US & World Daily Markets Financial Briefing 28-02-2006

Weak data drive stocks lower

NEW YORK - U.S. stocks fell Tuesday, hurt by a fall in consumer confidence, a slowing housing market and a weaker-than-expected regional manufacturing survey.
   
The Dow Jones Industrial Average fell 42 points to 11,055. The Nasdaq Composite Index was down 7 points to 2,299 while the S&P 500 Index dropped 7 points to 1,287.
   
"Those were three lousy numbers from an economic perspective," said Jay Suskind, director of trading at Ryan, Beck & Co., referring to the latest housing, consumer confidence and manufacturing data. "There is the intimation of a slowdown led by the housing market and if the consumer rolls over, then we have a problem."
   
As a result, the weak economic reports are providing an opportunity for investors to take profits off the higher end of the current trading range.
   
On the broader market for equities, decliners outpaced advancers by more
than 2 to 1 on both the New York Stock Exchange and the Nasdaq.
   
By sector, oil services, energy and transportation were some of the most significant decliners.
  
Semiconductors and networkers were the few areas of the market posting any
notable gains.
   
Flurry of data
   
Tuesday's string of economic data offered little comfort to those investors worried about easing economic growth.
   
Confirming a slowdown in the housing market, resales of U.S. homes dropped
2.8% in January to a seasonally adjusted annualized rate of 6.56 million, the
lowest in two years, the National Association of Realtors said. Economists were
expecting sales of about 6.65 million. December sales, however, were revised
higher.
   
U.S. consumer confidence, meanwhile, ended a three-month gaining streak in
February, falling to 101.7 from a revised January level of 106.8, the Conference
Board said. The expectations index fell to its lowest level since March 2003, to 83.3 in February from 92.1 in January.
   
Also, business activity in the Chicago region slowed in February according to NAPM-Chicago. The Chicago purchasing managers index fell to 54.9 in February
from 58.5 in January, the private group said Tuesday.

The decline was unexpected. Economists had forecast the Chicago PMI index to inch higher to 58.6. But readings over 50 indicate growth in the region. The report is seen as a good indicator of the national business index released on Wednesday by the Institute for Supply Management.
   
There was slightly better news ahead of the bell.
   
U.S. economic growth in the fourth quarter was revised higher to a 1.6%
annual pace from an initial estimate of 1.1%, the Commerce Department said.
   
Inventory rebuilding accounted for all of the growth in the economy during the quarter, the department said. The revisions were just as expected by economists surveyed by MarketWatch.
   
Core inflation -- which excludes food and energy costs -- increased at a 2.1% annual rate in the quarter, down from 2.2% in the earlier estimate.
 

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On the earnings front, H.J. Heinz Co. was unchanged at $37.60 after the maker of sauces, condiments and packaged foods posted adjusted earnings and sales that fell short of analyst expectations. The food group also offered a full-year profit outlook below current Wall Street estimates. On Monday, the stock rose 7 cents to $37.60.
   
Shares of Staples Inc. rose 4% to $23.98 after the office products retailer topped analyst estimates with a 15% profit rise.
   
Shares of Apple Computer Inc. gained 1.4% to $71.97 amid expectations the maker of the iPod digital music player is set to unveil new products at a company media event. Lehman Bros analyst Harry Blount said the new products may include a Mac Mini targeting the living room, new accessories for the iPod, a game box and a new Intel-based PC.

Forex

Dollar eases versus rivals; yen rally pauses

NEW YORK - The dollar eased against its European counterparts Tuesday after positive economic data from the eurozone reinforced expectations that European interest rates will rise on Thursday.
   
Meanwhile, the yen stabilized after surging to multi-week highs against rivals in the prior session on mounting speculation that the Bank of Japan may soon end its ultra-easing monetary policy.
   
Earlier, the dollar had scant reaction to an in-line revision of U.S. fourth-quarter gross domestic product data.
   
The number "came in as expected, There was nothing surprising from the revision at all," said Kathy Lien, chief fundamental analyst at Forex Capital Markets.
   
Lien said the dollar sold off against the euro and the British pound as European currencies were lifted by the better economic numbers from Europe.
       
The U.S. dollar fell further as the latest data did little to support a more aggressive interest-rate policy from the Federal Reserve.
   
The euro was last up 0.5% at $1.1906. Against the Japanese yen, the dollar
was off 0.1% at 116.06.

The British pound was up 0.4% at $1.7463.
   
Upbeat data from Europe
   
Euro-zone January CPI remained at 2.4% on an annual basis, the Eurostat statistics agency said Tuesday, confirming initial estimates.
   
And the euro-zone economic sentiment indicator for February rose to 102.7 from 101.5, inching ahead of consensus forecasts.
   
Elsewhere, German jobless rate on an adjusted basis fell 5,000 in February after a revised rise of 63,000 in January, a decline that wasn't as much as forecast. The seasonally adjusted unemployment rate was 11.3%.
   
In addition, French jobless rate rose to 9.6% in January from 9.5% in December, the first rise since May.
   
The European Central Bank meets Thursday, with uniform expectations for a quarter-point interest rate rise to 2.5%.

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The European Markets at 12.00 GMT

London - Leading shares extended losses at midday as better-than-expected results from Royal Bank of Scotland and BAT were offset by a weak utility sector and further falls by Reuters and Vodafone, dealers said.
   
By 12.00 pm, the FTSE 100 index was down 24.8 points at 5,851.1, while the broader indices were mixed.

Frankfurt - Shares were lower in midday trade following yesterday's sharp gains, which saw the DAX closing above 5,900 points or at its highest levels since August 2001, after a late pull-back on Wall Street overnight and amid a relative lack of local news, dealers said.
   
At 11.58 am, the DAX 30 index was 25.35 points or 0.43 pct lower at 5,889.80, having moved between 5,889.07-5,916.80 so far this session.

   
Paris - Shares were slightly down at midday amid profit-taking after reaching new highs yesterday, analysts said.
   
At 12.25 pm, the benchmark CAC-40 index was down 24.28 points or 0.48 pct at
5,056.21. There were 26 decliners and 14 gainers among the CAC-40 shares.

Amsterdam - Share prices were slightly lower in early afternoon trade, with TNT falling after a report German private equity investor Cornelius Geber and US private equity group Blackstone have abandoned plans to take over the Dutch group, dealers said.
   
At 1.41 pm, the AEX index was down 0.67 pct or 3.12 points at 464.41.

Madrid - Share prices were lower in early afternoon trade on broad profit-taking after recent highs on the IBEX-35 index, with Moviles, Fenosa and Iberia lower after full-year results, while Telefonica and Endesa gained, dealers said.
   
At 1.10 pm, the IBEX-35 index shed 51.3 points to 11,782.9, after trading in
a range of 11,761-11,840, on turnover of 1.583 bln eur.

Milan - Share prices were lower at midday hit by a bout of profit-taking, while Saipem continues to be underpinned by the purchase of Snamprogetti and better-than-expected full year results, dealers said.
   
At 11.46 am, the Mibtel was down 0.54 pct at 29,071 points and the S&P/Mib
dropped 0.70 pct to 38,053.

Stockholm - Share prices continued the morning's decline in midday trade, on extended profit-taking, with medical technology firm Elekta falling over 10 pct after its third quarter results and full year profit warning, dealers said.
   
At 12.10 pm, the OMX Stockholm index was down 0.73 pct at 321.945, while the
OMX Stockholm 30 index was down 0.80 pct at 1,008.40. Turnover was 5.33 bln skr.

Helsinki - Shares were lower in midday trade, in line with other European bourses, and amid profit taking on key stocks, dealers said
   
At 12.24 pm, the OMX Helsinki 25 index was 0.73 pct lower at 2,600.90 points. The OMX Helsinki index was down 0.37 pct at 8,982.98 points, while the Helsinki CAP portfolio index was 0.50 pct higher at 4,871.90 points.

Brussels - Shares were still down in early afternoon trade, as profit-taking became the order of the day, mopping up last week's historic gains while utility Suez languished at the bottom of the index for the second day running on news of its takeover by Gaz de France.
   
At 1.45 pm, the Bel-20 index was down 26.18 points at 3,875.5.

Athens - Shares were flat in midafternoon trade, off earlier lows, as investors mulled over a flow of full-year earnings results, brokers said.
   
At 2.20 pm the ASE general index was flat at 4,199.4 points, with advancers
outnumbering decliners, 151 to 96. The blue chip index was also flat at 2,331.2
points.

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Asian shares close mixed, Tokyo inches up on upbeat sentiment

HONG KONG - Share prices across the Asia-Pacific region ended mixed with Tokyo fractionally higher after the government reported that industrial output rose for the sixth-straight month although growth was slower than the market had forecast, dealers said.
   
Sentiment was also largely upbeat with offshore investors returning to the market, they said.
   
The government said industrial output rose a seasonally adjusted 0.3 pct in January from the previous month, slightly below the market consensus estimate of 0.5 pct.
   
Looking ahead, the government forecast that production will increase by 0.5 pct month-on-month in February but will fall by 0.7 pct in March.
   
The Nikkei 225 Stock Average closed up 12.48 points or 0.08 pct at 16,205.43, after touching a high of 16,229.68.
   
The broader TOPIX index of all first-section issues gained 3.60 points or 0.22 pct to 1,660.42, off its peak for the day of 1,664.07.
   
"Investors were expecting a little bit brighter industrial output data than the one released as the market consensus had been set at a rather low level compared with the previous months," said Ryuta Otsuka, a strategist at Toyo Securities.
   
Share prices in Australia slipped as investors sold resource stocks following weaker metal and oil prices, dealers said.
   
They said index leader BHP Billiton closed lower, weighing on the overall market while global miner Rio Tinto also lost ground because of the metals sell-off.
   
Dealers said the market's fall was limited by a switch from resources into the leading banks such as the National Australia Bank and Commonwealth Bank.
   
The S&P/ASX 200 eased 2.8 points or 0.06 pct to close at 4,921.3, widening the gap from a record high of 4,956.7 set on Feb 1.
   
In Hong Kong, share prices were trading lower in the afternoon on profit-taking following recent gains, with investors also turning cautious due to growing tension between China and Taiwan following the scrapping of Taiwan's National Unification Council, dealers said.
   
At 3:44 pm, the Hang Seng Index was down 35.96 points or 0.23 pct at 15,913.93.
   
In mainland China, A-shares in Shanghai and Shenzhen shrugged off early weaknesses and closed slightly higher amid bargain-hunting with banks and automakers leading the rebound, dealers said.
   
The Shanghai A-share Index added 1.94 points to 1,362.54 on turnover of 11.56 bln yuan and the Shenzhen A-share Index was up 0.96 point at 325.99 on turnover of 5.60 bln yuan.
   
In Seoul, share prices finished slightly lower, ending a three-day winning streak, as investors used South Korea's strong monthly production data and Wall Street's overnight rally as an excuse for profit-taking, dealers said.
   
The official data showed that the nation's industrial output expanded by 6.4 pct year-on-year in January, buoyed by strong global and domestic demand for chips, handsets, displays and cars, beating market expectations in the low-five pct range.
   
KT&G Corp came into focus after its major foreign shareholders Carl Icahn and his US partners said they have many courses of action to take on the South Korean tobacco firm, including a tender offer.
   
The KOSPI index closed down 3.28 points or 0.24 pct at 1,371.60.

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Gold futures edged higher in morning trading. The benchmark April contract was up $2.30 at $559.30 an ounce.
   
On the bond market, long-term Treasury prices strengthened, sending yields lower as the latest data came in weaker than expected, allaying inflation fears.
   
The benchmark 10-year note was up 9/32 at 99 17/32, with its yield at 4.56%.
   
Crude-oil futures were slightly lower in morning trading, extending a prior-session decline, as traders weighed ample supplies and an apparent easing of some of the tensions in the Middle East.
   
Crude for April delivery was last down 55 cents at $60.45 a barrel in New York trading.

Precious Metals Summary - London, 1530 GMT

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