US & World Daily Markets Financial Briefing 21-06-2007

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Stocks off in early trading as oil rises

NEW YORK - Stocks fell Thursday, extending their decline as oil prices approached $70 a barrel and as traders awaited release of a reading on the manufacturing sector.
   
While a jump in Treasury yields unnerved investors and sent stocks tumbling Wednesday, oil appeared to be a larger concern Thursday as yields stabilized.
   
Light, sweet crude oil rose 69 cents to $69.55 per barrel on the New York Mercantile Exchange as a general strike in Nigeria -- Africa's largest crude oil producer -- began to weigh on the market.
   
The Conference Board's May index of leading economic indicators failed to boost stocks Thursday; the research group predicted the U.S. economy will expand modestly in the coming months.
   
In midmorning trading, the Dow Jones industrial average fell 69.09, or 0.51 percent, to 13,420.33 after dropping 146 points Wednesday. Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 114.6 million shares. The Russell 2000 index of smaller companies fell 6.85, or 0.82 percent, to 829.33.
   
Britain's FTSE 100 fell 0.95 percent, Germany's DAX index fell 1.77 percent, and France's CAC-40 lost 1.28 percent.
   
Broader stock indicators fell. The Standard & Poor's 500 index fell 5.74, or 0.38 percent, to 1,507.10 and the Nasdaq composite index fell 10.38, or 0.40 percent, to 2,589.58.
   
Bonds were little changed; the yield on the benchmark 10-year Treasury note remained flat at 5.15 percent from late Wednesday.
   
Other fresh economic data on hand showed the number of workers seeking jobless benefits rose by 10,000 last week to a two-month high, marking the third straight weekly gain. While the increase wasn't large, the movement could suggest unemployment isn't quite as low as it had been.
   
The economic readings come in an otherwise quiet week for broad news about the economy and only a handful of quarterly results from companies. Corporate earnings reports will begin flowing in earnest in several weeks and Wall Street is accustomed to receiving profit warnings around this time. Investors are hoping a parade of strong earnings might continue and provide fodder for sending stocks higher.
   
Stocks in focus

H&R Block Inc. fell 90 cents, or 4 percent, to $21.88 after reporting it swung to a fourth-quarter loss amid continuing troubles in its mortgage lending arm. Difficulties there outweighed higher revenue from the
company's tax and financial-services businesses.
   
Eyewear maker Luxottica Group SpA rose $2.70, or 7.8 percent, to $37.54 after agreeing to acquire rival Oakley Inc. for $2.1 billion. Oakley jumped $3.24, or 12.8 percent, to $28.47.
   
Pier 1 Imports Inc., the seller of furniture and home decorating goods, fell 25 cents, or 2.9 percent, to $8.38 after its first-quarter loss widened as sales fell and as profit margins shrank.
   
Several analysts lowered their ratings on Cheesecake Factory Inc. after the restaurant chain forecast second-quarter revenue that proved weaker than Wall Street had been expecting.
   
Andersons Inc., an ethanol and grain producer, jumped $3.54, or 8.8 percent, to $43.94 after the company raised its full-year profit forecast following a strong second-quarter performance from its agricultural businesses. The company also began producing ethanol from a second plant and has seen better-than-expected margins.

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Dollar slips slightly after weaker-than expected jobless claims

LONDON - The dollar fell back slightly against the euro after the weekly jobless claims figures came in weaker than analysts had expected.
   
The number of people filing new claims for unemployment insurance in the week ended June 16 was 324,000 last week - the highest weekly reading since April 21. Analysts had expected little change from the previous week's 311,000.
    
The number of people continuing to claim unemployment insurance in the June 16 week rose 39,000 to 2.52 mln against a 2.50 mln expectation. That leaves the four-week average of continuing claims still at 2.50 mln.
   
Though economists had been talking about a stabilization in claims, the  numbers now show a steady increase since the last week of May.
   
At 1.36 pm the euro was trading at 1.3406 usd having been at 1.3390 shortly before the data was released.

Canadian dollar falls after weak retail sales data

LONDON - The Canadian dollar fell after retail sales data this afternoon came in well below expectations, with the US dollar rising back above the 1.07 cad mark.
   
Figures released by Statistics Canada showed Canadian retail sales grew by 0.4 pct in April from March, well below expectations for a 0.8 pct rise.
   
Excluding autos, sales were flat, again below forecasts for a 0.4 pct increase.
   
At 1.38 pm BST, the US dollar was trading at 1.0705 cad, up from 1.0673 just before the figures were released. The euro meanwhile rose to 1.4344 cad from 1.4296 cad.

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Euroshares down midday as Dow seen flat; luxury groups,DRAM-related stocks shine

LONDON - Leading European shares lost ground after losses on Wall Street overnight sparked by a fresh rise in US bond yields, with DRAM-related stocks and luxury goods groups bucking the trend.
   
At 12.56 am, the Dow Jones STOXX 50 Index was down 41.23 points at 3,937.55 while the DJ Stoxx 600 Index was 4.01 points at 393.84.
        
Shares in Luxottica Group shot up 6.94 pct to all-time highs after the Italian eyewear maker said it would acquire US peer Oakley for about 2.03 bln usd in cash, saying the deal is expected to generate 100 mln eur of annual synergies. "Every time Luxottica makes an acquisition, the shares rise due to cost savings," an analyst at an Italian brokerage said, adding that she will "certainly" hike her 26.4 eur price target on the stock.
   
Clarins added 4.35 pct after a report that the group's management has told employee representatives that "signs of interest" in the company have been shown by PPR and LVMH. The magazine, which did not name its source, said that since the death in March of founder Jacques Courtin-Clarins, the company has also attracted the attention of L'Oreal.
   
Shares in Hermes added 1.07 pct pulling back opening gains as investors shrugged off the group's reduced sales growth forecast for the year.
   
AIM-listed luxury brand Mulberry Group PLC climbed 1.94 pct after its full-year earnings statement. The group said pretax profit rose to 6.21 mln stg from 6.13 mln stg last year as turnover increased 4 pct to 45.1 mln stg boosted by sales from its core accessories business.
   
Swatch was down 0.86 pct and Richemont was only 0.13 pct lower -- but still outperforming -- after Swiss watch sales data for May.
   
Infineon Technologies was up 0.39 pct while shares in ASM International, a chip equipment maker, rose 2.46 pct. STMicroelectronics, though, was down 0.73 pct. The French listed group doesn't have a chip business, traders said.
   
Shares in EDF stormed 6.34 pct higher bringing its market cap to 143.6 bln eur, ensuring its place as the largest stock on the CAC 40 ahead of previous leader, Total. The oil and gas giant's market cap is 140.9 bln eur.
       
London Stock Exchange was down 1.54 pct after it confirmed that it is in merger talks with Borsa Italiana, the owner of Milan's stock exchange.
   
And Bolsas y Mercados Espanoles SA shares were up 0.92 pct on hopes the move is a sign there will be further consolidation in the sector.
       
Lafarge fell 2.02 pct as a widely hoped for EPS forecast has not yet emerged from today's investor day.

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Asian shares close mixed; Tokyo at 7-yr high on weaker yen

HONG KONG - Shares across the Asia-Pacific region closed mixed, with Tokyo and Taipei ignoring Wall Street's fall overnight and closing at seven-year highs.
   
Tokyo's benchmark Nikkei index ended at its highest closing level in seven years after the softer yen continued to underpin demand for export-oriented shares.
   
The Nikkei 225 Stock Average ended 28.62 points or 0.16 pct higher at 18,240.30, off a high of 18,287.73. It was the index's highest closing level since May 2000. The TOPIX index of all first-section issues climbed 5.66 points or 0.32 pct to finish at 1,789.38, off a high of 1,793.41.
       
The market opened on a weaker note, following the tumble on Wall Street overnight, with the Nikkei's sharp gains yesterday prompting investors to take some profits on those gains.
       
Australian shares finished lower after the sharp fall in US markets, although local shares were well-supported after the major Australian indexes hit new records yesterday.
   
Concerns over the US financial sector heightened after JP Morgan reportedly cancelled bids for 800 mln usd worth of assets seized from two hedge funds managed by Bear Stearns, raising fears of wider trouble ahead for US banking and financial stocks.
  
Australian investors in turn weighed on local banking stocks, while mixed metal prices in overnight trading led to a general retreat in resource stocks.
   
The S&P/ASX 200 closed down 9.9 points or 0.15 pct at 6,387.0, after yesterday's record close of 6,397.0. The key index ended off the low of 6,361.7. The high was 6,393.5.
   
Hong Kong shares were sharply higher in afternoon trade for the fifth straight day on the back of strong liquidity and China's expanded qualified domestic institutional investor (QDII) program, which will allow more
investments overseas.
   
Under new rules taking effect July 5, mainland China brokers and fund managers will be allowed to invest client funds in overseas fixed-income, equity and derivative securities. At 3.20 pm the Hang Seng Index was up 224.06 points or 1.03 pct at 21,908.73.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on optimism about first-half results in the run-up to the start of the interim earnings season, with financial and power stocks in demand. The Shanghai A-share Index was up 53.14 points or 1.21 pct to 4,439.11 and the Shenzhen A-share Index was up 1.04 points or 0.08 pct at 1,303.68.
   
Seoul shares closed higher, snapping a steep decline from the previous session, with sentiment heartened by gains in key regional markets even after broad sell off on Wall Street.
   
Chipmakers came into the spotlight, backed by a price gain of over 20 pct over a weekly basis in dynamic random access memory (DRAM) chips, widely used in computers, and attractive valuations following recent corrections.
   
The KOSPI index closed up 10.45 points or 0.59 pct at 1,794.24, after moving between 1,770.17 and 1,802.91.
   
Taipei shares surged to close at a fresh seven-year high as strong liquidity fueled follow-through interest after yesterday's buying binge. The weighted index closed up 96.11 points or 1.10 pct at 8,851.99, a new seven-year high since the index hit 8,861.03 points intraday on June 20, 2000.

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Copper lower on large increase in LME stocks, lead at new high

LONDON - Copper continued lower after a large increase in stocks outweighed strike threats. The London Metal Exchange said stocks rose 5,400 tonnes to 119,600 tonnes in a daily report.
   
However, traders kept a wary eye on news from Chile's Codelco, the world's largest copper producer where workers are due to strike today. Further, workers at the Collahusi mine are planning to strike on June 27, while in Peru workers at two mines and a smelter owned by Southern Copper have said they will strike on June 23.
   
Copper prices have added 20 pct since the start of this year. JP Morgan analyst Michael Jansen said: "The market's main interest with respect to copper is on-going talk of strike action." At 1.47 pm, LME copper for 3-month delivery was down at 7,500 usd a tonne against 7,520 usd.
       
Elsewhere lead struck another all time high, for the second time today, of 2,535 usd. Low stocks of the metal, at around two days worth of global consumption, fuelled prices. Lead was up trading at its all time high of 2,535 usd from 2,506 usd yesterday.
   
In other metals, nickel was steady at lower levels on the likelihood of Chinese steel production easing. A group of Chinese stainless steel producers plan to cut production by between 20 and 30 pct. Around two-thirds of all nickel mined is used to make steel.
   
Aluminium was down at 2,715 usd against 2,733 usd. Zinc was lower at 3,570 usd from 3,610 usd, while tin was down at 14,000 usd from 14,060 usd.

Sugar extends gains, coffee struggles at key resistance levels

LONDON - Sugar extended gains in a recovery from what traders believe to be an oversold position and as players digested news that India will increase the amount of the commodity it holds in buffer stocks.
   
However, market participants said there is little chance that sugar, the world's worst performing commodity this year, will break out of the downward price trend amid a mounting global surplus.
   
"I think the strength in London is more technical than anything else, the market has been very oversold. Looks like we're going to test the upper range of the downtrend channel," said John Boyden, a trader at Ambrian Commodities Ltd.
   
At 1.12 pm, white sugar for October delivery was up at 312.50 usd a tonne on the Euronext Liffe exchange, against 310.40 usd at the close yesterday.
   
Coffee prices hit the 1,940 usd level last week on concerns over insufficient supplies from Vietnam, the world's largest producer of the Robusta coffee beans traded in London.
   
"On a longer term view we see higher prices. Tightness in supply ... will come into play and once the market clears the technical levels ... suddenly funds rush in," said Copper at Ambrian.
   
Elsewhere, September Cocoa was down at 1,046 stg a tonne on the Euronext Liffe against 1,045 stg at the close yesterday, extending yesterday's decline on continued profit taking and lack of fresh industry buying.

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