Markets & Finance

Europe, Asia Lower


European stock markets were lower Friday. In London, the Financial Times Stock Exchange 100 lost 53.80 points, or 1.08%, to close at 4891.60. UK stocks extended losses to close below the 4,900 mark, with mining and metal stocks in the doldrums on concerns that metal prices may have peaked. Wall Street remained lower as IBM's poor first-quarter results weigh. Oil stocks were a drag on the FTSE as the price of crude falls below $51.50: BP and Shell declined 1.48% and 1.04%, respectively. Fund managers Amvescap, Schroders, and Man Group were down on general equity uncertainty, while the Financial Times reported it could be months before Amvescap's new CEO is appointed. Some support came from an upbeat pharma sector after a U.S. federal judge ruled that Eli Lilly's patent on its Zyprexa drug is valid. CSFB said the ruling raises hope of an industry resurgence: AstraZeneca and GlaxoSmithKline gained 2.45% and 1.44%, respectively. In M&A news, yesterday's rumour that Barclays may make a bid for Bank of America appears to have been discounted today.

German's Dax lost 89.80 points, or 2.04%, to close at 4312.25. Frankfurt's Dax closed markedly lower in heavy trade following a raft of negative U.S. indicators and disappointing corporate results from IBM and Samsung, heightening concerns that economic growth is beginning to falter. European tech stocks bore the brunt of today's sell-off after IBM reported a decline in business in March, pointing to a slowdown in sales from Germany, France and Italy contributing to significant falls among leading IT sector stocks from the eurozone. Siemens, Infineon, and SAP all fell. Pharma stocks offered refuge, gaining after CSFB upgraded its pan-European pharma sector to overweight from market weight, based on 1) Eli Lilly victory in the Zyprexa patent challenge and 2) a strongly pro-sector macro background. Siemens suffered after Sony Ericsson Mobile said first-quarter profit fell 61% as average selling prices declined. SAP sought to distance itself from off-the-cuff comments from CEO Kagermann, who suggested he isn't adverse to chatting with Oracle's Ellison. DaimlerChrysler's major shareholders are alleged to have been tapped up by private equity groups about a possible buyout and a breakup of the luxury car maker. MAN slipped after U.S. peer Navistar issued a profit warning.

France's CAC 40 lost 78.83 points, or 1.92%, to close at 4032.28. The CAC40 ended lower on Friday as Wall Street extends losses. U.S. major indices trade at five-and-a-half month lows as a disappointing report from IBM underpins concerns about corporate earnings growth. Fears are compounded by a sharper-than-expected fall in the University of Michigan consumer sentiment index for April. At home, Cap Gemini, STM, and Atos showed the steepest declines. The pressure from the sell-off eventually caused Sanofi to buckle. The pharma group had been one of the only CAC40 bright spots today, lifted after a U.S. court upheld Eli Lily's patent on Zyprexa, suggesting U.S. courts might be more inclined to defend patents for groups with outstanding legal challenges. CSFB rated Sanofi a trading buy after the ruling. Ongoing declines in the oil price, with WTI down 58 cents to trade at $50.55 per barrel, acted as a drag on the main index.

Asian markets were lower Friday. In Japan, the Nikkei 225 lost 192.48 points, or 1.66%, to close at 11,370.69. Japanese stocks were led lower by computer-related companies after IBM said first-quarter profit fell short of analysts' estimates. Fujitsu dropped 3.2% to 634 yen, Toshiba declined 2.9% to 436 yen and Sony slid 2.7% to 4,040 yen. Kyocera slumped 3.4% to 7,460 yen, Advantest fell 2.1% to 7,980 yen and Tokyo Electron was 3% lower to 5,880 yen. Exporters dropped after U.S. benchmark indexes slid to 2005 lows, on concern that growth is slowing. The Dow and the Nasdaq lost 1.2% and 1.4%, respectively, overnight.

In Hong Kong, the Hang Seng droopped 133.65 points, or 0.97%, to close at 13,638.75 following the lead of U.S. markets. The Dow fell 1.2% and the Nasdaq gave up 1.4% overnight. Of the 33 HSI constituents, 31 fell and two were unchanged. Leading laggards were Lenovo Group, Denway Motors, and Henderson Inv. S&P Equity Research is downgrading Denway to Sell from Strong Buy following the announcement of its disappointing 2004 final results.

Canada's benchmark TSX/S&P lost 130.53 points, or 1.39%, to close at 9,279.08.


Steve Ballmer, Power Forward
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