ADVFN Morning Euro Markets Bulletin - Jan 24th 2011

London Market reports
Cautious start to week

Market Movers
FTSE 100 5,903.08 +0.12%
techMARK 1,867.46 +0.13%
FTSE 250 11,578.06 +0.39%

London is muddling along in the early exchanges despite the decent finish to last week on Wall Street.

Banks are weak after comments by the head of the Independent Banking Commission over stricter capital rules and possible separation of the retail and investment bank arms. The political problems in Ireland have also unsettled the mood. RBS and Lloyds are both lower.

International Consolidated Airlines, the newly formed British Airways-Iberia entity, is up on its first day.

Standard Chartered has agreed to buy Singapore-based car and personal loans business GE Money for an undisclosed sum. Though no financial details have been disclosed, talk is that GE will get as much as S$900m (£439m) for the unit.

Data search software giant Autonomy has announced its seventh and eighth contract wins of 2011. The company has entered into a “significant agreement” with Euronews, a leading international news channel in Europe, and with an unnamed US hedge fund.

Outsource giant Serco has played down weekend reports it wants to buy US homeland security firm SRA International. The UK firm says it is "not in any discussions regarding any major transaction at this time," though it did not say whether it had been in discussions prior to the announcement. Stories at the weekend suggested Serco had made an offer worth $2bn for SRA and had been mulling a £500m rights issue to help pay for the deal.

John Lovering is to step down as chairman of Mitchells and Butlers and quit the board later this year. The pubs group is searching for a successor to Lovering whose stint in the chair has been short but action packed.

Irish foods group Greencore may be prepared to improve its offer for biscuits and pizza group Northern Foods after the agreed merger between the two was scuppered by Indian firm Boparan's £342m offer late Friday.

Shares of 3D and 2D x-ray imaging firm Image Scan powered ahead after it announced it had signed a £750,000 contract for the supply of an x-ray inspection system for use within a large UK nuclear facility.

Gem Diamonds received record average prices for stones from its Letšeng and Ellendale mines during the fourth quarter. Over the last three months of 2010, 24,517 carats of rough diamonds from Letšeng in Lesotho were sold at an average price of $3,291 per carat, up 74% from the $1,894 it made the year before.


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UK Event Calendar
INTERIM DIVIDEND PAYMENT DATE

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ANNUAL REPORT

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INTERNATIONAL ECONOMIC ANNOUNCEMENTS

PMI Manufacturing Survey (FRA) (08:00)
PMI Service Sector Survey (FRA) (08:00)
PMI Service Sector Survey (GER) (08:30)
PMI Manufacturing Survey (GER) (08:30)
PMI Manufacturing Survey (EU) (09:00)
PMI Service Sector Survey (EU) (09:00)
PMI Composite Index (EU) (09:00)
Industrial New Orders (EU) (10:00)


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European Market Reports
Ireland surges after week-end of political chaos

Europe’s stock markets have opened mixed, though, curiously, Ireland has got off to a flyer despite the political shenanigans over the week-end that saw prime minister Brian Cowen resign as leader of the Fianna Fail and the Green Party withdraw from the coalition government.

Ireland’s Overall Index is up 27 points at 2,873. Elsewhere, the German DAX is down 22 points at 7,040, the French CAC is unchanted at 4,018 and the Spanish IBEX is 8 points higher at 10,837.

In company news, consumer electronics leviathan Philips came up short of analysts’ estimates with its fourth quarter earnings.

Profit after tax rise to €463m from €251m a year earlier, but the market had been hoping for a figure of around €515m.

Sales rose to €7.39bn from €7.26bn the year before.

Irish foods group Greencore may be prepared to improve its offer for biscuits and pizza group Northern Foods after the agreed merger between the two was scuppered by Indian firm Boparan's £342m offer late Friday.

In a statement Greencore said a combination with Northern Foods still represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders.

The protracted merger talks between drugs firms Sanofi Aventis and Genzyme are still going on. French outfit Sanofi Aventis has extended the acceptance period for its $69 a share offer until February 15.


CAC 40 - Risers
Saint Gobain (SGO) € 42.32 +1.73%
Pernod Ricard (RI) € 70.91 +1.47%
AXA (CS) € 15.13 +1.20%
Vivendi (VIV) € 21.81 +0.65%
Societe Generale (GLE) € 48.38 +0.63%
Accor (AC) € 32.81 +0.61%
BNP Paribas (BNP) € 55.43 +0.60%
EADS (EAD) € 20.49 +0.49%
GDF Suez (GSZ) € 29.78 +0.44%
Total (FP) € 42.71 +0.42%

CAC 40 - Fallers
Technip (TEC) € 68.00 -2.09%
ST Microelectronics (STM) € 8.46 -1.86%
Peugeot (UG) € 30.83 -1.50%
Vallourec (VK) € 79.43 -1.45%
Alstom (ALO) € 41.65 -1.39%
Schneider Electric (SU) € 111.65 -1.28%
Air Liquide (AI) € 93.20 -1.19%
Suez Environnement Company (SEV) € 15.23 -0.56%
Publicis Groupe Sa (PUB) € 37.42 -0.48%
Lafarge (LG) € 47.61 -0.45%


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US Market Reports
Dow lifted by GE

Wall Street moved higher as figures from General Electric lifted the mood, though technology-focused Nasdaq fell back.

Dow Jones rose 49 to 11,871, the S&P 500 gained 3 at 1,283 but the NASDAQ fell 14 at 2,689. EBay, Sears and Electronic Arts dragged NASDAQ lower.

There were good results from General Electric (GE), while Bank of America reported a widely anticipated loss. It appears that GE’s figures are being taken as a further sign of the recovery in US corporate profits.

Conglomerate GE grew fourth quarter profit by 31% to $3.9bn, beating estimates, while BoA’s fourth quarter loss was $1.24bn. America’s biggest bank by assets saw heavy losses in the fourth quarter due to costs related to bad mortgages.

Google was higher on the day having stolen the after hours headlines as it announced co-founder Larry Page is to replace chief executive Eric Schmidt, who will become executive chairman. Google also unveiled a 29% rise in net profits to $2.5bn in the past quarter on revenues of $8.4bn.

Intuitive Surgical was the best performer in the S&P after reporting earnings of $3.02 a share, compared with expectations of $2.25 a share.

Hughes Communications, which provides broadband via satellite, is higher after rumours that it is up for sale.

Meanwhile, Hewlett-Packard says four directors are leaving and five new ones appointed, including former eBay boss Meg Whitman.

S&P 500 - Risers
Intuitive Surgical Inc. (ISRG) $326.99 +12.82%
General Electric Co. (GE) $19.74 +7.11%
Dean Foods Co. (DF) $10.46 +6.09%
SunTrust Banks Inc. (STI) $29.50 +5.85%

S&P 500 - Fallers
Advanced Micro Devices Inc. (AMD) $7.54 -5.99%
Electronic Arts Inc. (ERTS) $15.13 -4.00%
Jabil Circuit Inc. (JBL) $19.84 -3.92%
People's United Financial Inc. (PBCT) $13.20 -3.60%

Dow Jones I.A - Risers
General Electric Co. (GE) $19.74 +7.11%
American Express Co. (AXP) $46.00 +1.61%
Exxon Mobil Corp. (XOM) $78.98 +1.58%
Walt Disney Co. (DIS) $39.74 +1.46%

Dow Jones I.A - Fallers
Bank of America Corp. (BAC) $14.25 -1.99%
Microsoft Corp. (MSFT) $28.01 -1.21%
Alcoa Inc. (AA) $15.80 -1.13%
Caterpillar Inc. (CAT) $92.75 -0.92%


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Newspaper Round-up
Barclays, Cocoa, Centrica...



Bob Diamond will stamp his authority on Barclays next month, when the incoming chief executive announces a radical overhaul of the way it pays its top bankers.

According to people close to the plans, Mr Diamond aims to use innovative bonds – so-called contingent convertibles, or cocos – to pay a large portion of the bonuses for more than 1,000 bankers, those ranked at managing director level and above. Barclays is also planning to announce a broad-based review of its operations, pinpointing underperforming units and setting strict improvement targets, the FT reports.

Europe's banks are facing an exodus of staff to US rivals as regulatory and political pressure drives a growing pay divide between financial institutions headquartered on either side of the Atlantic. Warnings over the divide follow a roller coaster weekend in which Sir John Vickers, the banking commission chief, said Britain's lenders could be broken up and talks between finance chiefs and the Treasury over bonuses and lending targets stalled, the Telegraph reports.

Traders are bracing for a jump in the price of cocoa on Monday, after the internationally recognised president-elect of Ivory Coast imposed a one month export ban in an attempt to oust Laurent Gbagbo, who the international community said lost elections though he remains president. Cocoa is the main source of income for the government of Ivory Coast and any stoppage in exports would cut the funding Mr Gbagbo relies on to pay loyal civil servants and the military. Diplomats believe he needs about $150m a month, the FT reports.

A surge in profits of as much as 25% at the British Gas group Centrica looks set to prompt a Competition Commission investigation into Britain’s leading energy suppliers. Only two years after its last inquiry into the industry, Ofgem is in the middle of a new investigation into whether consumers facing historically high energy bills are being ripped off by the big six electricity and gas providers. The industry regulator’s latest inquiry was sparked by figures indicating that suppliers’ profit margins had increased by 38% year on year, the Times reports.

Serco, the FTSE 100 outsourcing group, has walked away from SRA International after the US security, defence and health services company rejected a near-$2bn approach. Serco’s board was unwilling to sweeten its indicative offer, people familiar with the matter said. Its decision not to pursue the approach further followed a strong run in the New York-listed company’s shares, which have risen 27% since the turn of the year, the FT reports.

A third of British households believe that their finances have deteriorated because of low income growth and rising inflation, a survey suggests. About 34% of 1,500 individuals polled said that they had suffered a worsening in their household budgets, compared with only 6% who noticed an improvement, according to the economics consultancy Markit. Respondents were particularly concerned about inflation, with 83% reporting an increase in the cost of living, while only 2% reported a decrease, the Times reports.

Thousands of British companies are suffering from serious financial problems as the economy gears up for the full impact of the public spending cuts and tax rises, according to a report from the restructuring and administration firm Begbies Traynor. Almost 148,000 companies were dealing with "significant" or "critical" financial problems over the final three months of 2010, the Independent reports.

Greencore is set to return to the fight for Northern Foods by adding cash to its offer for the company. The Irish food manufacturer is preparing to improve its offer after Northern Foods abandoned a planned merger between the two in order to back a higher offer from Ranjit Boparan, the Midlands-based entrepreneur. Mr Boparan, known as the “Chicken King” for his 2 Sisters poultry processing empire, won a recommendation from Northern Food’s board late on Friday after tabling a 73p-a-share cash offer that values the business at £342m, the Times reports..

The property entrepreneur Vincent Tchenguiz has taken a stake in an Israeli defence technology company as part of a much larger plan to create a homeland security business. Mr Tchenguiz’s Consensus Business Group has invested more than £500,000 in the high-technology company eVigilo, which in conjunction with Ericsson has developed technology that allows warning messages to be sent to mobile phones in a specific area, the Times reports.

The next generation of mobile phones disrupt cable television according to an official report, but the communications watchdog is confident the issue will be resolved before they go on sale. Ofcom has been aware that Long Term Evolution – or 4G – mobile phones caused interference to cable TV set-top boxes and called in Cobham Technical Services to investigate last year, the Independent reports.