ADVFN Morning Euro Markets Bulletin - Jan 5th 2011

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London Market Reports
Blue chips open lower

Market Movers
FTSE 100 5,983.82 -0.50%
techMARK 1,852.84 -0.11%
FTSE 250 11,671.80 -0.43%

London has opened weaker, continuing the softer trend seen towards the end of yesterday's session with retailers and food groups under pressure.

The snow lost Next an estimated £22m of full price sales in the run-up to Christmas - about 2.2% of the season's total sales - although the high street fashion chain remains on target to meet full-year profit forecasts. Like for like sales between 1 August and 24 December tumbled 6.1%, worse than analysts expected.

Fast growing pizza delivery firm Domino’s Pizza will deliver an extra topping of profits after a strong finish to the year. System sales for the 13 week period to 26 December increased by 17.8% to £132.5m from £112.4m in the corresponding period of 2009.

Entertainment media retailer HMV is in serious strife with a warning that it may struggle to meet bank covenants after sales tumbled in December. "Given the difficult trading conditions over Christmas and the likely outturn for the year, the board now expects that compliance with the April covenant test under the group's bank facility will be tight and is taking further mitigating actions during the next four months to address this," it said.

AB Foods and Marks & Spencer are lower after a report that the cost of a loaf of bread is set to rise this month after UK wheat prices hit an all-time high. Industry executives and traders have quietly told wholesale consumers, such as bakers and pasta and biscuit producers, to expect price increases over the next two to three weeks, following a round of hikes in October and November, the FT reports.

Oil fabrications giant Petrofac has confirmed the appointment of Andy Inglis, the former head of BP's exploration and production and who was in charge of safety at the time of the Gulf of Mexico oil spill.

India-focused Hardy Oil and Gas has plugged and abandoned the KG-D9-B3 well on its D9 (KG-DWN-2001/1) exploration licence. Hardy’s second exploratory well in the Krishna Godavari basin on the East Coast of India drilled down 3,829 metres. There were gas shows of 6-9%, but tests suggests water gradient in the sand packages.

Oil explorer Gulf Keystone shares picked up after a bullish update on its Shaikan-3 shallow appraisal well, which tested the Cretaceous intervals in the immediate vicinity its huge Shaikan-1 discovery. As a result of the tests, log evaluations and recovered fluid samples, Gulf Keystone's current P50 (probable) to P10 (possible) estimate of Garagu oil in place volumes is 220m to 2.2bn barrels.

Trading has continued to improve at banking software company Gresham Computing which made a profit in the fourth quarter. Business had already improved during the first three quarters of 2010 when the company returned to a first half profit of £0.1m.


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UK Event Calendar
FINALS

William Sinclair

TRADING ANNOUNCEMENTS

Next

IMS

Domino's Pizza UK & Irl

UK ECONOMIC ANNOUNCEMENTS

PMI Construction (09:30)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

PMI Composite (GER) (08:55)
PMI Services (GER) (08:55)
PMI Composite (EU) (09:00)
PMI Services (EU) (09:00)
MBA Mortgage Applications (US) (12:00)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
Crude Oil Inventories (US) (15:30)
FOMC Interest Rate Minutes (US) (19:00)


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European Market Reports
Stocks drift lower

Stocks ease back as the market mulls the signficance of the minutes of the most recent meeting of the Federal Reserve’s rate setting committee, which showed the committee is still committed to the $600bn extra stimulus package. Some investors are also keeping their powder dry ahead of this week’s US non-farm payrolls data.

The Paris CAC is down 15 at 3,900 and the DAX in Frankfurt is off 9 points at 6,966. Spain’s IBEX 35 index is 24 points lower at 9,864.

Spain’s largest oil firm, Repsol, has taken a step back after saying it will buy a 30% stake in an oil licence off the coast of Colombia.

In Germany car maker BMW is in the slow lane after it failed to topple Toyota’s Lexus Marquee as the best selling luxury car brand in the US in 2010.

It was not all bad news for the German car industry, however, as BMW hacked away at Lexus’s lead; Lexus sold 9,216 more cars than BMW in the US in 2010, down from a lead of 19,473 in 2009.

Sales of Mercedes cars rose 14% in 2010 from 2009’s level, giving the auto manufacturer third place at the luxury end of the US market.

German semiconductor maker Infineon has settled its civil dispute with its former boss, Ulrich Schumacher. The former chief executive will receive annual pension payments of €0.56m from 2018 onwards.

CAC 40 - Risers
Technip (TEC) € 73.92 +2.90%
EADS (EAD) € 18.21 +1.56%
Renault (RNO) € 45.40 +1.01%
Peugeot (UG) € 30.26 +0.95%
Lagardere SCA (MMB) € 33.31 +0.86%
ST Microelectronics (STM) € 8.16 +0.85%
Michelin (ML) € 54.43 +0.28%
France Telecom (FTE) € 15.98 +0.19%
Cap Gemini (CAP) € 35.78 +0.14%

CAC 40 - Fallers
Danone (BN) € 46.62 -1.80%
Dexia (DEXB) € 2.78 -1.63%
Vivendi (VIV) € 20.58 -1.34%
LVMH (MC) € 119.95 -1.32%
Societe Generale (GLE) € 42.53 -1.31%
Carrefour (CA) € 32.07 -1.26%
Veolia Environnement (VIE) € 22.08 -1.23%
Credit Agricole (ACA) € 9.94 -1.15%
AXA (CS) € 12.93 -1.15%
Air Liquide (AI) € 94.90 -0.94%


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US Market Reports
Mixed day for US markets

Wall Street was mixed with the Dow closing ahead after a volatile day but Nasdaq and the S&P finished lower.

The Dow gained 20 at 11,691, but the broader based S&P 500 fell 1 at 1,270, while the tech heavy NASDAQ Composite dipped 10 points to 2,681.

Minutes from the most recent meeting of the Federal Reserve’s rate setting committee showed they are still committed to the $600bn extra stimulus package.

US factory goods orders in November rose 0.7%, confounding economists’ expectations of a small decline. Last week, retail sales rose by 3.6% compared to a year ago.

GM’s sales rose by 7.5% in December thanks to strong demand for the Chevrolet Cruze.

Drug store group Rite Aid is posting healthy gains after it said like for like sales in early December were up 0.6% on the same period a year earlier.

Telecoms stock Motorola is in focus as today marks the day when the company splits into two, with Motorola Mobility getting the mobile phone business and Motorola Solutions getting the rest of the operation.

Morgan Stanley downgraded retailer Supervalu, while BMO cut Safeway from outperform to market perform. Deutsche Bank upgraded cruise ship operator Carnival from hold to buy.

Books retailer Borders has fallen following the recent departure of two executives.

The crude price retreated more than $2 per barrel to below $90 per barrel again.




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Newspaper Round-up
Oil, Wheat, BP...

High oil prices threaten to derail the fragile economic recovery among developed nations this year, the leading energy watchdog has warned, putting pressure on the Opec oil cartel to increase production.

Over the past year the oil import costs for the 34 mostly rich countries that make up the Organisation for Economic Co-operation and Development have soared by $200bn to $790bn at the end of 2010, according to an analysis by the International Energy Agency, the FT reports.

The cost of a loaf of bread is set to rise this month, fuelling domestic inflationary pressures, after UK wheat prices hit an all-time high. Industry executives and traders have quietly told wholesale consumers, such as bakers and pasta and biscuit producers, to expect price increases over the next two to three weeks, following a round of hikes in October and November. The warning came as the cost of UK wheat hit a nominal record high in the London market on Tuesday at £203.30 per tonne, up 90 per cent over the past year and above the previous peak of £197.50 a tonne set in September 2007, the FT reports.

Shares in BP jumped as much as 7% to a six-month high in London on the first day of trading in the new year as investors bought back into the stock after news that its compensation pay-outs for the Gulf of Mexico spill might be much lower than anticipated. Fresh reports that rival Royal Dutch Shell considered a takeover bid for the UK oil group also helped drive up the shares. The shares were buoyed by positive comments from Kenneth Feinberg, the lawyer in charge of the $20bn compensation fund set up by BP in the summer to help pay for claims from the spill. “I would hope that half that money would be more than enough to pay all the claims,” Mr Feinberg told Bloomberg Television, adding that many claims lacked sufficient documentation to warrant payment, the FT reports.

Manufacturing activity roared to a 16-year high last month, but surging costs of energy and metals are fuelling inflationary pressures, according to a closely watched industry report. The purchasing managers’ index of factory activity rocketed to a “truly spectacular” 58.3, well above the 50 level that marks the divide between contraction and expansion, according to Markit Group. Separate figures from the United States showed that manufacturers there also enjoyed a jump in orders at the end of the year, the Times reports.

The US economy’s improvement in recent weeks has not weakened the conviction among senior officials at the Federal Reserve that a second dose of quantitative easing (QE) is needed, minutes of their latest meeting show. The decision by the Fed’s Open Market Committee (FOMC) to embark on a new, $600bn (£384bn) round of QE proved controversial even without the last two months’ evidence that the world’s largest economy is strengthening, the Telegraph reports.

Blackrock, the world's biggest asset management firm, has predicted that US stock markets will record their third straight year of gains since the financial crisis, brushing off anxieties about Europe's debt woes and the scale of stimulus in the US. lackRock, which invests $3.45trn (£2.2trn) for customers, expects the S&P 500 to finish this year at 1,350 or beyond. It closed yesterday at 1,266, the Telegraph reports.

The man running Tesco’s new cash-for-gold service was a boss of a fraudulent college that swindled nearly 80,000 students. Peter Kenyon, chief executive of Ramsdens Financial Services, was a director of National Distance Learning College. His business partner, Michael Smallman, is serving a seven-year sentence for fraudulent trading and money laundering after he was convicted in 2008 of tricking students into believing they would receive a recognised qualification. Mr Kenyon was cleared of any wrongdoing and there is no suggestion that he acted improperly, the Times reports.

Mozilla'a Firefox has replaced Microsoft's Internet Explorer as the most widely-used web browser in Europe. The search engine took a 38.1% market share across the continent in December, surpassing Internet Explorer's 37.5% - the first time Microsoft has lost the top spot in a leading market. Google Chrome saw its share rise to 14.6% from just 5.1% a year earlier, the Telegraph reports.

EasyJet is buying 15 new passenger planes and upgrading an existing 20-strong order to larger aircraft, in the teeth of long-standing opposition to expansion plans from the founder and largest shareholder, Sir Stelios Haji-Ioannou. The decision from easyJet chief executive, Carolyn McCall – who took over in July when her predecessor left under the cloud of an increasingly vicious spat with Sir Stelios – commits the company to ambitious European expansion plans, the Independent reports.