US & World Daily Markets Financial Briefing 02-08-2007

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Stocks up on earnings, job readings

NEW YORK - Stocks rose tentatively Thursday after Wall Street received some solid readings on corporate earnings and the job market, but remained nervous that a tighter credit market could impede U.S. growth.
   
Traders were pleased that profits at companies such as Nokia Corp. came in better than expected, and that the Labor Department said jobless claims rose last week by a smaller number than economists predicted. The report -- which comes before Friday's highly anticipated July employment report -- was a promising sign that the U.S. job market is holding up.
   
But with the market growing more volatile, it was impossible to predict what turn trading might take. On Wednesday, the stock market surged during the last 20 minutes of trading, after ricocheting all day due to ongoing jitters about U.S. property loans and the availability of corporate credit.
   
In the first hour of trading, the Dow Jones industrial average rose 43.57, or 0.33 percent, to 13,405.94. Broader stock indicators also gained. The Standard & Poor's 500 index rose 6.90, or 0.47 percent, to 1,472.71, and the Nasdaq composite index rose 12.66, or 0.50 percent, to 2,566.53.
   
Bonds held steady, with the yield on the benchmark 10-year Treasury note at 2.79 percent, the same as late Wednesday. Crude oil futures rose 4 cents to $76.57 a barrel on the New York Mercantile Exchange. Crude is still trading below Tuesday's record close of $78.21.
   
The Russell 2000 index of smaller companies rose 3.57, or 0.46 percent, to 781.49.
   
In European trading, Britain's FTSE 100 rose 0.81 percent, Germany's DAX index rose 0.96 percent, and France's CAC-40 rose 1.12 percent.

Stocks in focus

Nokia, the biggest cell phone maker in the world, said its second-quarter profit more than doubled on strong sales. U.S. shares of the Finnish company soared $2.27, or 8 percent, to $30.68.
   
Automotive supplier Lear Corp. swung to a better-than-expected profit in the second quarter despite lower revenue, due to slashed costs. Shares rose $1.50, or 4.5 percent, to $34.87.
   
Profits at Eastman Kodak Co., CVS Caremark Corp. and Viacom Inc. also surpassed Street estimates. Shares of Eastman Kodak rose 5.9 percent, CVS shares rose 3.5 percent, and Viacom shares rose 2.3 percent.
   
Another takeover deal also lifted the market's spirits -- at least for the time being. Fiserv Inc. said it agreed to buy CheckFree Corp. in an all-cash deal worth about $4.4 billion, lifting CheckFree's shares up $9.17, or 25 percent, to $46.00.

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Euro has short-lived rally following hawkish ECB press briefing

LONDON - The euro briefly rose following a hawkish European Central Bank press briefing but quickly fell back.
   
In an impromptu press conference, ECB President Jean Claude Trichet called for "strong vigilance" on inflation, giving a strong hint that euro zone interest rates will rise again in September.
   
When the quotes were released following the embargoed media call, the euro crept up to 1.3675 usd, having been trading at around 1.3661 shortly before.
   
However, the rally was short-lived and at 2.40 pm the euro was down to 1.3654.

Meanwhile, the pound dipped after the Bank of England left UK interest rates unchanged at 5.75 pct. Although the decision was expected, markets had seen a very small risk of a quarter point hike.
   
The BoE is expected to raise rates to 6.00 pct in the autumn, and further clues on the precise timing of this move will be awaited in next week's quarterly inflation report.
   
Also in focus this afternoon will be today's dose of US data, with factory orders and weekly jobless claims due for release, although the highlight of the week will come with tomorrow's key monthly non-farm payrolls data.

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Euroshares higher midday, cautious trade continues, Nokia surges on Q2

LONDON - At 12.47 pm, the Dow Jones STOXX 50 added 38.50 points or 1.03 pct to 3,777.11 as the STOXX 600 added 3.38 points or 0.90 pct to 377.54.
   
Nokia surged 7.91 pct midday after the company presented second quarter results that beat market expectations.
        
Societe Generale posted second-quarter net profit up 32.7 pct to 1.744 bln eur, from 1.320 bln a year earlier and compared with analysts' consensus of 1.381 bln, boosted by a 235 mln eur capital gain on the sale of shares in Euronext. Citigroup said, in a note to clients, that "all business lines came in ahead of expectations" and it reiterated its 'buy' rating.
   
Credit Suisse Group also impressed with second quarter net profit of 3.189 bln sfr, up from 2.158 bln one year ago and compared with a consensus of 2.3 bln sfr, citing the positive effects of its client-focused business model and continued focus on efficiency.
       
Also in the banking sector, Barclays added some 0.45 pct as it confirmed a 12 pct increase in its first-half profit. "We enter the second half of 2007 with good business momentum. The UK and global economic outlook continues to be broadly positive," Barclays chief executive John Varley said in a statement.
   
Meanwhile, France Telecom was one of today's surprise gainers, after delighting investors after unveiling a 2.1 pct rise in first-half sales to 25.9 bln eur and said net profit in the period soared 43.5 pct to 3.3 bln from a year ago. Collins Stewart lifted its rating on France Telecom to 'buy' from 'hold,' saying the company's results gave some comfort on its core domestic operations where fixed line revenues were up sequentially.
   
Norwegian peer Telenor ASA rose 3.83 pct after it won in its New York arbitration case against Alfa. The US court ruled that Alfa must sell its shares in Ukrainian mobile operator Kyivstar or divest itself of competing assets.
   
Scandinavian broker Fondsfinans upgraded to 'buy' and said the stock is trading at a 25 pct discount to its sum-of-parts valuation.  The broker also said investors are overreacting to the negative margin development in emerging markets.    
   
Over in the oil and gas industry, EDF underperformed a little, adding 0.4 pct after it said sales for the first half of the year totaled 30.311, down 0.2 pct from 30.362 bln a year earlier and below the consensus figure of 30.4 bln.
  
Total also disappointed, down 2.77 pct, after presenting second quarter results which were mainly in line with expectations. Citigroup, in a note to clients, said exploration and production were a "slight miss". The broker also said there was little to excite about the group's outlook, but also stated that Total is still its preferred European oil major.
  
In Switzerland, Petroplus is in focus, up 5.6 pct, after the company announced the purchase of two French oil refiners from Shell for 475 mln usd.  UBS, in a note to clients, said the price is attractive and added that the deal would be 15 pct earnings accretive in 2008.   
   
Royal Dutch Shell also announced that its Societe des Petroles Shell unit is selling its Berre-l'Etang refinery to Dutch chemicals company Basell for 700 mln usd subject to staff consultation and regulatory approval. It expects the deal to be concluded in early 2008. Shares in Shell fell 1.29 pct.
  
Over in the health sector, Fresenius Medical Care AG added 3.78 pct after it released solid second-quarter figures and raised its 2007 outlook.
   
Meanwhile, Unilever PLC, the Anglo-Dutch consumer goods group, surged 5.07 pct higher after better-than-expected second-quarter sales results.

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Asian shares close mostly higher amid US sub-prime concerns

MUMBAI - Shares across the Asia-Pacific region closed mostly higher on Wall Street's overnight rebound, after seeing high volatility amid concerns over the problems in the US sub-prime lending market.
   
Australian shares ended higher after a volatile session which saw the market swing from a gain of nearly 2 pct at open into negative territory and then back over the gain line. The S&P/ASX 200 closed 70.6 points or 1.2 pct higher at 6,011.8, while the All Ordinaries index rose 60.9 points or 1 pct to 6,050.3.
   
China shares closed sharply higher, reversing yesterday's fall, with banks and property developers leading the gains as investors expected their upbeat interim earnings to support further rises. The Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed up 107.17 points or 2.5 pct at 4,407.73.
       
Tokyo shares closed higher after investors, encouraged by the rebound on Wall Street and a pullback in the yen, sought out bargains. The blue-chip Nikkei 225 Stock Average rose 113.13 points or 0.7 pct to 16,984.11. The broader TOPIX index inched up 0.48 point to finish at 1,669.33.
   
In Hong Kong, shares closed flat after a choppy session as nervous investors continued to hedge their bets on the prospects for global bourses.  The Hang Seng Index closed down 12.11 points or 0.6 pct at 22,443.25.
   
Taiwan shares closed higher in volatile trade as bargain-hunters stood their ground against foreign investors cashing out of the market amid persistent worries over US property loans and a credit squeeze. The weighted index closed up 58.69 points or 0.7 pct at 8,950.57.
   
Singapore shares closed marginally higher after a volatile session, with the Straits Times index closing up 3.75 points or 0.1 pct at 3,435.46.
   
South Korean shares closed lower as investors remained wary the slide in global equities may be far from over as concerns over the US housing and credit markets persist. The key KOSPI index was down 3.38 points or 0.2 pct at 1,853.07.
   
In Malaysia, the Kuala Lumpur Composite Index was down 6.21 points or 0.5 pct at 1,333.28.
   
Philippine stocks closed lower, with the benchmark composite index giving up a 41-point gain earlier in the session, as investors decided to sell more shares in the last hour of trading amid lingering concerns about the US credit market. The composite index ended down 67.43 points or 2 pct at 3,359.02, its worst level since May 10.
   
Indonesian shares closed higher Thursday after volatile trade, as a rebound in selected big caps, including Perusahaan Gas Negara, Telkom and Astra International, helped the benchmark index post gains. The composite index closed up 14.55 points, or 0.6 pct, at 2,270.85.

Indian shares closed higher on demand for select blue-chips after yesterday's steep fall, but volatility in global markets kept sentiment cautious and capped gains.
   
The Bombay Stock Exchange's benchmark Sensex closed up 0.33 pct, or 49.93 points, at 14,985.70. It had surged up to 15,134.53 points during trading, but waning risk appetite -- over concerns US sub-prime mortgage market woes would spread to the wider economy -- triggered profit-taking.
   
The National Stock Exchange's S&P CNX Nifty was up 0.24 pct to 4,356.35 points.

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Cocoa rebounds above the 1,000 stg mark on physical buying

LONDON - Cocoa rebounded slightly after dipping below 1,000 stg per tonne yesterday, as physical buying on the dips supported the market, despite analyst predictions for prices to continue to decline in the
medium term.
   
Cocoa fell sharply yesterday, weighed on by falling global equity markets and profit-taking by investors spooked by the bean's recent decline.
   
"You're seeing buyers stepping in when it drops below 1,000 stg," said Redtower Research analyst Elizabeth Miller. "There's nothing out there that's particularly positive (for the cocoa price) but there's a big psychological level around 1,000 stg, and if it should drop below that, we'd expect to see support around 970 stg per tonne."
   
At 2.06 pm on the Euronext Liffe, cocoa for September delivery was up at 1,008 stg a tonne against 997 stg at the close yesterday.
   
Cocoa has fallen recently as investors banked profits following a fresh four-year high earlier this month. They have been spurred on by expectations that a buoyant harvest in West Africa will increase supply, pushing prices lower.
   
Key producers Ivory Coast, Ghana and Nigeria have all reported regular rain over the last few weeks, which should aid pod development for the West African main crop next season.
   
Among other commodities traded on Euronext Liffe, Robusta coffee for September delivery was up at 1,823 usd a tonne against 1,806 usd at the close yesterday.
   
No 5 white sugar for October delivery eased to 302.80 usd a tonne against 303.10 usd.

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