ADVFN Morning Euro Markets Bulletin - March 1st 2011

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London Market Reports
Miners lift Footsie

Market Movers
FTSE 100 6,036.68 +0.71%
techMARK 1,921.93 +0.85%
FTSE 250 11,695.02 +0.63%

Overnight gains on Wall Street and an improvement in Asia this morning have propelled London higher first thing Tuesday. Copper miners Antofagasta and Kazakhmys are the best performers so far.

CD and computer games retailer HMV has issued another profits warning and begun talks with its banks about a new lending facility as it expects to breach some of its covenant tests when they are next tested.

Business has remained “challenging” since the company issued its last warning in January and profit before tax and exceptional items for the year to April is now expected to be “moderately below” the £45m forecast by analysts.

Banking giant Barclays is to buy the UK credit card assets of Egg, the online bank owned by Citigroup. The acquired business has around 1.15m credit card accounts with some £2.3bn of gross receivables.

Record gold and silver production coupled with soaring metal prices more than doubled Mexican miner Fresnillo’s profits last year to over $1bn. Pre-tax profits in 2010 soared from $457m to $1.02bn on revenues of $1.47bn, up 73% on an adjusted basis. "By 2018, Fresnillo will be able to produce 65m ounces of silver and over 400,000 ounces of gold annually,” chairman Alberto Baillères said.

Aerospace and vehicles engineer GKN bounced back into the black last year as all divisions bar aerospace saw good sales growth. Profits came in at £345m in 2010, a near £400m swing from losses of £54m the previous year. Sales rose by 20% to £5.1bn and by 22% on an underlying basis.

Full year numbers from events and publishing group United Business Media looked harmless enough, but investors are spooked, sending the shares down 10%. Adjusted profit before tax fell 5.3% to £156.4m, although a 4.5% increase in revenue at constant currency to £889.2m was better than expected. Underlying revenue grew 5.6%, up from 2.1% for the nine months.

Valve and actuators group Rotork delivered record revenue and profit in 2010, with all three of its divisions making progress. Revenue rose 7.6%, or 6.5% to £380.6m in 2010 from £353.5m in 2009. The market had been expecting sales of £374.5m.

Despite competition from firms using talking meerkats and comedy opera singers to advertise their products, Moneysupermarket.com saw improving trends in 2010 in all four of its main divisions.


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UK Event Calendar
INTERIMS
AI Claims Solutions, Dawson International, Eleco, Ricardo

INTERIM DIVIDEND PAYMENT DATE
DS Smith, IG Group Holdings, Puma High Income VCT

QUARTERLY PAYMENT DATE
JPMorgan Claverhouse Inv Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ISM Prices Paid (US) (15:00)
Unemployment Rate (EU) (10:00)
Unemployment Rate (GER) (08:55)

FINALS
Cookson Group, CRH, Development Securities, Elementis, Fresnillo, GKN, Hydro International, IP Group, Jardine Lloyd Thompson Group, Lavendon Group, Meggitt, Molins, Moneysupermarket.com Group, Persimmon, Promethean World, Provident Financial, Rotork, Share Plc, United Business Media Ltd., Xchanging

AGMS
Artemis VCT, Driver Group, Servoca

FINAL DIVIDEND PAYMENT DATE
British Portfolio Trust, OMG, TUI Travel, Wichford


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European Market Reports
Asian tailwinds send stocks sailing ahead

Some welcome economic data from Asia has given European stock markets an early morning lift.

The HSBC China Manufacturing Purchasing Managers Index (PMI) fell to 51.7 in February, its lowest level in seven months, from January’s 54.5. A value above 50 indicates expansion in manufacturing activity.

The government’s own PMI also fell, to 52.2 in February from 52.9 in January.

The decline suggests that the Chinese authorities’ attempts to apply the brakes to economic growth are working, which bodes well for stable interest rates and low inflation in the region.

China’s central bank has bumped up interest rates three times in the last four months.

Meanwhile, in Japan, the jobless rate remained at 9.4% in January while the number of people drawing a wage increased by 170,000.

In Germany, the DAX is up 75 points at 7,348 while in France, the CAC 40 index is up 29 at 4,140. The Swiss market index is 54 points firmer at 8,664.

Wines and spirits group Remy Cointreau has commenced negotiations to sell its champagne division to EPI, according to press reports. Le Figaro newspaper said the business could be sold for about €410m.

In other mergers & acquisition speculation, Swiss giant Nestle and American leviathan General Mills are both in the running to acquire the 50% stake in yogurt maker Yoplait being sold by PAI Partners, with both companies submitting bids of around €1.6bn.

The two listed companies are said to be competing with private equity firm Axa Private Equity.

Belgian pharmacy products supplier Omega Pharma perked up after announcing net income for 2010 of €69.5m, ahead of market expectations of €68.3m.

Aixtron’s earnings per share rose to €0.60 in the fourth quarter from €0.25 the year before, while revenue rose to €224.7m from €117.9m the year before.

The light emitting display (LED) producer is targeting total revenues of €800-900 million and an earnings before interest and tax (EBIT) margin of around 35% in fiscal 2011.

CAC 40 - Risers
LVMH (MC) € 116.95 +2.36%
Saint Gobain (SGO) € 44.33 +2.32%
Peugeot (UG) € 29.58 +1.95%
Technip (TEC) € 72.79 +1.75%
Lafarge (LG) € 44.71 +1.73%
Schneider Electric (SU) € 121.80 +1.58%
Cap Gemini (CAP) € 42.99 +1.55%
ArcelorMittal SA (MT) € 27.03 +1.52%
Vallourec (VK) € 76.19 +1.49%
PPR (PP) € 111.30 +1.18%

CAC 40 - Fallers
GDF Suez (GSZ) € 29.05 -1.11%
Unibail-Rodamco (UL) € 145.00 -0.48%
Alcatel-Lucent (ALU) € 3.57 -0.47%
Vivendi (VIV) € 20.61 -0.24%


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US Market Reports
Buffett comments lift Dow

Wall Street did well helped by Warren Buffett’s announcement that he is on the lookout for major acquisitions. Dow Jones closed up 95 at 12,226. The S&P 500 added 7 at 1,327 with Nasdaq up one at 1,327.

The billionaire investor’s “trigger finger is itchy”, he told shareholders in a letter. His investment company Berkshire Hathaway reported higher profits for the fourth quarter, with net income climbing to $2,656 a share from $1,969 a year earlier.

Among today’s big movers are handbag and shoe maker Kenneth Cole Productions, which falls after reporting a quarterly loss and announcing the departure of the chief financial officer and Lundin Mining which surged after receiving a C$4.8bn (US$4.9bn) cash and stock takeover offer from fellow miner Equinox Minerals.

Meanwhile, in economic news, personal income grew by 1% last month, according to Commerce Department figures, up from 0.4% the previous month and economists’ predictions for a similar effort this time. Spending by individuals was up 0.2%, though that was less than the 0.5% reported in December and weaker than the 0.4% forecast by analysts.

Oil prices fell back a little with markets still reassured by the Saudi’s assurance it would boost demand to meet any production shortfalls.

Contracts for pending sales of previously owned homes fell faster than expected in January, with the National Association of Realtors Pending Home Sales Index coming in at 88.9, down from 91.5 in December. The Chicago Purchasing Managers’ index came in at 71.2 for February, higher than forecast.


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Newspaper Round-up
Food prices, Libya, Pearson...

The City watchdog plans to investigate the way in which banks’ retail sales forces are rewarded amid fears that some clients are being pushed to buy “inappropriate” products.

Lord Turner of Ecchinswell, chairman of the Financial Services Authority, told The Times that he intended to investigate pay structures governing in-house sales staff to assess whether they encouraged “mis-selling”.

The price of food is rising far more quickly in Britain than in other leading nations as supermarket giants attempt to boost margins, researchers from a leading global bank say. Analysts at UBS said that of seven leading economies, Britain had the highest rate of food price inflation. The report said that the situation was “anomalous” and that the UK supermarkets might come under political pressure, or face a competition probe, the Times reports.

The Pentagon is deploying naval and air forces around Libya as the US and UK governments consider tougher measures to force Muammer Gaddafi from power, including the possible establishment of a no-fly zone. “We must not tolerate this regime using military force against its own people,” David Cameron, UK prime minister, said. “In that context I have asked the Ministry of Defence and the Chief of the Defence Staff to work with our allies on plans for a military no-fly zone," the FT reports.

The US economy has already begun to hit capacity constraints in some industries as business orders reach the highest level since the start of the Reagan boom in the early 1980s. The Chicago purchasing managers index (PMI) for the Mid-West region showed business optimism touched a 13-year high in February, while the new orders component was the highest since December 1983, the Telegraph reports.

Citigroup has come under attack from a prominent analyst and accountancy experts for failing to disclose regulatory criticism of the bank’s valuation of troubled securities during the financial crisis. Newly released documents show that on February 14 2008, the Office of the Comptroller of the Currency, one of Citi’s main regulators, expressed concerns about the way Citi valued mortgage-backed securities, the FT reports.

HSBC launched a thinly-veiled attack on the Government's banking levy yesterday, saying it would have cost the company $600m (£370m) last year – with two-thirds of the bill related to businesses based outside the UK. The bank, which is conducting one of its regular reviews into whether it should continue to be headquartered in Britain, said the Government was entitled to impose a levy after bailing out a number of institutions but pointed out that HSBC had not taken any money from the state, the Independent reports.

Pearson, the owner of the Financial Times and Penguin, yesterday hit out at Apple's controversial changes to its subscription policy, slamming its plans to block sharing of customer data. Dame Marjorie Scardino, chief executive of Pearson, said she was "unclear" how Apple's plan to take a 30% cut of magazine and newspaper subscriptions would work, adding: "We are still talking to them," the Independent reports.

Customer complaints about banks, insurers and other financial companies have risen by 15% in the last six months, according to new figures published by the Financial Ombudsman Service. Between July and December last year the Ombudsman received almost 100,000 complaints – and more than half of these were about our five biggest high street banks. The Lloyds Banking group received the most complaints – a total of 22,181 during this six month period – which equates to almost 120 complaints a day about our largest bank. However, this was marginally down on the number of complaints received in the first half of 2010, the Telegraph reports.

TalkTalk has tried to draw a line under a customer service debacle by paying £2.5m in compensation to tens of thousands of customers who were incorrectly billed. The UK’s second-largest broadband provider was widely criticised by consumer groups after a problem with its billing platform meant that thousands of customers received demands for payment despite cancelling contracts months earlier, the Times reports.

Britain’s insurers are braced for a sex discrimination ruling by the European courts that could drive up the cost of women’s car insurance and hit retirement payouts for men. The European Court of Justice is expected to rule today on whether to make it illegal for insurers to discriminate in favour of either sex for car insurance, life cover and annuity rates. The judgment marks the culmination of a legal challenge to the rights of insurers to opt out of gender discrimination rules, the Times reports.