US & World Daily Markets Financial Briefing 14-08-2006

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Mideast cease-fire boosts Wall Street

NEW YORK - Wall Street welcomed a cease-fire between Israel and Lebanon Monday, sending stocks higher as oil prices also dropped sharply.

With no economic data and little corporate news of note, investors saw the cease-fire as a buying opportunity after last week's losses. Crude futures fell as traders saw less risk of a supply disruption in the Middle East after the United Nations-mandated cease-fire took effect. A barrel of light crude was quoted at $73.16, down $1.19, on the New York Mercantile Exchange.

However, Wall Street's rally could be short lived with two major inflation reports due later in the week: the Labor Department's producer price index on Tuesday and the consumer price index on Wednesday. With the Federal Reserve warning the markets last week that inflation remains a concern, stocks could revert to the volatility of recent weeks if incoming economic data shows rising prices on the wholesale or consumer levels.

In the first hour of trading, the Dow Jones industrial average rose 63.71, or 0.57 percent, to 11,151.74. The Dow lost 1.36 percent last week.

Broader stock indicators also rose. The Standard & Poor's 500 index added 7.40, or 0.58 percent, to 1,274.14, and the Nasdaq composite index gained 7.67, or 0.86 percent, to 2,075.38.

Bonds moved lower, with the yield on the benchmark 10-year Treasury note rising to 4.99 percent from 4.97 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell.

In corporate news, PepsiCo Inc. announced that Chief Financial Officer Indra K. Nooyi would take over as chief executive Oct. 1, replacing the retiring Steven Reinemund. PepsiCo edged a penny higher to $63.34.

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Apple Computer Inc. rose 15 cents to $63.80 after the computer maker said late Friday a delay in its quarterly filing with the Securities and Exchange Commission meant that it was out of compliance with Nasdaq Stock Market listing rules. The company, which put off the filing as it evaluates how it handled stock option grants, said it was working with Nasdaq to keep its listing, and the stock would continue trading normally.

Shares of automakers were in play after analysts at Bear Stearns upgraded Ford Motor Co. two steps, to "outperform" from "underperform," while  owngrading General Motors Corp. from "outperform" to "peer perform." In a report, analysts said there was more potential from Ford than GM at the moment. Ford gained 19 cents to $7.56, while GM slipped 13 cents to $29.98.

Among companies reporting earnings, food service distributor Sysco Corp. added 13 cents to $28.09 after reporting fiscal fourth-quarter earnings that fell 11 percent due to higher transportation and pension costs. The company missed Wall Street forecasts by a penny per share.

The Russell 2000 index of smaller companies was up 5.21, or 0.77 percent, at 684.25.

Overseas, Japan's Nikkei stock average surged 1.88 percent. In afternoon trading, Britain's FTSE 100 was up 0.55 percent, Germany's DAX index added 0.78 percent, and France's CAC-40 rose 0.84 percent.

Inflation picked up in September in Europe as both areas show fragile economic growth. Just as in the U.S., rising energy prices are to blame. Read free, daily market reports available only at CMS Forex and open your free demo trading account today. Click here

AFX NEWS BRIEFING: Mergers and acquisitions highlights to 09:20 BST

2006-08-14 09:15:13
Autostrade motorway concession to be reviewed in Sept - infrastructure minister

MILAN - Italian infrastructure minister Antonio Di Pietro said that in September he will review the terms of Autostrade SpA's motorway concession.

2006-08-14 08:58:36
GEA Group denies it is in talks to sell Lurgi Lentjes to HIG

FRANKFURT - GEA Group AG is not in talks to sell its Lurgi Lentjes unit to US-based Hudson Investment Group (HIG), a company spokesman said.

2006-08-14 08:51:04
Spanish govt sees 'satisfactory solution' to Abertis-Autostrade merger veto
   
MADRID - The government is confident of a "satisfactory solution" to the Italian government's veto of the planned merger between Abertis Infraestructuras SA and Autostrade SpA, La Gaceta de Los Negocios reported Saturday citing Secretary of State for Economy David Vegara.

FRANKFURT - Vossloh AG may sell its diesel locomotives business, CEO
Gerhard Eschenroeder told the Frankfurter Allgemeine Sonntagszeitung yesterday.

LONDON - Hammerson PLC, the UK property company, has sold Avenue Retail Park in Cardiff for 37.5 mln stg to The Lanebridge Property Fund.

Enterprise Inns PLC said it has sold 769 pubs to Admiral Taverns for 318.1 mln stg, comprising 316.6 mln in cash and 1.5 mln in preference shares, in deal which it said "accelerates" its disposal programme.

AMSTERDAM - Hedge funds Paulson and Centaurus said they are jointly investigating options to create value for Royal Ahold NV stakeholders.

MADRID - The government has accused the European Commission of exceeding its authority in seeking clarification of the conditions that Spain set E.ON AG in order to approve its bid for Endesa SA, El Pais reported.

AMSTERDAM - A group of investors in Royal Ahold NV have lined up private equity and trade players to stage a leveraged buy-out of the Dutch retailer for around 11 bln eur, The Business reports.

LONDON - Aston Villa PLC has recommended a 547 pence a share bid from a vehicle of Randy Lerner, the owner of the Cleveland Browns American football club.

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Hong Kong shares close higher interest in laggard blue chips

HONG KONG - Share prices closed higher as laggard blue chips such as Hutchison Whampoa and CNOOC attracted rotational interest in late trade, dealers said.

The market was also supported by interest in some stocks that are to be included among Hang Seng Index constituents.

But trading was generally cautious ahead of more corporate results announcements from local firms and key US economic data this week.

The Hang Seng Index closed up 40.06 points or 0.23 pct at 17,290.01, off a low of 17,215.91 and high of 17,303.17.

Turnover was 21.95 bln hkd.

"The market was relatively quiet as investors wait for more US economic data including the CPI (consumer price index) this week and more corporate results from local companies," said Kenny Tang, associate director at Tung Tai Securities.

"But there was rotational buying of laggards which helped support index's gains," he said.

Among blue chips that attracted laggard interest, CNOOC rose 0.14 hkd or 2 pct to 7.15 and Hutchison Whampoa was up 1.25 hkd or 1.72 pct at 72.75.

Tang said the index also drew support from many property counters after reports of buying interest in primary residential properties last week.

The property sector index gained 67.06 points or 0.33 pct at 20,546.49, with Sun Hung Kai up 0.25 hkd or 30 pct at 83.90 and Cheung up 0.35 hkd or 0.41 pct at 85.25. New World Development was up 0.24 hkd or 1.81 pct at 13.50 and Hang Lung Properties up 0.26 hkd or 1.67 pct at 15.84.

Henderson Land lost 0.20 hkd or 0.46 pct at 42.96.

Foxconn and Hong Kong Exchange and Clearing (HKEx) posted sharp gains following news of their inclusion among the Hang Seng Index constituents, while China Construction Bank (CCB) was down on profit-taking after previous gains ahead of its inclusion to the HSI.

Index compiler HSI Services announced last Friday that CCB, Foxconn and HKEx are to be included in the HSI from Sept 11, while the Lenovo Group and Johnson Electric are to be removed from the benchmark index. The changes will take the total number of HSI constituent stocks to 34 from 33 currently.

Meanwhile, Bank of China is to be added to the Hang Seng China Enterprises Index, while China Southern Airlines and BYD Co are to be dropped.

Foxconn was up 0.84 hkd or 4.5 pct at 19.52 and HKEx up 0.40 hkd or 0.77 pct at 52.30, while CCB was down 0.02 hkd or 0.57 pct at 3.49.

Johnson Electric was down 0.08 hkd or 1.5 pct at 5.24, while Lenovo was down 0.04 hkd or 1.48 pct at 2.66.

China Mobile, which will report its firat-half results on Thursday, was flat at 51.50 hkd, while peer China Unicom was up 0.09 hkd or 1.23 pct at 7.41.

Among banks, HSBC was down 0.30 hkd or 0.21 pct at 140.80, while Hang Seng Bank up 0.10 hkd or 0.10 pct at 99.70 and Bank of East Asia was up 0.40 hkd or 1.17 pct at 34.55.

China Paradise fell sharply after announcing an 89 pct year-on-year fall in net profit for the first half to June. The stock was down 0.21 hkd or 10.5 pct at 1.79, off its low of 1.71.

The retailer, whose shares were recently acquired by rival GOME Electrical Appliances, said its net profit fell to 15.02 mln yuan against 140.57 mln a year earlier.

GOME was down 0.36 hkd or 5.75 pct at 5.90, off its low of 5.48. The company will announce its results on Thursday.

"China Paradise' results are an indication of a retail market that has become highly competitive. Investors are now speculating that GOME's results may be as bad," Tung Tai Securities' Tang said.

Among other China-related stocks, PetroChina was flat at 9.09 hkd and Chalco up 0.05 hkd or 0.97 pct at 5.21.

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UK July raw material prices rise, manufacturers struggle to pass on gains

LONDON - A jump in crude oil prices pushed UK raw material costs higher in July, but manufacturers continued to struggle to pass on these gains, official figures showed today.

The office for National Statistics revealed that input prices on a seasonally adjusted basis rose by 1.1 pct in July from the previous month, modestly higher than expectations of a 1.0 pct increase. The latest increase is the biggest since January when a 1.6 pct gain was recorded.

In June, input prices rose 0.2 pct.

On a year-on-year basis, input prices were 9.6 pct higher, above the 9.0 pct increase expected by analysts but well down on June's 11.5 pct reading.

The annual rate has been trending steadily lower from the heights of 18.2 pct in December 2005, and the latest annual increase is the lowest since October 2005.

The statistics office said the rise between June and July reflected gains in crude oil, metals and the residual category of imported parts and equipment.

Crude oil prices jumped 6.0 pct between June and July to reach their highest level since records began in 1991. Metals prices rose 2.3 pct, reflecting a 6.7 pct increase in copper and and 6.7 pct gain in gold.

Today's release also showed, however, that manufacturers continue to struggle to pass on price increases.

On a non-seasonally adjusted basis, output prices rose 0.2 pct, below predictions of a 0.4 pct increase. On a year-on-year basis, output prices were 2.8 pct higher,  own on the 3.4 pct recorded in June and the 2.9 pct predicted
by analysts.

The latest annual rate is the lowest since April.

The statistics office said the monthly rise mainly reflected rises in petroleum and food. The former rose 0.8 pct between June and July, taking petroleum prices to their highest ever since records began in 1991.

Elsewhere, the statistics office core output prices, which exclude food, beverages, tobacco and petroleum products, rose just 0.1 pct between June and July, below predictions of a 0.2 pct increase.

The latest reading, on an seasonally-adjusted basis, is the smallest since October last year when prices fell 0.1 pct.

On a year-on-year basis, core output prices rose by 2.5 pct, below predictions of 2.7 pct.

"The producer output price inflation for July is more benign than expected and should temporarily at least temper concerns that high energy prices are increasingly filtering through the supply chain," said Howard Archer at Global Insight.

Nevertheless, with input prices rising sharply in July and oil prices hitting new highs in early August, the Bank of England will still be concerned that manufacturers will be looking for opportunities to pass on more of these costs and boost their margins.

"The producer price inflation (data) are unlikely to markedly alleviate the Bank of England's concerns over inflation risks, and a further interest rate hike before the end of the year remains highly possible," he said.

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