ADVFN Morning Euro Markets Bulletin - March 8th 2011

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London Market Reports
Oil to dominate again

Oil and Libya are set to dominate the market again after yesterday's frantic trading on oil markets.

US light crude for April delivery is currently down $1.60 at $103.84 a barrel. Saudi Arabia and others are going to raise output to keep the global economic recovery on track. That has taken some of the pressure off, but markets remain jittery.

In company news, Old Mutual has been through the mill this last six months, but strong growth in new business sales, cost cutting and favourable exchange rates pushed profits up by 14% in 2010.

Copper miner Antofagasta is to pay a huge special dividend after profits last year smashed through the $1bn mark as output rose and prices soared. Net profits last year rose by 58% to $1.05bn, from $668m, on revenues up by 55% at $4.58bn from $2.96bn.

Spirax Sarco did not match the one-off payment from Antofagasta, but the steam trap and pump maker’s shareholders are unlikely to complain as the shares hit a 52-week high. On top of the 25p special dividend the full year dividend for 2010 has been cranked up 19% to 43.0p from 36.1p, as the company announced record sales and profits.

Global engineering solutions provider Weir Group enjoyed record margins in 2010 as order input rose by almost two-fifths from the year before. Order input, calculated using average exchange rates for 2010, rose 39% £1,904m in 2010 from £1,366m in 2009, and was up 36% on a like for like basis.

BT and Vodafone are going well after a bullish note yesterday from Morgan Stanley. “Telecommunications is our preferred defensive sector,” the US broker said “It offers greater potential for a positive growth surprise as well as offering a substantial dividend yield boost over other sectors.” Vodafone and BT are both classed as “overweight”, with price targets of 225p and 260p respectively.

Online betting exchange operator Betfair said its core revenue rose by 6.2% in the third quarter of its financial year from a year earlier. Core Betfair sports revenue in the three months to 31 January rose 8.6% year on year (yoy) to £56.6m, games revenue rose 8.2% yoy to £14.3m but poker revenue fell 20.5% yoy to £5.2m.

Plant hire group Ashtead expects to beat expectations for the full-year after narrowing third quarter losses and ramping up revenue by 15%. The loss before tax and one-off items dropped to £1.7m in the three months to 31 January, seasonally the most difficult period, from £12m a year ago. Revenue jumped to £221.34m from £187.3m.

Shares in set-top box maker Pace tumbled after hefty one-off costs cut profits growth to a minimum last year. The BSkyB supplier lifted 2010 revenues by 17.4% to £1.33bn, with organic revenues growing 9.7%. Operating profits rose by 32% to £92m, though pre-tax profits rose only slightly to £71m after one-off costs of £19m relating to its acquisitions last year and the closure of its European free-to-air business.


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UK Event Calendar
INTERIMS
Abcam, Interior Services Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bankruptcies (JPN)
Machine Orders (JPN)
Bank of France Business Sentiment (FRA) (07:30)
Trade Balance (FRA) (07:45)
Factory Orders (GER) (11:00)
NFIB Small Business Optimism (US) (12:30)

Q3
Ashtead Group

GMS
Forte Energy NL

FINALS
Advanced Medical Solutions Group, Antofagasta, Cupid, FBD Holdings, Hydro International, Inchcape, InterQuest Group, Johnson Service Group, Old Mutual, Pace, Pinewood Shepperton, Spirax-Sarco Engineering, STM Group, Tullett Prebon, Weir Group, Zotefoams

AGMS
Henderson Diversified Income Ltd.

UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)
RICS House Price Balance (00:01)

FINAL DIVIDEND PAYMENT DATE
Artemis VCT


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European Market Reports
Car firms rise as oil price dips

It’s a mixed showing for European bourses at the outset, with Germany firmer, Spain weaker and France yet to make up its mind.

The oil price has reversed course for the first time in three days on reports that Libyan leader Muammar Gadaffi is ready to throw the towel in.

Arab TV network Al Jazeera claims Gadaffi has proposed a meeting with the Libyan parliament to effectively negotiate surrender terms, which will include immunity from prosecution for Gadaffi plus a “golden parachute” payment.

The leaders of the rebel movement have reportedly rejected the overtures.

The decline in the oil price is boosting sentiment, though oil companies may come under selling pressure as a result.

Swedish independent oil and gas firm Lundin Petroleum may resist any downward pressure, however, after BofA Merrill Lynch upgraded the stock to “buy” from “sell”.

Car makers and their suppliers welcome the oil price fall. In France, tyre maker Michelin is the best performing blue-chip, while Renault and Peugeot also edge forward. In Germany Daimler and Volkswagen are top of the leaderboard, with fellow car maker BMW not far behind.

Germany’s DAX index is up 35 at 7,197 while Spain’s IBEX 35 is off 46 points at 10,449. The Paris CAC 40 is barely changed, up 3 at 3,993.

CAC 40 - Risers
Michelin (ML) € 59.18 +2.49%
AXA (CS) € 15.06 +1.48%
Bouygues (EN) € 34.53 +0.91%
Renault (RNO) € 41.94 +0.89%
LVMH (MC) € 113.95 +0.89%
Peugeot (UG) € 28.56 +0.88%
Lafarge (LG) € 43.80 +0.72%
Pernod Ricard (RI) € 66.22 +0.67%
EDF (EDF) € 31.25 +0.53%
EADS (EAD) € 19.40 +0.52%

CAC 40 - Fallers
Alcatel-Lucent (ALU) € 3.93 -2.67%
Vallourec (VK) € 73.13 -0.64%
Societe Generale (GLE) € 46.29 -0.56%
Cap Gemini (CAP) € 41.81 -0.51%
Credit Agricole (ACA) € 11.74 -0.34%
Schneider Electric (SU) € 117.70 -0.34%
GDF Suez (GSZ) € 27.50 -0.24%
PPR (PP) € 110.30 -0.23%
Total (FP) € 43.61 -0.21%
Unibail-Rodamco (UL) € 147.55 -0.14%


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US Market Reports
Libya worries sink Dow

A bright start on Wall Street came to an abrupt end as worries over the situation in Libya gripped the markets once again.

The Dow Jones industrial average closed down 79 at 12,090 while the broader based S&P 500 shed 11 points at 1,310. Nasdaq lost 39 at 2,745.

An indication from Richard Fisher, president of the Federal Reserve Bank of Dallas, that he is having doubts about the continuation of the Federal Reserve’s quantitative easing programme also soured sentiment.

The price of oil moved above $106 a barrel in electronic trading before Wall Street opened but the April futures contract for West Texas light sweet crude has now eased back to around $105, though it is still up by about a dollar from last night’s close.

Computer data storage firm Western Digital is to buy the hard disk business of Japanese rival Hitachi for $4.3bn in a cash plus shares deal. The market has given the thumbs up to the move and has marked up US sector peer Seagate Technology in sympathy.

In broker action, coffee bar owner Starbucks is wanted after Morgan Stanley raised its rating on the shares to “overweight” from “equal weight”. Chief executive Howard Schultz also told reporters it plans several acquisitions over the next 12 to 18 months to bolster its consumer products division.

American Airlines is to issue $1bn of senior debt secured by routes, takeoff and landing slots and rights to use space in airport terminals, parent AMR said today.

Bloomberg reports that Microsoft will pay Nokia more than $1bn to promote and develop Windows-based handsets as part of their smartphone software agreement. Nokia will pay Microsoft a fee for each copy of Windows used in its phones.

S&P 500 - Risers
Western Digital Corp. (WDC) $34.68 +15.56%
IntercontinentalExchange Inc. (ICE) $134.72 +3.43%
Sprint Nxtel Corp. (S) $4.48 +3.23%
Harley-Davidson Inc. (HOG) $40.75 +2.52%

S&P 500 - Fallers
Urban Outfitters Inc. (URBN) $35.30 -8.31%
JDS Uniphase Corp. (JDSU) $25.51 -6.80%
Micron Technology Inc. (MU) $11.00 -5.50%
Teradyne Inc. (TER) $17.95 -5.43%

Dow Jones I.A - Risers
McDonald's Corp. (MCD) $76.29 +0.34%
3M Co. (MMM) $92.40 +0.23%
General Electric Co. (GE) $20.39 +0.10%
Coca-Cola Co. (KO) $65.22 +0.02%

Dow Jones I.A - Fallers
Alcoa Inc. (AA) $16.25 -1.96%
Intel Corp. (INTC) $21.21 -1.62%
Hewlett-Packard Co. (HPQ) $41.98 -1.48%
Boeing Co. (BA) $70.88 -1.28%


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Newspaper Round-up
Oil prices, Barclays, Pension reform...

The conflict in Libya helped propel the price of oil towards $120 a barrel on Monday as forces loyal to Col Muammar Gaddafi and rebels trying to overthrow his regime formed a front line around the strategic oil town of Ras Lanuf.

Saudi Arabian political activists have also added to energy fears with calls for a day of protest this week. Britain and France were leading diplomatic efforts to win support at the United Nations for a no-fly zone. These moves in part follow intense lobbying from the rebels, the Telegraph reports.

Influential members of Opec, the oil cartel, are joining Saudi Arabia in raising output to cool soaring prices and allay fears of a supply crunch in the west. The behind-the-scenes move by Kuwait, the United Arab Emirates and Nigeria reflects growing unease among Opec members over the threat to the global economic recovery from crude’s runaway rise amid the worsening crisis in Libya.

US oil prices increased to their highest levels since September 2008 on Monday, trading at an intraday high of $106.95 a barrel, as Brent, the European benchmark, hit a session high of $118.50. Gold jumped to a fresh record of $1,444 an ounce. Industry officials said the production increase, expected by early April, would – together with an earlier rise by Saudi Arabia – almost make up the shortfall in supply from falling Libyan crude exports, the FT reports.

Barclays triggered fury yesterday by revealing that nine senior bankers had received £88 million from share awards and that its chief executive Bob Diamond was awarded a package worth £23m.

The bank disclosed yesterday that it had handed £90m to the heads of its investment bank. The packages, which include salaries, bonuses and share awards dating back several years, were revealed before publication of its annual report on Friday. Jerry del Missier, who became co-head of Barclays Capital, Barclays’ investment banking division, on October 1, received £33m from share awards from previous years. Rich Ricci, BarCap’s other co-head and another Barclays veteran, received £30m from the same historic share plans, the Times reports.

Pensioners are to receive a flat-rate universal retirement payment of £140 a week that will end the injustice of working mothers being penalised for taking a break to raise children, under reforms to be signalled by Iain Duncan Smith today. The Work and Pensions Secretary will pledge to sweep away a host of complex rules and "fundamentally simplify" the basic state pension. Insiders said Mr Duncan's Smith's intervention represents the start of a Coalition drive to replace the existing state pension regime with a "single tier" retirement payment, the Telegraph reports.

Retailers suffered their weakest sales growth for nearly two years in February, as hard-pressed consumers reined in their spending in the wake of soaring petrol prices, tax increases and uncertainty over jobs. The British Retail Consortium-KPMG survey warned that most non-food retailers from clothing to footwear groups saw either weak or falling sales last month. The monthly report found that total sales growth slowed to 1.1% in February, despite this figure taking account of new store openings, as well as price rises due rising commodity costs and the hike in VAT, the Independent reports.

The hedge fund manager at the centre of one the biggest insider trading investigations undertaken in the United States is expected to give evidence at his own trial, which starts today. Raj Rajaratnam’s high-risk strategy is said to be typical of a man who has described his investing success as being driven by pride and a determination to win. He once said: “I want to win every time. Taking calculated risks gets my adrenalin pumping,” the Times reports.

Greece reacted angrily to a credit ratings downgrade today just days before a summit of eurozone leaders to thrash out a permanent rescue system for its weaker economies. The three-notch downgrade by Moody’s thrust Portugal and Spain back into the bailout spotlight, yet it could strengthen the case for both Greece and Ireland to receive better terms on their loans. The two countries are making the case for lower interest rates from their eurozone partners, or for longer to pay back their debts, in order to avoid stifling their own recoveries, the Times reports.

Laurent Gbagbo, the Ivory Coast leader who the international community says lost presidential elections in November, announced he would nationalise the cocoa sector in a surprise move that threatened to drive the cocoa price sharply higher. The African country is the world’s largest cocoa exporter, accounting for 40 per cent of global supplies of the bean used to make chocolate. Cocoa prices are nearing three-decade highs amid the worsening crisis in Ivory Coast, the FT reports.