ADVFN Morning Euro Markets Bulletin - March 9th 2011

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London Market Reports
Early falls despite Pru show of strength

Market Movers
FTSE 100 5,952.72 -0.37%
techMARK 1,926.92 +0.06%
FTSE 250 11,757.05 +0.12%

London has slipped lower in early dealings, despite good numbers from Prudential and a strong performance on Wall Street overnight as oil prices fell back.

Insurer Prudential made 20% more in 2010 than it did the year before as Asia raced ahead of the US as the UK company’s largest earner. Group operating profit before tax on a European Embedded Value (EEV) basis jumped to £3.70bn in 2010 from £3.09bn the year before.

Africa-focused oil firm Tullow Oil ramped up profits in 2010, broadly in line with City expectations, as oil prices jumped by almost a third. Profit before tax soared to $152m from $33m in 2009 and rose 137% to $73m after taxes. Sales revenue was 19% better at $1.09bn.

Banks are never far from the headlines and after bonus payments to Barclays' Bob Diamond and yesterday's disclosure of RBS chief Stephen Hester's incentives for 2010, Lloyds is in the spotlight today. Chief executive António Horta-Osório has stamped his authority with a shake-up of the retail bank and insurance divisions and the departure of two senior directors.

Daimler and Rolls-Royce have confirmed they intend to take over German-listed engineer Tognum through a tender offer by a joint venture company. Daimler and Rolls-Royce will offer Tognum shareholders €24 per share in cash representing a total consideration of approximately €3.2bn, about 30% above Friday’s closing price. Daimler currently owns 28.4% of Tognum.

Acquisitive engineering conglomerate Halma has its cheque book out again, and is buying Swiss company Medicel, a designer and manufacturer of single-use injector devices for Intra Ocular Lenses (IOL) used for cataract surgery. Initial consideration is £46.6m, with a further £20m payable, depending on performance of the acquired company.

Tourists flocking to its Garfunkel’s outlets in Central London helped The Restaurant Group come though the weather, ash clouds and recession last year in decent shape. Profits in 2010 rose by 17% to £56.5m, from £48.3m, on revenues up 7% at £466m. Like-for-like sales fell by 1%.


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UK Event Calendar
INTERIMS
Encore Oil

INTERIM DIVIDEND PAYMENT DATE
Stagecoach Group

INTERIM EX-DIVIDEND DATE
Alumasc Group, Ashmore Group, Asian Citrus Holding, BHP Billiton, Centaur Media, Dechra Pharmaceuticals, Dunelm Group, Electric & General Inv Trust, Gartmore Irish Growth Fund, Hays, Impala Platinum Holdings Ltd., Medusa Mining Ltd. (DI), Renishaw, Ricardo, Sportingbet, Wilmington Group

QUARTERLY EX-DIVIDEND DATE
British Assets Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Nominal GDP (JPN)
CGPI (JPN)
Industrial Production (GER) (11:00)
Wholesales Inventories (US) (15:00)

FINALS
African Eagle Resources, Alkane Energy, Ark Therapeutics Group, Avengardco Investments Public Ltd.GDR, Bank Pekao SA GDS (Reg S), BATM Advanced Communications Ltd., Costain Group, F&C Inv Trust, Hill & Smith Holdings, Hutchison China Meditech Ltd., Interserve, Johnston Press, Lookers, Melrose, Prudential, Restaurant Group, SQS Software Quality Systems AG, Stadium Group, Telecom Egypt SAE GDS (Regs), Tullow Oil, Yule Catto & Co

ANNUAL REPORT
Meggitt

EGMS
BATM Advanced Communications Ltd.

AGMS
Travelzest

UK ECONOMIC ANNOUNCEMENTS
BRC Shop Price Index (00:01)
Trade Balance (10:30)

FINAL EX-DIVIDEND DATE
Avesco Group, Avon Rubber, Baronsmead VCT 3, Baronsmead VCT 4, Brewin Dolphin Holdings, British American Tobacco, CRH, Domino Printing Sciences, Goldenport Holdings Inc., Hammerson, Lavendon Group, Meggitt, New World Resources NV (DI), Octopus Titan VCT 1, Octopus Titan VCT 2, Safestore Holdings, Scottish American Inv Company, Serco Group, Spirent Communications, St. Modwen Properties, Standard Chartered


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European Market Reports
Eurozone debt worries weigh

Europe’s markets have made a dull start to the day, despite the continued ebbing of the oil price.

Angola’s oil minister Jose Maria Botelho de Vasconcelos has said the Organisation of Petroleum Exporting Countries (OPEC) should wait until events become clearer in Libya before deciding whether to call an emergency meeting.

“The information that we have is that the market is supplied,” he said, in a statement that reassured the market about oil supplies.

The eurozone’s debt situation is souring sentiment, however. Moritz Kraemer, managing director of European sovereign ratings at debt ratings agency Standard & Poor’s said that following the recent cut in Greece’s rating other countries in the Eurozone might also see their rates cut soon.

The Paris CAC 40 index is down 17, the Frankfurt DAX is off 5 points at 7,159 and the Madrid IBEX 35 is 56 points lower at 10,512.

In corporate news, Airbus maker European Aeronautic, Defence & Space (EADS) has started paying dividends again, after it returned to profit in 2010. Full year post-tax profit for 2010 was €553m, compared with a loss of €763m in 2009.

German utility company EON is on the slide after it said operating earnings in 2011 will fall by about 16% from 2010 levels, partly as a result of a new nuclear fuel tax introduced in Germany.

Adjusted after-tax profit is expected to decrease by up to a third to between €3.3bn to €4bn, the company said.

Post-tax profit in 2010 was down to €5.85bn from €8.42 billion a year earlier, though the result topped analysts’ expectations of net income of €4.88bn.

Daimler and Rolls-Royce have confirmed they intend to take over German-listed engineer Tognum through a tender offer by a joint venture company.

Daimler and Rolls-Royce will offer Tognum shareholders €24 per share in cash representing a total consideration of approximately €3.2bn, about 30% above Friday’s closing price. Daimler currently owns 28.4% of Tognum.

CAC 40 - Risers
EADS (EAD) € 20.36 +2.62%
Michelin (ML) € 60.83 +2.34%
Accor (AC) € 33.13 +0.79%
Renault (RNO) € 42.53 +0.67%
Vallourec (VK) € 74.43 +0.65%
L'Oreal (OR) € 83.17 +0.57%
Pernod Ricard (RI) € 67.20 +0.48%
Saint Gobain (SGO) € 42.36 +0.40%
Air Liquide (AI) € 94.15 +0.29%
PPR (PP) € 109.70 +0.27%

CAC 40 - Fallers
Alcatel-Lucent (ALU) € 3.84 -3.30%
Credit Agricole (ACA) € 11.73 -2.17%
Societe Generale (GLE) € 46.48 -1.63%
Technip (TEC) € 71.33 -1.30%
Natixis SA (KN) € 4.17 -1.23%
BNP Paribas (BNP) € 52.58 -1.17%
Total (FP) € 43.19 -1.04%
ST Microelectronics (STM) € 9.59 -1.03%
Lafarge (LG) € 43.71 -0.85%
ArcelorMittal SA (MT) € 25.46 -0.70%


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US Market Reports
Dow jumps 124

Wall Street went from strength to strength today as oil prices eased and bank shares soared.

An increase in production by Saudi Arabia and others to cover the shortfall caused by violence in Libya has pulled oil prices back from 29-month highs. Light crude remained below $105 a barrel in New York. Reports that Libyan leader Muammar Gadaffi might be looking for a way to step down also boosted sentiment.

The Dow Jones index closed up 124 at 12,214, the Nasdaq Composite rose 20 to 2,765 and the broader S&P 500 added 11 at 1,321.

Bank of America released a positive trading statement and along with American Express and JP Morgan Chase led the Dow Jones higher. BoA chief executive Brian Moynihan also said the bank plans to increase its buy-back programme and could raise the dividend.

Urban Outfitters was in trouble though. The trendy clothing firm’s fourth quarter earnings, released after the bell yesterday, disappointed. Post-tax profit of $75.2m in the three months to end-January represented a decline from the $77.7m made a year earlier. Earnings per share held steady at 45c but were well below market expectations of 52c. The shares slid 16%.

Elsewhere, burger vendor McDonalds said US sales in February achieved year-on-year like-for-like growth of 2.7%, when the market had pencilled in a growth figure of 4%.

The picture is looking brighter at computer video chip maker Nvidia after the stock’s rating was raised to “neutral” from “underweight” by JP Morgan.

Sprint Nextel went higher due to rumours that it might buy T-Mobile USA from Deutsche Telekom in exchange for shares. Online movie rental company Netflix is lower after Warner bros says it will offer films for rent or purchase via Facebook.

S&P 500 - Risers
PulteGroup Inc. (PHM) $7.09 +8.41%
Southwest Airlines Co. (LUV) $12.66 +7.56%
Goodyear Tire & Rubber Co. (GT) $14.12 +5.85%
RadioShack Corp. (RSH) $15.40 +5.62%

S&P 500 - Fallers
Urban Outfitters Inc. (URBN) $31.65 -16.69%
Netflix Inc. (NFLX) $195.03 -5.96%
Tesoro Corp. (TSO) $23.25 -4.28%
National Semiconductor (NSM) $14.69 -2.97%

Dow Jones I.A - Risers
Bank of America Corp. (BAC) $14.69 +4.70%
American Express Co. (AXP) $45.24 +3.50%
JP Morgan Chase & Co. (JPM) $46.42 +2.72%
AT&T Inc. (T) $28.46 +2.01%

Dow Jones I.A - Fallers
McDonald's Corp. (MCD) $75.55 -0.97%
Intel Corp. (INTC) $21.11 -0.47%
Exxon Mobil Corp. (XOM) $84.60 -0.14%


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Newspaper Round-up
RBS, Food prices, ITV...

Nine senior executives of Royal Bank of Scotland are in line to receive £28m, according to the latest disclosure of largesse in the financial sector.

Stephen Hester, chief executive of the bank, which is 84%-owned by taxpayers, could earn £7.7m for 2010 including salary, annual bonus and long term incentive plans (LTIPs). That compares to a £13.5m package for Bob Diamond, Barclays’ chief executive, over the same period, the Times reports.

Food prices are rising more quickly in Britain than in any other Western European country, according to the Organisation for Economic and Co-operation Development. Prices rose by 6.3% in the year to January, the OECD said, higher than in every other country in the eurozone apart from Estonia, where prices climbed by 11.4%. The British Retail Consortium, which bases its figures on surveys of retailers, calculated that food price inflation was a more modest 4.6% in January, adding that it had eased to 4.5% last month, the Times reports.

Two of Lloyds Banking Group's most senior board directors are set to leave as part of a shake-up by the bank's new chief executive. Helen Weir, the executive director for retail and Lloyds' most senior female employee, and Archie Kane, the executive director for insurance, are expected to depart, possibly with significant pay-offs, according to people familiar with the matter. The departures could be announced as early as today alongside some important changes to the structure of Lloyds' operations, the Telegraph reports.

ITV is paying its newly installed chief executive Adam Crozier more than £1.6m for his first eight months in the job after the beleaguered broadcaster saw its profits treble. According to the broadcaster's annual report, the former head of the Royal Mail was paid a basic salary of £532,000, plus another £334,000 "golden hello" on joining the company. He also received a £252,000 short-term cash bonus and another £505,000 deferred in shares until 2013, the Independent reports.

Key parts of a stress test for European banks designed to raise investor confidence in the sector have been softened by regulators despite widespread derision of a similar exercise last year, which was seen by financial markets as too lax. Some of the scenarios under which bank balance sheets will be tested are more benign than the tests that failed to gain investor credibility last year. The new stress test will model the impact of a 15 per cent fall in equity markets on banks – way below the numbers used in the 2010 test, with no discernible toughening of other key parameters, the FT reports.

Bupa has written down close to £250m on investments including London's Cromwell hospital as the private healthcare group sounded a warning over the future of elderly care in the UK. The company reported a 72% slump in pre-tax profits to £118m last year, after it took a £249.2m impairment on the Cromwell, its NHS-facing Home Healthcare division and Health Dialog, a US based business, the Telegraph reports.

The film studio Pinewood Shepperton hopes to grab a share of the profits of successful British movies, such as The King's Speech, by investing in small budget British films. Pinewood, where the James Bond and Harry Potter films are shot, said it plans to invest as much as a 20% stake in up to four films a year with production budgets of about £2m. It is the first time that Pinewood has planned this type of investment since it was making the Carry On films in the 1970s, the Independent reports.

Alan Mulally, Ford Motor’s chief executive, and Bill Ford, chairman, have reaped the rewards of the Detroit carmaker’s dramatic turnround, between them pocketing shares worth almost $100m. Ford disclosed in regulatory filings it had paid Mr Mulally 3.8m shares worth about $56m before tax. Mr Ford was paid 2.9m shares worth $42m. About 40 per cent of the shares were held back for tax payments. Several other senior executives, including Lewis Booth, chief financial officer, also received large share pay-outs, the FT reports.