ADVFN Morning Euro Markets Bulletin - March 15th 2011

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London Market Reports
Nuclear fears sink Footsie

An 11% plunge in Tokyo this morning on fears of a nuclear catastrophe in Japan has hammered share prices in London first thing.

A third explosion at the Fukushima Daiichi nuclear power plant has raised concerns of a major radiation leak. People within 30 kilometres of the plant are being told to stay indoors, while a no-fly zone has been set up around the plant to stop the radiation spreading.

Only a handful of blue chips are in the blue, mainly retailers after steady results from Debenhams. Marks & Spencer and Next are the best of the bunch. Miners are taking a beating led by ENRC and Kazakhmys.

Sales fell at Debenhams in the first half, though by a little less than forecast, and headline profit at the department store is expected to beat last year’s effort and meet estimates. Like for like sales for the 26 weeks to 26 February fell 1.5% excluding VAT, but were flat including the tax.

Royal Dutch Shell made “good progress” in 2010 and 2011 has started well, with the oil giant on track to hit its strategic targets by next year. Shell, which hosts its annual Investor Day in London today, is one year in to a three-year strategic plan and should increase cashflow from operations 2009-2012.

A strong showing by the banking division was not enough to offset weaker performance in other parts of the business at merchant bank Close Brothers. Operating profit before tax in the six months to 31 January dipped to £55.8m from £61.8m the year before.

Security firm G4S saw profit before interest, tax and amortisation rise 4.2% in 2010 to £527m from £506m the year before. Turnover rose 4.1% to £7.4bn from £7.1bn. Organic turnover growth was 2.1%, down from a growth rate of 3.7% in 2009.

Next week could decide the fate of troubled sportswear retailer JJB Sports as it confirmed it intends to raise £65m through a new share placing but only if its landlords agree to a new company voluntary agreement (CVA).


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UK Event Calendar
INTERIMS
Air Partner, Close Brothers Group, St Ives

INTERIM EX-DIVIDEND DATE
Cash Converters International Ltd. Units

QUARTERLY PAYMENT DATE
Canaccord Financial Inc.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bank of Japan target rate (JPN)
Machine Tool Orders (JPN)
Consumer Price Index (FRA) (06:30)
Harmonised Competitiveness Indicators (EU) (09:00)
ZEW Survey (EU & GER) (10:00)
Employment (EU) (10:00)
Empire State Manufacturing Survey (US) (12:30)
Import and Export Price Indices (US) (12:30)
FOMC rate decision (18:15)

UK ECONOMIC ANNOUNCEMENTS
DCLG House Prices (09:30)

Q3
Real Estate Credit Investments Ltd.

Q4
First Quantum Minerals Ltd.

FINALS
Axis-Shield, Capital Drilling Ltd. (DI), Cello Group, Collins Stewart, Dealogic Holdings, European Goldfields Ltd., Fairpoint Group, First Quantum Minerals Ltd., Fisher (James) & Sons, G4S, Gem Diamonds Ltd. (DI), KBC Advanced Technologies, Mears Group, Metalrax Group, ProPhotonix (Reg S)

EGMS
CSS Stellar, EPE Special Opportunities, EPE Special Opportunities, Ferrexpo, Persian Gold

AGMS
Electronic Data Processing, Framlington AIM VCT, Trans Balkan Investments Ltd., Wynnstay Group

TRADING ANNOUNCEMENTS
Debenhams

Q1
Avesco Group


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European Market Reports
Sharp falls after panic selling in Japan

European dealers’ screens are a sea of red as things get worse still in Japan. A third explosion at the Fukushima Daiichi nuclear power plant has raised concerns of a major radiation leak in the region.

Europe’s major stock market indices are all down by more than percentage point and in some cases – the DAX in Germany, for example – by more than two percentage points.

The DAX is off 167 points at 6,699 while the Swiss Market Index is down 124 points at 6,149. In Paris, the CAC is 62 points lower at 3,815 while the OMX Stockholm index is one of the hardest hit, down 31 at 1,059.

The falls come in the wake of a thousand point (10.55%) fall on the Nikkei 225 index in Tokyo.

Concerns about the wisdom of relying on nuclear power in areas known to suffer from earthquakes continues to hit power providers such as RWE, Areva and EON, whole French turbine generator maker Alstom is also friendless. Conversely, clean energy providers, such as wind turbine maker Nordex and solar power specialist SolarWorld continue to be bid up.

Luxury goods makers are also suffering still; the Japanese market is a big one for companies such as LVMH and Burberry.

In corporate news, Deutsche Boerse is off the pace on fears it may face a bidding war as it seeks to merge with NYSE Euronext. Reports suggest that rival bourse operator NASDAQ OMS Group is trying to raise the funds to enter the bid battle.

German banking giant Deutsche Bank has reiterated 2011 profits guidance of €10bn at the pre-tax level.

CAC 40 - Risers
None

CAC 40 - Fallers
ST Microelectronics (STM) € 8.73 -4.08%
LVMH (MC) € 102.55 -3.80%
Alstom (ALO) € 37.13 -3.70%
PPR (PP) € 102.25 -3.36%
Renault (RNO) € 37.03 -3.00%
Peugeot (UG) € 26.51 -2.88%
Societe Generale (GLE) € 46.16 -2.73%
Cap Gemini (CAP) € 39.08 -2.68%
Alcatel-Lucent (ALU) € 3.68 -2.57%
Accor (AC) € 31.15 -2.56%


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US Market Reports
Dow slips on Japan worries

Wall Street closed lower as the earthquake in Japan cast a shadow over global stock markets.

Dow Jones shed 51 at 11,993, the S&P 500 ended 7 lower at 1,296 and Nasdaq lost 14 at 2,700.

Shares listed in Tokyo tumbled overnight as investors tried to assess the impact of the earthquake. A second explosion occurred at Japan’s Fukushima Dai-ichi nuclear plant on Monday following the blast on Saturday.

The blast occurred at the plant’s No. 3 reactor building, according to Tokyo Electric Power, the operator. The power company said the reactor’s protective containment shell remained intact after the blast. An explosion similar in nature destroyed the plant’s No.1 reactor on Saturday and there is concern about the other reactor.

Uranium miners and nuclear plant operators were on the slide. Nuclear power plant operator Entergy dropped and some uranium miners fell even further. General Electric supplied one of the reactors at the nuclear power plant.
In contrast, solar companies rose. MEMC Electronic Materials is the biggest riser in the S&P.

One company that bucked the trend was NYSE Euronext on rumours that NADSAQ OMX might launch a hostile bid for the owner of the New York Stock Exchange. It is believed that IntercontinentalExchange will buy NYSE Euronext’s European assets if the bid went ahead. The preferred suitor is Deutsche Boerse, which has tabled an offer worth $34.92 per NYSE Euronext share.

Pfizer was among the risers as was oil giant Exxon Mobil even though the price slipped back to $100 a barrel. Warren Buffett’s Berkshire Hathaway is paying $9bn for lubricant additives supplier Lubrizol.

S&P 500 - Risers
MEMC Electronic Materials (WFR) $13.37 +11.23%
Tesoro Corp. (TSO) $25.98 +6.00%
First Solar Inc. (FSLR) $146.92 +5.14%
Cabot Oil & Gas Corp. (COG) $46.22 +5.00%

S&P 500 - Fallers
Coach Inc. (COH) $53.11 -5.30%
Tiffany & Co. (TIF) $59.86 -5.27%
Entergy Corp. (ETR) $70.09 -4.89%
Owens-Illinois Inc. (OI) $29.41 -4.23%

Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $102.10 +2.08%
Pfizer Inc. (PFE) $19.81 +1.75%
Chevron Corp. (CVX) $100.80 +0.87%
Alcoa Inc. (AA) $16.12 +0.56%

Dow Jones I.A - Fallers
General Electric Co. (GE) $19.92 -2.16%
Verizon Communications Inc. (VZ) $35.18 -1.87%
Walt Disney Co. (DIS) $42.24 -1.61%
McDonald's Corp. (MCD) $75.67 -1.38%


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Newspaper Round-up
Third explosion at nuclear plant...

A third explosion rocked Japan's Fukushima nuclear power plant on Tuesday and some workers were ordered to leave the site, a sign that the situation may be getting more serious.

The operator of the Fukushima Daiichi complex said radiation levels around the site immediately after the blast were rising fast but still far from levels that local authorities say would cause large-scale radiation sickness, the Telegraph reports.

Predictions that the Japanese earthquake could prove to be the most costly ever natural disaster hit insurers yesterday. AIR Worldwide, a catastrophe risk expert, warned that the insured loss could climb to £21.5bn for the earthquake damage alone. That news led the investment bank Panmure Gordon to speculate that the total bill could top £37bn, the Independent reports.

Robert Tchenguiz has appointed Lord Ken Macdonald, the former director of public prosecutions, to examine whether search and arrest warrants obtained by the Serious Fraud Office (SFO) last week were legal. Speaking publicly for the first time since his arrest, together with that of his brother Vincent and five others, Mr Tchenguiz dismissed last week's raids as a "publicity stunt", the Telegraph reports.

Vincent Tchenguiz, the property tycoon, saw the holding companies behind his largest property business collapse into administration yester-day. Zolfo Cooper, the restructuring firm, has been hired as administrator for four companies within the Peverel Group, which is the UK's largest property management company, the Independent reports.

Britain's triple-A credit rating is safe for the time being after one of the world's leading ratings agencies said the Government's austerity package had done enough to stabilise the public finances. In a report on the UK, Fitch Ratings praised the "strong budgetary consolidation effort" undertaken by the Coalition and said the fiscal risks to the country were declining, the Telegraph reports.

Renault’s chief executive has offered to give up his bonus after issuing a humiliating apology to three managers sacked after being falsely accused of spying for China. Carlos Ghosn, who was reportedly due to receive a bonus of €1.6m for 2010, was speaking after the French car group held an emergency board meeting to consider mounting evidence that it had fallen for a scam. Patrick Pelata, the chief operating officer, will also forgo his bonus, but Mr Ghosn said that he had declined his resignation, the Times reports.

Shares in NYSE Euronext leapt more than 4.5% in New York yesterday after reports that the rival Nasdaq exchange was close to making a hostile bid. An offer from Nasdaq would trigger a politically charged battle for the New York Stock Exchange, which last month agreed to a $9bn (£5.5bn) takeover bid from Deutsche Börse, the Times reports.

Edwards, the industrial group and former BOC subsidiary, is to list on the London Stock Exchange. The £1.5bn flotation is likely to be highly profitable for its owners, two private equity funds spun out of JP Morgan. About 50 senior staff at Edwards — including two former Jaguar Land Rover bosses who now lead the company — will also be sitting on small fortunes. Their shareholdings are set to be valued at an average of £3m apiece, or £150m in total, the Times reports.

Lloyds Banking Group is understood to have all but ruled out paying former chief executive Eric Daniels a bonus for this year after shareholders objected to any payment. Mr Daniels, who received a £1.45 million bonus for 2010, was replaced on March 1 by the former Santander boss António Horta-Osório, but he will continue to work at Lloyds as an adviser until September. As such, he is entitled to be considered for a bonus, the Times reports.