ADVFN Morning Euro Markets Bulletin - Jan 26th 2011

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London Market reports
Bright start for blue chips

Market Movers
FTSE 100 5,963.15 +0.77%
techMARK 1,897.94 +1.29%
FTSE 250 11,592.95 +0.79%



London has made good ground this morning after a late rally on Wall Street sparked by a stronger than expected US consumer confidence report.

BG Group is the best performer after yet another discovery in the Santos Basin offshore Brazil. The latest strike is at Carioca North-East, located in a water depth of 2,151m, approximately 275km off the coast of São Paulo state. BG has a 30% stake.

Accountancy software group Sage’s first quarter was in line with expectations flagged at last month’s full-year numbers, keeping up the momentum in revenue growth seen in the second half.

Oil and gas firm Heritage is a strange market this morning, The shares have slumped even though it said it has found one of the largest gas fields in Iraq.

Water supplier United Utilities has been trading in line with expectations since October, with regulated revenue slightly higher than anticipated, though it will tail off in the second half.

Newsagent WH Smith’s high street stores were hit by tough trading conditions and the winter freeze, but profits met forecasts and gross margin is ahead of plan. In what the newspaper, books and stationery retailer called a “resilient” performance, total sales for the 21 weeks to 22 January fell 4% and were down 5% on a like for like basis.

A confident Cookson has forecast earnings growth of at least 10% for the next three years with dividends increasing in step. For the year to December just ended, the ceramics and electronics specialist expects revenue of around £2.5bn and trading profit of around £250m, adding that the group's performance in the current year, 2011, should be "well ahead of 2010".

Final quarter sales at soft drinks group AG Barr, best known for its Irn Bru and Tizer brands, is expected to be around 5% ahead of the previous year after a strong performance from its core brands. Full year like for like growth is expected to be around 10%, the group said in Wednesday's trading update.


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UK Event Calendar
INTERIMS
Renishaw, System C Healthcare

INTERIM DIVIDEND PAYMENT DATE
Latham (James)

INTERIM EX-DIVIDEND DATE
Anite, DS Smith, Fletcher King, Foresight 3 VCT, Foresight 4 VCT, IG Group Holdings, Income & Growth VCT , NCC Group, Scottish & Southern Energy

QUARTERLY EX-DIVIDEND DATE
Equity Partnership Inv Co Income Shares

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Small Business Confidence
Jobseekers – net change (FRA) (17:00)
Total Jobless (FRA) (17:00)
Crude Oil Inventories (US) (15:30)
New Homes Sales (US) (15:00)
FOMC Rate Decision (19:15)

GMS
Schroder UK Mid & Small Cap Fund, ValiRx

FINALS
Wynnstay Group

IMSS
Brewin Dolphin Holdings, Sage Group, United Utilities Group

EGMS
Capital Shopping Centres Group

AGMS
Invesco Leveraged High Yield Fund Ltd., Vision Opportunity China Fund Ltd., WH Smith

TRADING ANNOUNCEMENTS
Cookson Group, Sage Group, WH Smith

UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Minutes (09:30)

FINAL DIVIDEND PAYMENT DATE
Majedie Investments

FINAL EX-DIVIDEND DATE
British Portfolio Trust, Compass Group, Renew Holdings, Shaftesbury, Treatt


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European Market Reports


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US Market Reports
Dow claws back losses

Wall Street had clawed back most of its early losses by the close despite a mixed set of results from large US companies.

Dow Jones finished down 3 at 11,977, the tech-laced Nasdaq Composite gained 1 at 2,719, while the broader S&P 500 was unchanged at 1,291.

Economic news was mixed. US consumer confidence is recovering faster than expected. The Conference Board’s index rose from 53.3 in December to 60.6 in January. That is much higher than forecast by analysts.

However, the S&P/Case-Shiller index of home values fell 1.6% in the year to November 2010. That was in line with expectations.

3M beat expectations when it reported earnings of $1.30 a share. Guidance for 2011 has been edged up to $5.95 to $6.20 a share but that wasn’t good enough for investors who hit the sell button.

Verizon Communications disappointed, as revenue and profit fell short of forecasts. Fourth quarter earnings still rose from 22c a share to 93c a share. However, stripping out one-offs, the earnings of 54c a share were slightly below the forecast of 55c a share.

Even if redundancy costs are excluded, American Express reported lower than expected fourth quarter earnings after the close last night.

Johnson & Johnson was also among the weaklings following in line earnings that failed to excite.

But chemicals manufacturer Du Pont reported fourth quarter earnings of 50 cents a share, much higher than expected, and insurer Travelers is going well after trumping forecasts and talking up prospects for 2011. Motorcycle manufacturer Harley-Davidson was the best performer in the S&P after reporting a reduced loss.

Elsewhere, US Steel reported a slightly lower loss for the year and Eastman Kodak has lost a trade ruling, which will mean that it may be difficult to collect royalties from Apple and Research In Motion.

Telecoms equipment supplier Tellabs says that its first quarter revenues will be 16% lower than expected at $335m.

S&P 500 - Risers
Harley-Davidson Inc. (HOG) $39.43 +8.06%
Corning Inc. (GLW) $21.21 +7.99%
AK Steel Holding Corp. (AKS) $15.57 +7.68%
Sara Lee Corp. (SLE) $19.63 +6.92%

S&P 500 - Fallers
Tellabs Inc. (TLAB) $5.66 -19.66%
Eastman Kodak Co. (EK) $4.52 -13.41%
Red Hat Inc. (RHT) $40.00 -4.94%
Teradata Corp. (TDC) $43.62 -4.76%

Dow Jones I.A - Risers
Wal-Mart Stores Inc. (WMT) $57.26 +2.16%
Cisco Systems Inc. (CSCO) $21.51 +1.61%
Verizon Communications Inc. (VZ) $35.79 +1.56%
Home Depot Inc. (HD) $37.16 +1.39%

Dow Jones I.A - Fallers
American Express Co. (AXP) $44.80 -2.16%
Bank of America Corp. (BAC) $13.63 -2.08%
3M Co. (MMM) $88.50 -2.02%
Johnson & Johnson (JNJ) $61.08 -1.83%


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Newspaper Round-up
Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again.

The UK’s “uncomfortably high inflation” is of more concern to the Monetary Policy Committee (MPC) than the surprise fall in gross domestic product, Mervyn King said on Tuesday night. Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, warned. With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed, the Telegraph reports.

Economists warned of a double-dip recession last night as ministers responded to “shockingly bad” statistics by insisting that there was no Plan B to the Government’s cuts, teh Times adds. The Governor of the Bank of England said that inflation could rise as high as 5% in the next few months and that people would feel a “squeeze in living standards” throughout the year, the Times reports.

The International Monetary Fund maintained its forecasts for UK growth – but warned of the "serious blow" to the world economy that could emerge if overheating in China and other fast-growing economies is not dampened. The IMF is forecasting oil prices up from an average of $79 a barrel to $90 a barrel this year. Food prices will remain high, said the fund, until after the 2011 crop season, the Independent reports.

Asian and Middle-East investors have thronged to buy the first issue of AAA-rated bonds by the eurozone's new bail-out fund, marking a key moment in the evolution of Europe's monetary union. The auction of €5bn (£4.3bn) of five-year bonds to fund the first stage of the Irish loan package was nine times subscribed, reflecting appetite for bonds ranked with core German or French debt but offering higher returns. The yield was 2.89%, compared with 2.31% for Bunds, the Telegraph reports.

Consumer complaints about high prices for heating oil this winter have led the Office of Fair Trading to launch inquiry into the UK’s domestic market. The watchdog said it would investigate heating oil and liquefied petroleum gas (LPG) suppliers, who provide energy to 2.5m people not connected to the gas grid, the Telegraph reports.

The Government will announce the first big review of its relationship with monopoly suppliers in more than four decades today as it tries to save taxpayers’ money. The review will be led by the Ministry of Defence, which spends about £9bn a year with companies on a non-competitive basis. Equipment such as nuclear submarines can usually be bought only from a single supplier, so contracts have to be negotiated without the benefit of competitive pressure to keep costs down, the Times reports.

Four industrial and mining companies from Russia are set to list in London within the next few weeks, the first in a string of companies from the country rushing to raise an estimated $15bn-$20bn (€11bn-€14bn) this year. The companies are taking advantage of a narrow window before the state steps in with its own capital raisings. Since the start of the week, Hydraulic Machines & Systems, Russia’s leading pump manufacturer, and Koks, a pig iron and coking coal group, have announced price ranges for their upcoming listings. Steel pipe maker Chelpipe is to announce its range as early as today, the FT reports.

Barack Obama offered to work with US business and his political opponents to reform corporate tax in a State of the Union address that mixed dire warnings about the US’s future with faith that the country could renew itself. “We are poised for progress,” the US president said. “But to win the future, we’ll need to take on challenges that have been decades in the making.” Mr Obama laid out a broad agenda that included $400bn in proposed cuts to the budget over 10 years, the FT reports.

The mobile operator O2 will today launch an ambitious drive to install Wi-Fi hotspots across the UK, bringing it into conflict with broadband rivals BSkyB and BT. The announcement of its Wi-Fi division will mark what the company calls the first "truly free, public Wi-Fi platform" in the UK, available not just to its customers, but anyone else who wants to use it, the Independent reports.

John Gunn is back. One of the most controversial businessmen of the 1990s, who oversaw the construction and then demise of British & Commonwealth, has re-invented himself as a would-be thorn in the side of the Big Five bus companies. Yesterday, Mr Gunn’s AIM-listed minnow Rotala took control of Preston Bus after the Competition Commission ruled out of order its acquisition in 2009 by Stagecoach — one of the heavyweights of the industry alongside FirstGroup, Go-Ahead, Arriva and National Express, the Times reports.

A former nurse who won a £2.2m settlement after claiming she was victimised by male colleagues has been suspended from a company she founded amid allegations of serious accounting irregularities. Kate Bleasdale, who hit the headlines last decade after saying that male colleagues sent her inappropriate e-mails and ogled her, has been suspended from Healthcare Locums, which supplies medical staff to fill short-term contracts. Diane Jarvis, its chief financial officer, has also been suspended, the Times reports.