ADVFN Morning Euro Markets Bulletin - February 27th 2012

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London Market Reports

FTSE 100 Euronext Dax perf CAC 40

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Market Movers

techMARK 2,014.39 -0.60%
FTSE 100 5,892.46 -0.72%
FTSE 250 11,435.36 -0.79%
- Essar drops after full-year results.
- Vedanta confirms merger of Indian subsidiaries.
- HSBC beats expectations in 2011.

London's blue chip index fell sharply in early trading on Monday after a G20 meeting failed to alleviate concerns over the economic crisis in Europe. Essar Energy and the miners leading the downside, while the reaction to HSBC's full-year results was, on the whole, rather muted.

G20 told Europe that it must first work on raising more funds itself if it expects to receive more financial assistance from the rest of the world. Based on their communiqué published on Sunday, at last weekend's meeting of Finance Ministers and Central Bank Governors, the G20 members were content to pat themselves on the back for having "been actively engaged in taking the steps needed to safeguard the global financial system and to avoid adverse scenarios".

Yet their discussion on the possibility of increasing the International Monetary Fund's resources was put off as they await "essential input", mainly for the euro are countries to "reassess the strength of their support facilities in March". Currently under discussion in Europe is the possibility of merging the temporary and permanent bailout funds, known as the EFSF (European Financial Stability Facility) and ESM (European Stability Mechanism), respectively. The ESM is supposed to replace the EFSF, but a possible merger would increase this firewall from €500bn to around €750bn.

The idea's main opponent is Germany. The Eurozone's motor of growth is worried about footing the bill for the crisis when the root problems have not been snipped out.

Also weighing on sentiment was the price of oil. Brent crude futures were down 0.89% at $124.36 by 08:41 on the InterContinental Europe Exchange, but the recent surge has seen the price come near to its highest level since 2008 due to Iran-related supply concerns. Thoughts are now turning to the effect that elevated prices will have on the recovery in Europe.

At the weekend, the Managing Director of the International Monetary Fund (IMF), Christine Lagarde, said that the global economy is "still not out of the danger zone" - "The G20 countries must now strengthen resilience to further shocks that could result from the still-fragile financial systems, high public and private debt, and higher world prices…Of equal concern is unemployment, which is still too high in many countries," she said.

ESSAR DROPS AFTER FULL-YEAR RESULTS

Leading the downside was India-focused power generation and oil and gas group Essar Energy after reporting a sharp drop in profits in the 12 months ended December 31st. When accounting for the reversal of a sales tax benefit - due to the Indian Supreme Court ruling against a sales tax deferment - the group fell to a pre-tax loss of $881.1m, from a profit of $365.5m the year before.

Pearson, publisher of Penguin books and the Financial Times, was a heavy faller after seeing sales climb to £5,862m in 2011 from £5,663m in 2010, below the market consensus forecast of £5,919m.

Meanwhile, miners were firmly out of favour as metals prices edged lower. Kazakhmys, Eurasian Natural Resources Corp, Anglo American and Xstrata were among the top 10 worst performing stocks.

Bucking the trend was Vedanta Resources which, following weeks of speculation, confirmed that it will be merging its Indian iron ore and copper divisions, Sesa Goa and Sterlite, respectively, to create a new multi-metal mining giant - Sesa Sterlite. The combination is expected to create India's natural resources "champion" and is anticipated to be the world's seventh-largest global diversified natural resources major on an EBITDA (earnings before interest, tax , depreciation and amortisation) basis.

Just six stocks were on the rise with distribution and outsourcing firm Bunzl leading the way after profits were comfortably ahead of expectations in 2011, with the new bits and the old bits of the company all chipping in with strong performances.

Oil group BP followed suit after the court hearing regarding the Macondo oil well explosion which was due to start on Monday February 27th was delayed by one week. The delay is to allow more time for BP and the Plaintiffs' Steering Committee (PSC) more time to continue settlement discussions and attempt to reach an agreement.

Global banking colossus HSBC saw strong profits growth in 2011 despite its investment banking arm's profits taking a dive. Reported profit before tax at $21,872m was ahead of expectations and up from $19,037m the year before. Shares nudged slightly lower, while Lloyds and Barclays were also on the fall.

Shares in UK-based insurance titan Prudential were also lower after announcing that it could be upping sticks and moving its headquarters outside Europe to avoid strict new capital rules for European insurers.

Associated British Foods, the foods group which also owns the Primark clothes store, fell despite saying that adjusted operating profit will be ahead of last year's interim outcome.

On the FTSE 250, housebuilder Bovis fell despite posting a 74% increase in annual pre-tax profit after it sold more homes at a wider margin. Profit before tax rose to £32.1m for the financial year ended 31 December 2011 from £18.5m the year before. Revenue for the year increased to £364.8m from £298.6m previously.


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FTSE 100 - Risers
Bunzl (BNZL) 955.00p +2.63%
BP (BP.) 502.90p +1.35%
Marks & Spencer Group (MKS) 357.40p +1.13%
Admiral Group (ADM) 1,053.00p +0.57%
Vedanta Resources (VED) 1,507.00p +0.47%
British American Tobacco (BATS) 3,141.50p +0.46%

FTSE 100 - Fallers
Essar Energy (ESSR) 120.20p -4.60%
ICAP (IAP) 383.50p -2.91%
Kazakhmys (KAZ) 1,130.00p -2.84%
Hargreaves Lansdown (HL.) 450.60p -2.47%
Pearson (PSON) 1,224.00p -2.16%
Eurasian Natural Resources Corp. (ENRC) 723.50p -2.10%
Lloyds Banking Group (LLOY) 34.99p -2.07%
Anglo American (AAL) 2,640.50p -1.97%
Xstrata (XTA) 1,191.50p -1.93%
Associated British Foods (ABF) 1,196.00p -1.89%

FTSE 250 - Risers
Cookson Group (CKSN) 691.00p +3.06%
JD Wetherspoon (JDW) 405.00p +1.94%
Imagination Technologies Group (IMG) 597.50p +1.36%
Carpetright (CPR) 680.00p +1.04%
Stobart Group Ltd. (STOB) 124.30p +0.97%
Phoenix Group Holdings (DI) (PHNX) 570.00p +0.97%
Home Retail Group (HOME) 104.20p +0.87%
RPS Group (RPS) 231.90p +0.83%
Brown (N.) Group (BWNG) 246.30p +0.78%
Bodycote (BOY) 403.00p +0.75%

FTSE 250 - Fallers
Bovis Homes Group (BVS) 483.40p -4.37%
Ferrexpo (FXPO) 313.30p -3.27%
Kenmare Resources (KMR) 58.30p -3.08%
Spirax-Sarco Engineering (SPX) 2,023.00p -3.02%
Senior (SNR) 195.40p -2.79%
Spectris (SXS) 1,706.00p -2.51%
Laird (LRD) 170.60p -2.46%
Exillon Energy (EXI) 234.50p -2.45%
JPMorgan Indian Inv Trust (JII) 382.90p -2.42%

UK Event Calendar

Monday February 27

INTERIMS
Netcall, Sareum Holdings

INTERIM DIVIDEND PAYMENT DATE
City of London Investment Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
M3 Money Supply (EU) (09:00)
Pending Homes Sales (US) (15:00)

Q4
PostNL NV

FINALS
Bovis Homes Group, Cookson Group, Dialight, Hiscox Ltd., HSBC Holdings, Keller Group, Microgen, Pearson, PostNL NV, Senior, Staffline Group, Ultra Electronics Holdings, WSP Group

ANNUAL REPORT
Treatt

IMSS
Essar Energy

EGMS
JSC Acron GDR (Reg S), JSC KazMunaiGaz Exploration Production GDR (Reg S)

AGMS
Treatt

TRADING ANNOUNCEMENTS
Associated British Foods

FINAL DIVIDEND PAYMENT DATE
Compass Group




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European Market Reports

FTSE 100 Euronext Dax perf CAC 40


-Banks deposited €477.5bn at ECB overnight.
-Italy will auction €12.25bn in bills this afternoon.

FTSE-100: -0.51%
Euro Stoxx 50: -0.68%
Dax-30: -0.68%
Cac-40: -0.71%
Ibex 35: -0.40%

The major European equity benchmarks have begun the day moderately underwater, weighed down by the lack of agreement at this past weekend´s G-20 summit on an increase in the resources which are put at the disposal of the International Monetary Fund (IMF). Some officials had been hoping that Europe would contribute another €250bn to the so-called European Stability Mechanism, to which international creditors would add a further €250bn for the IMF, thus bringing the total funds available to deal with the crisis in the European periphery to €1tn.

While that possibility remains the assembled countries were unanimous in asking that Europe first increase its own resources for the rescue-fund. Similarly, whereas some news reports had indicated that Germany might be willing to show greater flexibility the country´s finance minister seemed to quash that line of thinking. "Let me be clear," Mr Schäuble said. "It does not make any economic sense [to take measures] which would neutralise the interest risk in the Eurozone, nor endlessly pumping money into stability funds, nor starting up the ECB printing press."

Despite that, some observers, such as the Financial Times, believe that Germany´s stance may indeed be softening. Of possible interest as well, Finland seems to have changed its mind on that subject (as Holland also did recently), leaving Germany as the sole country opposed to such an increase.

EQUITIES

Shipping giant Maersk is down 3.2% after posting a 43% drop in 2011 profit to 15.2bn kroner.

From a sector stand-point the worst performers now are automobiles (-1.70%), basic resources (-1.14%) and technology (-1.09%).

MACROECONOMY

French producer prices rose by 0.6% month-on-month in January (Consensus: 0.4%).

The rate of growth in the Eurozone´s money supply increased to 2.0% year-on-year in January (Consensus: 1.8%).

Italian business confidence fell to 91.5 points in February (Consensus: 92.3), from 92.1 the month before.

OTHER MARKETS

The euro/dollar is falling 0.11% to the 1.3430 dollar mark.

Front month Brent futures are down 0.93% to the $124.31 level.


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US Market Reports


Dow Jones Industrial: -2 at 12,983
NASDAQ Composite: +7 at 2,964
S&P 500: +2 at 1,366

- Geithner says US is considering release from strategic oil reserve-CNBC
- Arab states push for more forceful intervention in Syria.
- Sears soars after divestment proposals
- Salesforce.com gets the right numbers

While the venerable Dow Jones index span its wheel on Fridays, finishing the day little moved, the S&P 500 edged up to its highest level since June 2008, buoyed by some decent economic data and solid corporate updates.

Retailer Sears led the way after the company announced plans on Thursday to sell 11 stores and some other businesses as it seeks to raise as much as $770m.

Helpdesk software firm Salesforce.com was also on a charge, as it said customer invoice amounts in the fourth quarter were up 57% year-on-year, comfortably ahead of market expectations.

Advertising firm Interpublic Group gave itself a leg-up with news of a planned $300m share buy-back programme. Health insurer Aetna was on the same kick, announcing it will buy back $295m of its own shares.

Recovery stock AIG was wanted following its quarterly results, but footwear firms Crocs and Deckers Outdoor were both given the boot by investors after disappointing with earnings guidance. Clothing retailer Gap was another hammered after profits guidance underwhelmed.

JP Morgan has reiterated its overweight stance on shares of Apple ahead of the World Mobile Congress on Monday.

Cable company Comcast sent Sprint backwards when it said it is suing a unit of the telecoms firm, alleging the infringement of four patents.

MACROECONOMY

US consumer confidence rose to 75.3 points in February, according to the latest survey from the University of Michigan.

New home sales rose more than expected in January, to an annualized rate of 321,000 (Consensus: 315,000).

OTHER MARKETS

The price of West Texas sweet light crude for April delivery rose $1.94 to $109.77 a barrel in NYMEX trading.

10-year US Treasuries for their part gained 6/32 dollars with yields at 1.98%.

S&P 500 - Risers
Sears Holdings Corp. (SHLD) $68.31 +10.53%
Salesforce.Com Inc. (CRM) $143.64 +9.01%
Interpublic Group of Companies Inc. (IPG) $11.66 +6.87%
Boston Scientific Corp. (BSX) $6.25 +5.93%
R.R. Donnelley & Sons Co. (RRD) $14.10 +4.06%
Iron Mountain Inc. (IRM) $31.47 +4.03%

S&P 500 - Fallers
Valero Energy Corp. (VLO) $24.38 -5.50%
First Solar Inc. (FSLR) $35.58 -4.35%
Gap Inc. (GPS) $22.57 -4.04%
Tesoro Corp. (TSO) $27.70 -3.59%
Masco Corp. (MAS) $11.57 -3.02%

Dow Jones I.A - Risers
American Express Co. (AXP) $53.33 +1.25%
Pfizer Inc. (PFE) $21.18 +0.71%
Chevron Corp. (CVX) $109.08 +0.67%

Dow Jones I.A - Fallers
Bank of America Corp. (BAC) $7.88 -1.75%
Hewlett-Packard Co. (HPQ) $26.64 -1.52%
Johnson & Johnson (JNJ) $64.45 -1.00%

Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $68.31 +10.53%
Logitech International S.A. (LOGI) $8.89 +2.42%
Cognizant Technology Solutions Corp. (CTSH) $72.18 +2.24%
Citrix Systems Inc. (CTXS) $75.16 +1.87%
Urban Outfitters Inc. (URBN) $29.62 +1.65%
Fiserv Inc. (FISV) $66.87 +1.56%
Baidu Inc. (BIDU) $134.89 +1.54%
Oracle Corp. (ORCL) $29.25 +1.53%
Wynn Resorts Ltd. (WYNN) $118.10 +1.51%

Nasdaq 100 - Fallers
Nll Holdings Inc. (NIHD) $20.25 -4.53%
First Solar Inc. (FSLR) $35.58 -4.35%
Marvell Technology Group Ltd. (MRVL) $15.46 -3.71%
Dish Network Corp. (DISH) $28.80 -2.77%
Comcast Corp. (CMCSA) $29.19 -2.08%
Warner Chilcott Plc (WCRX) $16.33 -2.04%
KLA-Tencor Corp. (KLAC) $47.75 -1.65%
Autodesk Inc. (ADSK) $37.62 -1.52%




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Newspaper Round Up
A communique agreed by G20 finance ministers in Mexico City last night said a decision by Eurozone leaders to boost their own firewall was "essential" before any more external resources were allocated via the International Monetary Fund. () Germany's Wolfgang Schaeuble fired back: "Let me be clear. It does not make any economic sense [to take measures] which would neutralise the interest risk in the Eurozone, nor endlessly pumping money into stability funds, nor starting up the ECB printing press." Mr Schaeuble insisted the rescue efforts were adequate. "I dare to say that Europe has done its homework," he said, claiming the reduction of Eurozone bond yields in recent weeks "show we're on the right course". The G20 also used the communique to warn that "growth expectations for 2012 are moderate and downside risks continue to be high," The Telegraph reports.

The threat to ARM Holdings' grip on the smartphone market has increased with Orange announcing plans for a budget smartphone using an Intel chip. The new device, developed under the code name "Orange Santa Clara", will be the first Intel-based smartphone in Europe. It will target the lower end of the market and aims to "democratise" access to smartphones, Vincent Brunet, executive vice president of consumer mobile devices at Orange said ahead of the Mobile World Congress, which opens in Barcelona today. The details of the Santa Clara launch are unknown, but it will be available in the UK and France, and will position Orange to grow the number of customers using their mobiles to access the internet the fastest growing part of the business, The Telegraph says.

One of Prudential's institutional shareholders has warned of the dangers of the insurer moving its head office from London to Hong Kong to try to sidestep tough solvency rules being introduced in Europe in January. Robin Geffen, managing director of Neptune Asset Management, claimed such a move would raise questions about the "financial health" of the Pru and stir memories of the company's abortive $35bn (24bn) bid for AIG's Asian arm, AIA, in 2010. Geffen's comments came amid speculation undenied by Prudential that Pru chief executive Tidjane Thiam had ordered the review of the company's UK domicile. Geffen, whose group has an undisclosable sub-3% stake in the insurer, told The Scotsman he had strong reservations about a move to Hong Kong. He said: "If this is a way of the group avoiding European solvency ratios, then investors would have every right to be worried. "If Prudential wants to head offshore in search of less stringent solvency rules then it would raise serious questions about the fundamental health of the business."

The South Korean government is plotting another swoop on the North Sea in its quest to secure global supplies of oil, The Times has learnt. KNOC, the Korean national oil company, has approached Statoil about buying a large chunk of its oilfields. Executives from Seoul have flown to Norway to open negotiations. It is understood that Statoil rebuffed the initial unsolicited approach but that talks are continuing. One source said that KNOC had "billions of dollars" to clinch a deal. In 2010 KNOC bought the North Sea producer Dana Petroleum for 1.87bn in a hostile takeover. The deal, which many in the industry believe was overpriced, will enable KNOC to meet its target of doubling production to 300,000 barrels per day this year.

Rolls-Royce is to form a safety committee following heavy criticism of the British manufacturer for its handling of an engine blow-out on a Qantas A380. The FTSE 100 company has hired City heavyweight Sir Frank Chapman, chief executive of BG Group, to chair the committee, which will be assembled this year. The move is the first public acknowledgement by Rolls of mistakes in the handling of the engine crisis. Rolls shares fell sharply after a Qantas A380 was forced to make an emergency landing in Singapore in November 2010 after its Rolls-made Trent 900 engine exploded in mid-air.() Safety committees are common in oil and gas companies and Rolls says Sir Frank will bring an "extensive engineering and technological background, and experience in a safety-conscious industry," The Telegraph writes.

Royal Bank of Scotland might have to move its corporate headquarters to London if Scotland becomes independent, according to a leading economist.Professor Charles Goodhart, a former Bank of England policymaker, said that a Scottish government would not have sufficient fiscal firepower to support such a massive lender, and that the bank might therefore have to migrate to London. "There is no way the Scottish system could have bailed out RBS and they couldn't in future," he said. "For a variety of reasons RBS would probably need to shift its head office to London." If Scotland keeps the pound, it would not have the ability to set interest rates or print money, leaving it with few financial levers to operate in a crisis, analysts argue, The Times reports.

The Mobile World Congress in Barcelona will enable the world's largest mobile phone makers to showcase their brightest innovations, such as 4G phones that offer lightning-fast speeds and handsets that work like credit cards. Yet an innovation that packs a whole mobile network neatly into a suitcase is poised to steal the show. Vodafone unveiled its "instant network" solution at last year's congress. It enables aid agencies to drop a mobile phone base station directly into a disaster zone from an aircraft. The company will beam images of the network directly into the conference, which starts today, from Kaikor in northern Kenya, where it is being used by the Red Cross. The network, which packs a base station into three suitcases weighing less than 100 kilograms, alleviates the need to ship in traditional telecoms kit, The Times says.


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