ADVFN Morning Euro Markets Bulletin - March 3rd 2011

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London Market Reports
Strong start as updates impress

Shares are broadly higher after a good reception for most updates, while BSkyB moves ahead after the government gave News Corporation’s acquisition of the satellite broadcaster the green light.

The government has agreed to let Rupert Murdoch’s NewsCorp, the publisher of the Times and Sun, buy satellite broadcaster BSKyB in a deal that will see Sky News placed under independent control.

“While News Corporation continues to believe that the proposed acquisition of the shares in BSkyB that it does not already own will not result in insufficient plurality for any audience in the UK, it has submitted this comprehensive proposal in order to avoid a lengthy and costly review by the Competition Commission,” News Corp said as it welcomed the announcement.

IMI leads the risers after an increase in demand and cost cutting helped the engineer grow full-year profits by 44% to a new record, though the search for a new chairman goes on. Profit from continuing operations before tax and exceptional items rose to £304.4m from £211.7m in 2009 on revenue up 7% to £1.91bn. Reported profit leapt 64% to £306.1m and organic sales growth was 6%.

Sticking with engineering, Amec, also higher today, will be the envy of many a company after it said it can expect to grow regardless of the pace of economic recovery. Pre-tax profits in 2010 soared to £258.2m from £203.5m the previous year as revenues grew to £2.95bn from £2.54bn. Projects during the period included support work with oil giant BP in Azerbaijan and an underground mining contract in Mongolia.

Insurer Aviva ramped up profits by 35% in 2010, helped by cost cutting, and had a record year in the UK. The firm, which has 19m customers in Britain, posted a profit before tax of £2.44bn, up from £1.81bn in 2009. Operating earnings jumped 26% to £2.55bn.

Full year earnings for mining giant Kazakhmys were a little higher than expected as the price of copper raced higher in 2010. Stripping out any contribution from the group’s 26% stake in fellow Kazakh resources firm ENRC, earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $1.93bn, up 59.5% from $1.21bn the year before and ahead of market expectations of $1.86bn.

Oil and gas firm Tullow Oil gushes ahead after it hailed an “exceptional result” on its drilling of the Enyenra-2A appraisal well, in the Deepwater Tano licence offshore Ghana. Drilling successfully encountered oil in excellent quality sandstone reservoirs, with solid evidence of communication with the Owo-1 well, which confirms that the Owo oil discovery, now renamed Enyenra, is a major light oil field.

Defence firm Cobham’s profits in 2010 were hurt by delays in orders in the US and the company sees continuing difficulties this year as the world’s only superpower seeks to rein in spending following the financial crisis. Statutory pre-tax profits in the year to 31 December fell to £189m from £245m on revenues that edged up to £1.8bn from £1.75bn.

Housebuilder Taylor Wimpey returned to profit in 2010 and has made a positive start to the current year with prices up in some places. The firm made a profit before tax and one-off items of £75.1m compared with a £96.1m loss in 2009 on revenue up a fraction at £2.6bn despite total completions falling from 15,166 to 14,272.

Identity theft and credit card insurer CPP celebrated a strong first year as a public company, with profits increasing by a third. Underlying profit before tax in 2010 rose 33% to £46.7m from £35.2m the year before on revenue that rose 12% to £325.8m from £292.1m in 2009.

Telecoms testing group Spirent reported a 32% rise in 2010 pre-tax profit, increased its dividend and said it is confident of further growth in 2011. The company, which tests the performance of IT and communications systems, said pre-tax profit for the year rose to $112.2m compare with $84.9m in 2009. Revenue was up 13% at $482.2m.

Newspaper group Trinity Mirror has taken a dive. It held back from reinstating its dividend despite a big jump in profits as it slashed costs to cope with the tough times the newspaper industry is facing. The publisher of the Mirror and a host of local titles said pre-tax profits in 2010 were up to £101.5m from £72.7m the previous year, even as revenues slipped to £761.5m from £763.3m. Some analysts had been expecting a slight rise in revenues.


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UK Event Calendar
INTERIMS
Frontier IP Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ECB Interest Rate (EU) (12:45)
ISM Services (US) (15:00)
Retail Sales (EU) (10:00)

GMS
Anglo & Overseas, Astaire Group, Evolve Capital, Moss Bros Group

FINALS
ACTA Spa, Amec, Aviva, Balfour Beatty, Cobham, Communisis, CPP Group, Grafton Group Units, Hardy Underwriting Bermuda Ltd. (DI), Howden Joinery Group, IMI, OAO Severstal GDR (Reg S), Psion, Taylor Wimpey, Total Produce, Trinity Mirror, Vitec Group

IMSS
DS Smith

EGMS
Atlantic Coal, e-Therapeutics, Gitanjali Gems Ltd. GDR (Reg S), Premier Foods

AGMS
IDOX, Jersey Electricity 'A' Shares, Local Shopping REIT, LPA Group

TRADING ANNOUNCEMENTS
Kazakhmys, Liontrust Asset Managament


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European Market Reports
Spain, Italy lag as shares elsewhere rally

Though Spain and Italy, the two European countries most dependent on Libyan oil, are off the pace, the majority of European bourses have headed higher at the outset.

Spain’s IBEX 35 is down 18 at 10,625 while Italy’s MIB is down 7 at 22,231.

In Germany, the DAX is up 16 at 7,197 while in Paris the CAC 40 is 10 points to the good at 4,044.

The world’s largest brewer, Anheuser-Busch InBev topped expectations with fourth quarter earnings.

Adjusted earnings before interest, tax, depreciation and amortisation rose by a quarter to $3.9bn in the final three months of 2010, cruising past expectations of $3.4bn.

The market was also caught on the hop by the group more than doubling its dividend to 80 cents from 38 cents. Investment analysts had pencilled in a figure of 66 cents for the dividend.

Recruitment firm Adecco also surprised to the upside. The Swiss company said fourth quarter post-tax profit rose to €141m from €42m a year earlier. Full year profit was €423m, up from €8m in 2009.

The company said the outlook for the current year looks favourable, and unveiled plans to buy back up to 2% of its shares if conditions warrant it.

Dutch supermarket giant Ahold is another company planning buybacks, It intends to plough €1bn into a share buyback programme, the group announced, after disappointing fourth quarter results.

Fourth quarter profit after tax drooped to €154m from €267m in the fourth quarter of 2009, well below the €241m the market had been expecting.

French oil giant Total has agreed to buy a 12% holding in Russian gas producer OAO Novatek for around $4bn, and has joined the Russian company’s Yamal liquefied natural gas project as a strategic partner.

CAC 40 - Risers
Alcatel-Lucent (ALU) € 3.84 +6.75%
Schneider Electric (SU) € 120.50 +1.99%
Accor (AC) € 33.43 +1.53%
Carrefour (CA) € 33.90 +0.88%
Air Liquide (AI) € 93.60 +0.76%
Technip (TEC) € 70.55 +0.69%
Vinci (DG) € 43.90 +0.68%
Alstom (ALO) € 41.69 +0.60%
Saint Gobain (SGO) € 43.10 +0.60%
Total (FP) € 43.54 +0.42%

CAC 40 - Fallers
ST Microelectronics (STM) € 9.30 -1.21%
France Telecom (FTE) € 15.74 -0.82%
Suez Environnement Company (SEV) € 15.51 -0.51%
Cap Gemini (CAP) € 41.46 -0.50%
Publicis Groupe Sa (PUB) € 40.77 -0.48%
EADS (EAD) € 20.23 -0.47%
Credit Agricole (ACA) € 12.10 -0.37%
Natixis SA (KN) € 4.23 -0.35%
Essilor International (EI) € 50.90 -0.35%
GDF Suez (GSZ) € 28.12 -0.32%


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US Market Reports
Stocks edge higher

US shares edged higher with investors keeping a keen eye on the ongoing turmoil in the Arab world and oil prices. The Dow Jones rose 8 at 12,066, the S&P 500 added 10 at 2,748 while Nasdaq gained 3 at 1.308.

News that Colonel Gaddafi’s forces are attacking rebels in eastern Libya is still a concern sent the oil price higher again.

Light crude rose by $2.60, or 2.6%, to $102.23 a barrel, the highest since September 2008. Gold futures for April delivery also rose, settling at a fresh record of $1,437.70 an ounce.

In economic news, payroll processor ADP revealed private-sector employers added 217,000 jobs in February, more than expected, although Challenger, Gray & Christmas says employers are planning to sack almost 51,000 this month, up from 35,500 the month before.

Shares in PPL jumped after the US utility group agreed to buy E.ON’s power grid in central England for £3.5bn in cash. PPL will also take on £0.5bn of existing debt.

On the earnings front, warehouse retailer Costco made $348m in the second quarter on revenue up 11.35 to $20.9bn. Talk that Yahoo is planning to sell its 30% interest in Yahoo! Japan sent shares in the web portal higher. Digital video recording company TiVo is lower after reporting bigger fourth quarter losses than expected.

Steve Jobs made a surprise appearance as Apple unveiled the iPad2, with a new, thinner design and an updated "A5" dual-core microprocessor. The iPad 2 will feature front- and rear-facing cameras and will be capable of FaceTime video chatting. The price will be $499 for Wi-Fi-only and $629 for 3G.

S&P 500 - Risers
Xilinx Inc. (XLNX) $34.45 +5.35%
Cameron International Corp. (CAM) $60.46 +4.71%
Eastman Chemical Co. (EMN) $94.52 +3.72%
Yahoo! Inc. (YHOO) $16.65 +3.42%

S&P 500 - Fallers
Hudson City Bancorp Inc. (HCBK) $9.95 -8.74%
MetLife Inc. (MET) $43.41 -5.71%
Nvidia Corp. (NVDA) $20.80 -3.93%
Prudential Fincl Inc. (PRU) $62.52 -3.76%

Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $100.97 +1.11%
3M Co. (MMM) $91.32 +0.95%
Verizon Communications Inc. (VZ) $36.34 +0.89%
Hewlett-Packard Co. (HPQ) $43.24 +0.77%

Dow Jones I.A - Fallers
JP Morgan Chase & Co. (JPM) $45.21 -0.86%
Boeing Co. (BA) $69.57 -0.78%
Coca-Cola Co. (KO) $64.43 -0.74%
Bank of America Corp. (BAC) $13.83 -0.72%


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Newspaper Round-up
Retailers, Land Rover, Apple

The bosses of some of the UK's biggest high-street chains have warned the Treasury urgent action is needed to prevent a double-dip recession and the possible closure of thousands of shops. Danny Alexander, the Chief Secretary to the Treasury, met with a delegation of retailers including Justin King, chief executive of J Sainsbury, and Charlie Mayfield, the chairman of John Lewis Partnership. The retail chiefs told Mr Alexander that the sector is already absorbing £670m of extra Government-imposed costs and warned him not to increase the burden, according to the Telegraph.

Britain’s latest big new car will create or sustain up to 5,500 jobs in addition to the 1,500 workers that Jaguar Land Rover is hiring for the project at its Halewood plant. The news was hailed by ministers yesterday as further evidence of British manufacturing getting back into gear. Jaguar Land Rover revealed the ramifications of the launch of the new baby Range Rover, which goes on sale this summer, as it said that it had signed £2 billion of supply contracts around the new model with 40 British companies, the Times reports.

Steve Jobs, Apple’s chief executive, made his first public appearance since going on medical leave six weeks ago, taking the stage at a San Francisco media event to introduce the iPad 2, the second generation of the company’s tablet computer. Gaunt but energetic, Mr Jobs showed off a thinner iPad with two core processors and a claimed ninefold increase in graphics performance, the Financial Times reports.

The value of Sir Frank Williams’ stake in Williams Grand Prix fell by €7 million yesterday as shares in the Formula One team began trading for the first time. Williams is the first F1 team to go the market, with about a quarter of the company being floated on the Frankfurt Stock Exchange, according to the Times.

Ford's chief financial officer has warned predictions of a surge in electric car sales are "very ambitious", as next generation vehicles dominate the Geneva Motor Show. Lewis Booth, a Briton, raised concerns about their viability without state subsidies, the Telegraph reports.

European investigators raided several major publishers on Wednesday as the worldwide probe into allegations of price-fixing of ebooks stepped up a gear. The European Commission said its agents had "reason to believe" that several unnamed companies across Europe "may have violated EU antitrust rules that prohibit cartels and other restrictive business practices,” the Telegraph says.

TNK-BP is proposing to act as a middleman in BP's $10bn (£6.1bn) share-swap deal with Russian rival Rosneft, but the British oil major does not support the plan. Under the scheme, TNK-BP would buy the 5 per cent of BP shares the company is already authorised to issue in respect of the Rosneft deal. The shares – worth around $8bn – would then be passed to Rosneft in return for 10 per cent of its stock, the Independent says.

US states and local governments could default on $100bn (£60bn) of their debts over the next five years, according to a report from the consulting firm founded by economist Nouriel Roubini. The report follows dire predictions of a wide-scale collapse in the US's $2.7tn municipal bonds market by Meredith Whitney, the analyst who was among the first to warn of the 2008 banking crisis, according to the Guardian.