Markets & Finance

Europe Lower


European stock markets were lower on Tuessday. In London, the Financial Times-Stock Exchange 100 lost 22.00 points, or 0.45%, to close at 4818.70. The FTSE closed on a negative note today as Wall Street traded lower and UK supermarket chain William Morrison provided a disappointing update. Morrison tumbled 5.45% after reporting growth at its core Morrison stores moved up just 0.1% in the crucial six week Christmas trading period to Jan. 9, 2005. Morgan Stanley downgraded Aviva and Legal & General. Cairn Energy made a new Indian gas discovery with the Raageshwari well, currently operating 75 km south of Mangala, in the southern part of the Rajasthan Basin. Bovis Homes is expected to announce fiscal year record profits in line with consensus and said completions increased 9% year-over-year.

In Germany, the DAX lost 49.36 points, or 1.15%, to close at 4258.01. Frankfurt closed lower after heavy selling of the Dax March futures and disappointing data from the U.S. and Europe combined to push the index significantly below the 4,300 level. A lack of follow-through buying from managers and worries about the dollar and the price of oil also contributed to the negative sentiment pervading the market Tuesday. January's ZEW investor index jumped to its highest level for several months, coming in at 26.9 vs. the 18.0 forecast, but news that STMicroelectronics missed fourth-quarter targets impacted Infineon after the Franco/Italian semiconductor manufacturer said its gross margin was about 36.6%, below the 38 to 39% forecast previously. The chip company also said it was pulling out the sale of its fibre-optics unit with US Finisar after the transaction threatened to drag out for almost a year.

France's CAC-40 lost 28.83 points, or 0.74%, to close at 3848.99. The CAC40 suffered in the shadow of declines on Wall Street after disappointing quarterly results from Alcoa, Genentech and downwards-revised estimates from chipmaker AMD. After the close, Intel is expected to report quarterly results with earnings per share guidance pitched at 31 cents, vs. 27 cents a year ago. Back at home, STM dropped 4.29% after warning on fourth-quarter margins, blaming a weak dollar impact. The Franco-Italian chip-maker put gross margin at 36.6%, vs. guidance of 38 to 39%. Carrefour edged down 0.65%, ahead of its fourth-quarter trading update reported after hours. Peugeot denied it was in equity swap talks with Mitsubishi, stating that it is in contact with a number of international car manufacturers as part of its cooperation policy. La Tribune reported that Euronext could offer 6.00 pounds/share for the London Stock Exchange. Broker actions: UBS upgraded Vivendi Universal and Total to buy from neutral. Pernod Ricard traded ex-dividend today.

Asian markets were mixed on Tuesday. In Japan, the Nikkei average rose 106.74 points, or 0.93% to a six-month closing high of 11539.99, buoyed by gains in tech stocks. Advantest advanced 1.29% while Nikon Corp jumped nearly 2%. Retailer Ito-Yokado rose 1.44% after it posted 51% growth in net profit for the three months due to large dividend income from Seven-Eleven Japan Co. Seven-Eleven shares added 1.26% on news that the convenient store operator posted a 3.4% year-over-year rise in net profit for the third-quarter.

In Hong Kong, the Hang Seng lost 22.14 points, or 0.16%, to close at 13,509.25. Stocks traded mixed, with Standard Chartered sinking after it said late Monday it agreed to buy Korea First Bank at $3.3 billion in cash. Goldman Sachs is uncomfortable with the purchase price paid (around 30% higher than what the press reported HSBC's bid to have been) for this outsize acquisition, and the integration, earnings and valuation risks involved.


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