Markets & Finance

Europe and Asia Lower


European stock markets were lower on Thursday. In London, the Financial Times-Stock Exchange 100 lost 7.90 points, or 0.16%, to close at 4908.30, as Wall Street traded lower amid poor productivity data and disappointing figures from Amazon.com. At home, the oil and gas sector continued to weigh. Shell dropped 1.9% after saying its 2003 proven reserves have been restated by 1.4 billion barrels, more than analysts forecast, and said its proved reserves replacement ratio for 2004 was expected to be in the range of 45% to 55%. Its fourth-quarter CCS earnings jumped to $5.127 billion, vs. a consensus of $4.825 billion, and Shell also announced a $3 billion to $5 billion buy-back programme. Vodafone also rose 1.66% after a broker note advised investors to switch to Vodafone from BT.

Germany's DAX lost 14.67 points, or 0.34%, to close at 4281.64. Frankfurt closed near session lows following a quiet day largely dominated by news emanating from Germany's largest bank as it laid out its strategy for increasing its profitability in the near term. A weaker tone to Wall Street following disappointing news from Amazon.com and a report which showed productivity of U.S. workers only grew by 0.8% in January, the lowest rate for four years, also set the tone for this afternoon's slide. In Europe, the European Central Bank unsurprisingly held rates at the current 2% as high unemployment across the region helps keep the lid on euro inflation. Deutsche Bank gained 1.1% after reporting fourth-quarter net profit of 269 million euro, including the previously announced 600 million euro restructuring charge. Consensus was for a figure of 185 million euro. While revenues and costs are both ahead of expectations, the bank was helped by a lower-than-expected provision charge. CEO Ackermann said he is not contemplating any acquisitions or mergers at present and is not looking to sell the Alex Brown unit. The bank will cut upwards of 6,400 jobs worldwide as it seeks to achieve its target of 25% return on equity. Henkel reported fiscal 2004 broadly in line with expectations from an operating perspective, meeting and beating management guidance. However, there were indications that the cyclical story is starting to roll over. Henkel gave 2005 guidance as +3 to 4% and EBITA growth (excluding exceptionals and foreign exchange) in the high-teens.

France's CAC-40 lost 22.78 points, or 0.58%, to close at 3928.94, as Wall Street traded in the red, hit by soft productivity data and Amazon's weak numbers last night. The European Central Bank left rates unchanged, as widely expected, given soft employment situation across the continent and only mild pressures on inflation. In Paris, Alcatel knocked 10 points off the CAC40 as weaker-than-expected fourth-quarter results and the lack of a 2004 dividend proved a major disappointment. BNP-P was responsible for another 5 points off the CAC40 after posting slightly lower-than-expected fourth-quarter net income of 952 million euro, vs. consensus of 994 million euro. However, operational performance remained strong and provisions were lower than expected. Pernod slipped 1.84% after tabling fiscal 2004 like-for-like sales growth of 5.4%, vs. expectations of 6% like-for-like growth.

Asian markets were also lower on Thursday. In Japan, the Nikkei 225 lost 17.79 points, or 0.16%, to close at 11,389.35. The Nikkei average ended lower, hurt by losses in major banking names. But the index's decline was limited by losses in industrials such as steel stocks and mining issues. Sumitomo Mitsui Financial Group sank 2.79% after a Mainichi report, which it denied, said that it plans to give up on a merger attempt with UFJ Holdings. UFJ Holdings skidded 2.47%. Toyota Motor, which ended flat, posted a 5.3% rise in third-quarter operating profit after it boosted its share of major car markets. Companies that posted poor earnings results took a beating, with Nitto Denko plummeting 5.58%. Nitto Denko it cut its group net sales forecast to 510 billion yen from 520 billion yen for the business year to March.

Hong Kong's Hang Seng Index was down slightly, losing 40.47 points, or 0.30%, to close at 13,515.33, with utilities, properties, and industrials edging lower.

Canada's benchmark TSX/S&P lost 0.23 points, or 0.00%, to close at 9,303.71.


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