ADVFN Morning Euro Markets Bulletin - July 29th 2011

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London Market Reports


US worries overshadow cheery updates

Market Movers
techMARK 1,911.61 -0.18%
FTSE 100 5,836.17 -0.63%
FTSE 250 11,557.35 -0.50%

Shares have moved higher after some upbeat company statements this morning, but,demonstrating the its exposure to the global economy, the top share index has slumped on the back of worries over the ongoing deadlock as US politicians debate raising its debt ceiling.

Banks such as Lloyds and miners such as BHP Billiton are in negative territory.

But company news has impressed the market. Financial Times and Penguin books publisher Pearson moves ahead after it upgraded its outlook for the full year following interim results that saw adjusted operating profit rise by 17% year-to-year to £208m on the back of a 3% increase in the headline sales figure to £2.4bn. The interim dividend has been hiked by 8% to 14.0p from 13.0p.

BSkyB is wanted demonstrating why Rupert Murdoch’s News Corporation was so keen to get his hands on the broadcaster with a sharp rise in revenues and profits. Revenue in the year to 30 June soared to £6.6bn from £5.7bn the previous year, while EBITDA (earnings before interest, depreciation and amortisation) came in at £1.4bn, up from £1.2bn.

Mobile phone network colossus Vodafone, another riser today, is to pay a special dividend of 4p per share next year after its 45% owned US associate, Verizon Wireless, resumed dividend payments.

British Airways operator International Consolidated Airlines (IAG) also takes off. It moved into profit in the second quarter, but economic weakness in some markets and high oil prices remain a concern.

Emergency home repairs outfit Homeserve expects customer growth of around 3% in the UK in the current financial year. "We have made a good start to the financial year and continue to expect to deliver another year of strong growth," the company said, adding that the results will, as usual, be second-half weighted.

FTSE 100 - Risers
Vodafone Group (VOD) 172.40p +4.23%
Pearson (PSON) 1,186.00p +4.13%
BT Group (BT.A) 200.10p +1.11%
British Sky Broadcasting Group (BSY) 720.00p +0.56%
Prudential (PRU) 688.00p +0.44%
Compass Group (CPG) 578.00p +0.09%
Intertek Group (ITRK) 1,913.00p +0.05%
Essar Energy (ESSR) 366.10p -0.08%
Rolls-Royce Group (RR.) 644.50p -0.08%
Experian (EXPN) 805.00p -0.12%

FTSE 100 - Fallers
ARM Holdings (ARM) 571.50p -2.64%
Barclays (BARC) 222.35p -2.44%
Lloyds Banking Group (LLOY) 44.01p -2.21%
Schroders (Non-Voting) (SDRC) 1,333.00p -2.13%
Resolution Ltd. (RSL) 275.20p -2.06%
Anglo American (AAL) 2,937.50p -2.02%
Royal Bank of Scotland Group (RBS) 35.57p -1.96%
Standard Life (SL.) 197.10p -1.89%
IMI (IMI) 1,055.00p -1.77%
Standard Chartered (STAN) 1,570.00p -1.75%

FTSE 250 - Risers
Exillon Energy (EXI) 436.60p +3.04%
Euromoney Institutional Investor (ERM) 682.00p +2.56%
Punch Taverns (PUB) 64.10p +2.48%
Sports Direct International (SPD) 263.70p +2.21%
Rentokil Initial (RTO) 92.20p +2.10%
AZ Electronic Materials SA (WI) (AZEM) 279.50p +1.90%
Grainger (GRI) 122.80p +1.74%
Talvivaara Mining Company (TALV) 406.70p +1.55%
Perform Group (PER) 188.80p +1.40%
COLT Group SA (COLT) 120.60p +1.26%

FTSE 250 - Fallers
Kofax (KFX) 380.10p -3.28%
Unite Group (UTG) 207.70p -2.94%
Dunelm Group (DNLM) 450.00p -2.85%
JKX Oil & Gas (JKX) 238.90p -2.85%
Supergroup (SGP) 1,083.00p -2.52%
Lamprell (LAM) 381.30p -2.23%
Dixons Retail (DXNS) 13.82p -2.12%
Travis Perkins (TPK) 908.00p -2.10%
Salamander Energy (SMDR) 275.00p -1.79%
QinetiQ Group (QQ.) 112.50p -1.66%


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UK Event Calendar
INTERIMS
Anglo American, Charter International, International Airlines, Jardine Matheson Holdings Ltd (Singapore), Jardine Strategic Holdingd Ltd. (Singapore), Manganese Bronze Holdings, Pearson, Rentokil Initial, Travis Perkins

INTERIM DIVIDEND PAYMENT DATE
Character Group, Chrysalis VCT, Dunedin Smaller Companies Inv Trust, Jupiter Green Inv Trust, Octopus Titan VCT 1, Octopus Titan VCT 2, Paragon Group Of Companies, ProVen Growth & Income VCT, ProVen VCT, Zytronic

QUARTERLY PAYMENT DATE
Equity Partnership Inv Co Income Shares, Schroder Income Growth Fund

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Household Spending (JPN)
Jobless Rate (JPN)
Consumer Prices Index (JPN)
Industrial Production (JPN)
Construction Orders (JPN)
GFK Consumer Confidence (GER) (07:00)
Producer Prices (FRA) (07:45)
Consumer Spending (FRA) (07:45)
Consumer Prices estimate (EU) (10:00)
International Reserves (EU) (11:00)
GDP (Advance) (US) (13:30)
Personal Consumption (US) (13:30)
Chicago PMI (US) (14:45)
NAPM Milwaukee (US) (15:00)
U. of Michigan Confidence(Final) (US) (15:00)

GMS
INVU

FINALS
British Sky Broadcasting Group

EGMS
Noventa Ltd.

AGMS
British Smaller Companies VCT, Creon Corporation, Edinburgh Inv Trust, European Convergence Development Co, Fidelity China Special Situations , Homeserve, ING Global Real Estate Securities Ltd., INVU, Longships, Parallel Media Group, RAM Investment Group, Suretrack Monitoring , Tongaat-Hulett Ltd., Torotrak

UK ECONOMIC ANNOUNCEMENTS
GFK Consumer Confidence (09:30)
Net Consumer Credit (09:30)
M4 Money Supply (09:30)
Mortgage Approvals (09:30)

FINAL DIVIDEND PAYMENT DATE
Aberdeen All Asia Inv Trust, Acal, Aveva Group, Brown (N.) Group, Edinburgh Inv Trust, Investec Structured Products Calculus VCT, KCOM Group, Kiotech International, Lindsell Train Inv Trust, Montanaro European Smaller Companies Trust, MS International, Octopus VCT , PME African Infrastructure Opportunities, Puma VCT V, Severn Trent, TP70 2008 (I) VCT, TP70 2008 (II) VCT, UBC Media Group


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European Market Report
US debt stalemate knocks shares again

Another day has dawned and still the US has not passed a bill to raise its debt ceiling, and that has cranked up the tension on this side of the pond, where markets have opened lower across the board.

The Paris CAC is down 49 at 3,663, the Frankfurt DAX is off 74 at 7,115 and the Swiss Market index is down 75 at 5,796.

On the economic front, German retail sales, seasonally and inflation adjusted, rose by 6.3% in June, the biggest monthly rise on record. The sharp increase caught economists on the hop, as they had expected a gain of around 1.7%, and more than reversed May's 2.5% fall.

Meanwhile, Spain's sovereign debt has been marked for a possible downgrade by credit rating agency Moody's. The agency said any downgrade would probably only be down one notch from the current level of Aa2.

Water and waste management outfit Veolia Environnement has issued a profits warning and announced plans to restructure its operations.

The company said full-year adjusted operating income on a constant exchange rates basis would be down slightly on last year, and thus it would not achieve its aim of showing income growth this year.

As for the restructuring, that's going to lead to an €800m charge for asset impairments and write-downs.

Schneider Electric saw net income rise to €802m in the first half of 2011 from €735m the year before. Earnings per share climbed to €3 from €2.86 the year before. Sales rose 21% to €10.3m from €8.6m, while like-for-like sales growth came in at 10.2%. The company stuck with its full-year guidance of organic revenue growth of 6-9%.

The power network equipment provider saw its shares drift lower in early trading, however, as the company drew attention to rising raw material costs, which are beginning to weigh on the company's bottom line.

CAC 40 - Risers
Saint Gobain (SGO) € 40.70 +2.91%
Vallourec (VK) € 71.67 +2.40%
Technip (TEC) € 76.46 +1.34%
Air Liquide (AI) € 95.27 +0.52%
PPR (PP) € 130.30 +0.35%
EADS (EAD) € 24.37 +0.29%
Renault (RNO) € 37.42 +0.03%

CAC 40 - Fallers
Veolia Environnement (VIE) € 16.30 -6.67%
Schneider Electric (SU) € 98.11 -4.47%
Michelin (ML) € 58.71 -4.10%
Credit Agricole (ACA) € 8.59 -2.66%
Suez Environnement Company (SEV) € 12.77 -2.52%
Societe Generale (GLE) € 34.72 -2.47%
AXA (CS) € 13.14 -2.38%
Natixis SA (KN) € 3.13 -2.34%
BNP Paribas (BNP) € 45.46 -2.02%
GDF Suez (GSZ) € 22.76 -1.85%


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ADVFN Survey
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As retail investors are aware the markets are very volatile at the moment, so in light of this we would like to find out where you think the markets are headed.

We would be very grateful if you would take a few moments to fill out this short questionnaire (seven questions).

Click here to take part. Many thanks in advance for your help.


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US Market Reports

Dow Jones NASDAQ NYSE AMEX

Please click on the images to view our interactive charts

Debt Worries Contribute To Afternoon Pullback On Wall Street

After showing a strong upward move in morning trading on Thursday on the heels of upbeat economic data, stocks moved back to the downside over the course of the afternoon amid lingering concerns about the ongoing debt limit debate in Washington.

The major averages eventually ended the session mixed, with the Nasdaq posting a slim gain. While the Nasdaq edged up by 1.46 points or 0.1 percent to 2,766.25, the Dow fell 62.44 points or 0.5 percent to 12,240.11 and the S&P 500 slid 4.22 points or 0.3 percent to 1,300.67.

The early strength on Wall Street was due in large part to the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended July 23rd, with claims falling below the key 400,000 level.

The report showed that jobless claims fell to 398,000 from the previous week's revised figure of 422,000. The drop in jobless claims came as a surprise to economists, who had expected claims to increase to 425,000 from the 418,000 originally reported for the previous week.

Additional buying interest was generated by the release of a separate report from the National Association of Realtors showed that pending home sales increased for the second consecutive month in June.

Nonetheless, stocks pulled back well off their highs in afternoon trading amid continued concerns about the debt limit debate and a potential default by the U.S. government.

Lawmakers in Washington continue to struggle to reach an agreement on raising the debt limit, with the House scheduled to vote on House Speaker John Boehner's plan for a temporary increase in the debt ceiling this evening.

The outcome of the vote is likely to be closely watched, although Democrats in the Senate have indicated that the proposal will die in the upper chamber and President Obama has suggested that he would veto the bill if it makes it to his desk.

Among individual stocks, oil giant Exxon Mobil (XOM) fell by 2.2 percent after reporting second quarter earnings that rose to $2.18 per share but came in below analyst estimates for earnings of $2.33 per share. The company reported revenues of $125.5 billion, above expectations for $121.4 billion.

Meanwhile, DuPont (DD) closed nearly flat after reporting adjusted second quarter earnings of $1.37 per share, above analyst estimates for earnings of $1.34 per share. The chemical giant also raised its full-year earnings guidance.

Sector News

While most of the major sectors were showing only modest moves at the close of trading, notable weakness was visible among networking stocks. The NYSE Arca Networking Index fell by 2.6 percent, adding to the steep loss posted in the previous session and setting a nearly eight-month closing low.

Among networking stocks, Alcatel-Lucent (ALU) posted a particularly steep loss after reporting weaker than expected second quarter revenue growth. Shares of Alcatel-Lucent fell by 20.4 percent to their worst closing level in over five months.

Airline stocks also came under pressure over the course of the trading session, dragging the NYSE Arca Airline Index down by 1.6 percent to a one-year closing low. United Continental (UAL) and US Airways (LCC) turned in two of the sector's worst performances.

Electronic storage, gold, and telecom stocks also saw notable weakness on the day, while strength was visible among oil service stocks. Cameron International (CAM) helped to lead the sector oil service higher after reporting better than expected second quarter earnings.

Looking Ahead

The outcome of the vote on the House GOP's debt ceiling proposal may impact trading on Friday along with the Commerce Department's advance report on second quarter GDP.

On the earnings front, Merck (MRK), Chevron (CVX), and Amgen (AMGN) are among the companies scheduled to release their quarterly results before the start of trading on Friday.


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Friday newspaper round-up
Vodafone will pay a £2bn special dividend next year after its patience in hanging on to a minority stake in America’s biggest mobile network paid off. The British company, which owns a 45 per cent stake in Verizon Wireless, will receive £2.8bn in dividend payments after Verizon Communications, the majority owner, agreed at a board meeting to resume payouts to the parent companies, the Times reports.

A chorus of global banks has warned that Washington risks triggering a global slump and may suffer permanent loss of credibility by flirting with default on America's $14.3trn (£8.8trn) federal debt. The dangers are almost as great if the US fails to lift the debt ceiling and avoids default by enacting the most drastic fiscal squeeze in modern history. "Default would be an act of collective insanity," said Willem Buiter, Cititgroup's chief economist, according to the Daily Telegraph.

The role of Carl-Henric Svanberg, BP’s chairman, whose position came under fire last year in the wake of the Gulf of Mexico spill, is under scrutiny again amid investor dissatisfaction over the oil group’s lack of clarity on its strategic direction. Several top-15 shareholders have warned that they want to see evidence of momentum by the UK oil group in the next few months in the wake of Tuesday’s disappointing earnings, the Financial Times reports.

The public is so cynical about energy suppliers that it will dismiss any investigation into soaring prices as a “stitch-up”, the head of British Gas’s parent company said yesterday. With the possibility of a Competition Commission inquiry looming, the Centrica chief executive Sam Laidlaw told The Times that distrust of the industry was so entrenched that no sudden “Damascene moment” would convince consumers that rising bills were fair.

Oberthur is in the final stages of an auction to sell large chunks of its business to private equity bidders, in a move that analysts said would provide the French group with fire power to eventually relaunch a bid for troubled UK banknote printer De La Rue. US financial investors Advent International and One Equity Partners are the two remaining contenders vying for a 60 per cent stake in Oberthur’s smart card business in a deal that could be worth up to €600m ($855m), several people close to the situation said, according to the Financial Times.

Williams-Sonoma, the upmarket US home furnishings and gourmet cookware chain, is plotting to launch in the UK next year, despite the dire turbulent conditions on the high street. The US retail group, which has 560 retail stores in the US and Canada, has appointed a UK retail property agent in the past week and plans to open its first store in the first half of next year, the Independent reports.

The Government's much-vaunted Big Society bank launches with the name Big Society Capital today under the chairmanship of Sir Ronald Cohen, a pioneer of the UK venture capital industry. In its first transaction, the £600m fund has invested £1m in Private Equity Foundation, an organisation helping disadvantaged teenagers find jobs when they leave school, according to the Independent.

Nick Leslau, one of Britain's wealthiest property entrepreneurs, has just embarked on the grandest undertaking of his career: he has snapped up the historic St Katharine Docks near the Tower of London for £156m.The son of a jeweller who grew up in Cricklewood in north London and says he has recently become "besotted" with reading books about the capital in medieval times, Leslau wants to refurbish the buildings around the 200-berth marina and hopes to entice City banks to the waterfront, the Guardian reports.

George Osborne was handed a much-needed boost yesterday as Britain was deemed a safer place to invest than the United States. In a rare event on the financial markets, it became cheaper for the UK government than for the American administration to borrow money from international lenders, the Daily Mail reports.