Markets & Finance

Europe and Asia Lower


European stock markets were lower on Wednesday. In London, the Financial Times Stock Exchange-100 lost 26.90 points, or 0.54%, to close at 4910.40. The FTSE narrowed losses slightly at the end of the session as U.S. markets traded flat to higher on the back of a fall in oil prices. WTI was trading at $54.50 per barrel at the London close. The oil price drop offset inflationary concerns, after strong U.S. CPI data. In London, falling crude futures were used as a reason to sell BP and Shell. Elsewhere, earnings focus was on retailers. Troubled Morrison posted pretax profits of 321.1 million pounds, in line with revised expectations after last week's profit warning. The supermarket noted exceptional costs are likely to be significantly higher and its FD quit. Next recovered from early lows after reporting fiscal 2004 pretax profits up 8%, but said the first seven weeks of the current year suggest that its caution highlighted in September last year was well placed. Woolworths shares are still below the 58.2 pence per share indicative takeover proposal from Apax. The retailer reported fiscal 2004 sales up 4.5%, but like-for-like sales in Woolworths Mainchain down 1.3%.

In Germany, the DAX Lost 3.49 points, or 0.08%, to close at 4317.20. Frankfurt closed almost unchanged on the session, bouncing from intraday lows after Wall Street pared opening losses following a surprise 0.4% rise in February CPI. Early sentiment in Germany was not helped by a weaker-than-expected Ifo business confidence survey, which fell to an 18 month low in March on higher energy costs. The March index fell to 94 from a revised 95.4 in February. Analysts predict another sluggish growth performance this year if oil and dollar remain at current levels. Domestic consumer prices gained 0.4% in the regions of Brandenburg and Saxony. On the corporate news front, TUI paced gainers despite reporting the fourth-quarter loss at its tourism division widened to 125 million euro from a previous loss of 93 million euro. Overall, earnings from tourism rose to 2.8% of sales, up from 1.6% in 2003. Lufthansa slipped after the airline guided for a similar profit to last year's due to integration costs associated with integrating Swiss. Deutsche Boerse bounced after saying it will launch a share buyback programme worth 1.1 billion euro. VW rose on a UBS hike in its target.

France's CAC-40 lost 14.77 points, or 0.36%, to close at 4032.41. The CAC40 ended 0.36% down on Wednesday, but off the session's low point as Wall Street made a short-lived attempt to nudge higher amid slipping oil prices and a strengthening dollar. Just one day after the Fed expressed its concerns about inflation pressures, U.S. CPI rose 0.4% in February, vs. 0.3% expected, while the core index was up 0.3%, vs. the 0.2% expected. This bolsters expectations that Greenspan will implement a series of interest rates hikes over 2005. At home, Total slipped as WTI dipped below $55 per barrel after crude inventories showed a stronger-than-expected build for the week ended Mar. 18. Distillate and gasoline showed steeper-than-forecast draws. Sanofi-Aventis was weak but outperformed the market, supported by S&P Rating's corporate credit ratings upgrade to 'AA-/A-1+' from 'A+/A-1'. The return of pricing power supports food producers, including Danone, which was largely sheltered from Morgan Stanley's downgrade to underweight from equal weight and recommended switch into Nestle or Unilever.

Asian markets were also lost ground on Wednesday. In Japan, the Nikkei Nikkei 225 lost 102.85 points, or 0.87%, to close at 11,739.12. Japan's Nikkei 225 index closed down 102.85 points, or 0.87%, to 11739.12, hurt by losses in the U.S. overnight on worries of more aggressive interest hikes going forward. Fuji TV Network plunged 6.95% to 281,000 yen, as investors casted doubt over a potential take-over plan by internet Services firm Livedoor Co. Property names such as Mitsubishi Estate fell 3.84% to 1328 yen following recent gains. On the upside, Japan Tobacco, the world's third-biggest tobacco company, rose 3.17% to 1,300,000 yen on news that U.S. bio-company Gilead Sciences would pay over $100 million for the exclusive right to develop and market the Japanese firm's HIV-fighting drug outside Japan. On the economic front, Japan's trade surplus for February fell 21.7% year-over-year to 1.093 trillion yen, sharply lower than market expectation as exports to China slid for the first time in three years and oil prices rose.

Hong Kong's Hang Seng Index fell 172.86 points, or 1.32%, to 13,594.50 about half-an-hour before the closing. Top HSI percentage laggards were Esprit, Wheelock, and CNOOC. According to press reports, Esprit Holdings major shareholder and chairman Michael Ying may be looking to sell 80 million of his Esprit shares at a price between $53.8 (hong kong) and $54.8 per share (3% to 4.8% discount to last closing). Leading gainers were Li & Fung and Denway Motors.

Canada's benchmark TSX/S&P lost 97.55 points, or 1.01%, to close at 9549.67.


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