percent after reaching a four-year intraday high. PulteGroup (PHM) and M/I Homes (MHO) are turning in two of the housing sector's best performances, advancing by 6.4 percent and 5.3 percent, respectively. Networking stocks also continue to see considerable strength on the day, with the NYSE Arca Networking Index up by 1.6 percent. Juniper Networks (JNPR) and Alcatel-Lucent (ALU) are posting standout gains. Airline, telecom, and brokerage stocks are also holding on to notable gains, while weakness has emerged among health insurance and tobacco stocks. Broker tips Kingfisher, Wolseley, Barratt Seymour Pierce has downgraded its rating for B and Q owner Kingfisher from 'hold' to 'sell' and trimmed its target price from 290p to 240p following the group's first-half results which were significantly affected by the weather and foreign exchange losses. "Despite downgrades in recent weeks, interim results to end of July are disappointing and at the bottom end of market expectations," said analyst Freddie George. George added: "The stock has held up well over the last quarter despite a steady trickle of downgrades and on the basis of our revised forecasts is more than fairly valued. On the basis of our forecast it is valued at 12.0x FY13 earnings which we believe is too demanding giving the difficult outlook, with a prospective yield of 3.5%." UBS has cut its recommendation for plumbing and heating products group Wolseley from 'buy' to 'neutral', saying that it is pausing for breath following a strong performance in 2012 so far. "Following a strong run (+26% absolute year-to-date) and a significant re-rating we downgrade Wolseley to 'neutral' from 'buy'. We believe the fundamentals remain positive with a solid market share take story in the US (in addition to cyclical recovery, helped by an improving US housing market) and a very strong balance sheet allowing for cash returns, but we believe this is now priced in," UBS said on Wednesday morning. Panmure Gordon has reiterated its positive view of house-builder Barratt Developments in spite of the negative market reaction to the firm's preliminary results on Wednesday, saying that there's still plenty of upside to the stock. "Although Barratt has had a significant increase in its share price since the start of the year, we still see plenty to go for with the stock on a PNAV rating of 0.74x. We therefore maintain our 'buy' recommendation and 190p target price."