ADVFN III Morning Euro Markets Bulletin -September 1st, 2012-.

	ADVFN III	Morning Euro Markets Bulletin
	Daily world financial news

Monday, 01 October 2012

London Market Report

FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts

London open: Stocks shrug off disappointing Asian data Market Movers techMARK 2,128.58 +0.62% FTSE 100 5,778.15 +0.63% FTSE 250 11,796.22 +0.53% - UK stocks make strong gains early on - Japanese, Chinese figures disappoint - Xstrata rises after agreeing terms with Glencore UK equities advanced on Monday morning in spite of some disappointing economic data from Asia as stock markets kicked off the fourth quarter on a positive note. The Bank of Japan's quarterly Tankan survey for large manufacturers fell from -1 to -3 in September, its fourth negative reading. Meanwhile, the HSBC/Markit China manufacturing purchasing managers' index (PMI) stayed below 50, which continues to indicate contraction in the sector. However, helping sentiment this morning was Friday's release by auditor Oliver Wyman which estimated that the Spanish financial sector would need €59.3bn in funds in order to stay afloat, well within the €100bn limit given by the European Union. "The broader market is higher from Friday's close, as the most compelling strategy currently adopted by investors is to position for equity outperformance relative to bonds," said financial trader David White from SpreadEx. "This week is likely to be a repeat of the familiar themes and headline risks faced by the market for some time, namely pressured European debt and a slowing China. Participants will turn to non-farm numbers due out from the US on Friday for a guide as to whether or not the labour market is currently improving," he said. Xstrata and Glencore agree terms The big news of the morning was that the so-called merger of equals between commodities trader Glencore and mining titan Xtsrata is back on after the independent directors of the latter agreed to Glencore's terms. Glencore was in the red early on while Xstrata was making gains. Glencore increased its terms to a "take it or leave it" offer of 3.05 Glencore shares for every Xstrata share back in early September and after an extended period of umming and aahing, the independent directors of Xstrata have agreed to recommend that Xstrata shareholders accept the offer. Banking stocks were in demand with Royal Bank of Scotland, Lloyds and Barclays benefiting from ratings upgrades from Liberum Capital, which lifted its recommendation on all three to 'buy'. Property firm Hammerson rose after selling one of its last central London office properties as it pushes forward with plans to focus solely on retail space. The deal means the firm has just one office building left in its portfolio. Sector peer British Land was also in the blue after offloading the Beehive Centre, a retail centre comprising 16 units including an Asda supermarket, to Orchard Street Investment Management, for £109.2m. Shares of Taylor Wimpey (and Barratt Developments) are on the up following an upgrade out of Citi this morning. UK Event Calendar Monday October 01 INTERIM DIVIDEND PAYMENT DATE Avesco Group, Jardine Lloyd Thompson Group, Legal & General Group, Portmeirion Group, Robinson, Stanley Gibbons Group INTERNATIONAL ECONOMIC ANNOUNCEMENTS Construction Spending (US) (15:00) ISM Manufacturing (US) (15:00) ISM Prices Paid (US) (15:00) PMI Manufacturing (GER) (08:55) Retail Sales (GER) (07:00) Unemployment Rate (EU) (10:00) FINALS Pure Wafer, Sabien Technology Group AGMS Begbies Traynor Group, City of London Investment Group, Swan (John) & Sons, Zetar TRADING ANNOUNCEMENTS Andor Technology, ITE FINAL DIVIDEND PAYMENT DATE Park Group, PZ Cussons, Swan (John) & Sons Sector movers FTSE 100 Euronext Dax perf CAC 40 European stocks are set to edge lower on Monday, as weak economic data out of China and Japan underscored the headwinds faced by the global economy. China's manufacturing activity shrank for the second month in September on weak domestic and external demand, increasing the pressure on the government to step up stimulus. The official Purchasing Managers' Index came in at 49.8 in September, up slightly from 49.2 a month ago, but still remaining below 50 which divides growth and contraction. The reading was forecast to improve to 50.1. Separately, the Bank of Japan's tankan survey showed that large Japanese companies became more pessimistic about business conditions in the three months to September, weighed down by a persistently firm yen and weakening global demand. The key measure of business confidence fell to minus 3 from minus 1 in June. The results of a stress test conducted by management consultants Oliver Wyman showed that Spain's troubled banks need roughly 59.3 billion euros to shore up their finances in an adverse economic scenario. The capital needs estimate applies to 7 out of 14 banking groups entities on which the stress-testing exercise was conducted to assess the resilience of the Spanish banking system and its ability to withstand a severe adverse stress of deteriorating macroeconomic and market conditions. The independent stress test was commissioned by the Spanish government as part of the conditions agreed in July for a European bailout of as much as €100 billion for the country's banking system. Due to increased costs of public financing, Spain's public debt figure is expected to reach 85.3 per cent of gross domestic product in 2012 and 90.5 per cent in 2013, Spain's Minister of Finance and Public Administration Cristobal Montoro Romero said on Saturday, increasing speculation that Moody's Investors Service could downgrade Spanish government debt to 'junk' status. In economic releases, the average asking price for a home in the United Kingdom fell 0.1 percent in September from the previous month, falling for the third straight month, property monitoring site Hometrack said. The headline figure was in line with expectations and unchanged from the readings of the previous two months. In corporate news, Daimler AG and the Renault-Nissan Alliance announced that they are collaborating on two new projects to accelerate development of fuel-efficient powertrains. The stress test results for the Spanish banking system showed that several lenders, including Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and Banco Sabadell SA have capital excesses in the adverse scenario. The board of the mining giant Xstrata has backed the proposed merger between the company and Swiss mining and commodities trader Glencore International Plc. Mining giant BHP Billiton has projected its copper production to grow at a compound annual growth rate of 10 percent up to end fiscal 2015. Consumer electronics giant Royal Philips Electronics said that it has agreed to form a 50-50 healthcare joint venture in Saudi Arabia with a unit of the Al Faisaliah Group. Aviva Plc. has received buyout offers from Apollo Global Management LLC, Harbinger Capital Partners and Guggenheim Partners LLC for a U.S. life insurance division, the Bloomberg reported, citing people familiar with the matter. Shell Petroleum Development Company of Nigeria, a subsidiary of Royal Dutch Shell, said in a statement that it has shut down the 28-inch Bomu-Bonny Trunkline after it discovered a fire earlier in the day. European stocks fell notably on Friday as investors awaited the results of stress tests on Spanish banks. France's CAC 40 tumbled 2.5 percent, while the German DAX, Switzerland's SMI and the U.K.'s FTSE 100 lost between 0.7 percent and 1 percent. U.S. stocks managed to recover some early losses, but still ended the session on a weak note on Friday, with concerns over Spain's ability to deal with its banks and weak U.S. economic data on Chicago-area business activity and consumer spending weighing on the markets. The Dow edged down 0.4 percent, the tech-heavy Nasdaq slid 0.7 percent and the S&P 500 dropped half a percent. US Market Report US close: Stocks finish a splendid quarter in the red -Spanish 10 year bond yields down 1bp to 5.94% -Bank of America to pay $2.43bn in settlement -Nike off on China demand concern -Consumer confidence pressured by stagnant incomes -Personal income well below forecasts (with revisions) -Chicago PMI at 3 year low -Chicago PMI not signaling substantial further decline -Barclays -Fisher afraid Fed painting itself into a corner with QE3 Dow Jones Industrial: -0.36% Nasdaq Comp.: -065% S&P 500: -0.45% Wall Street benchmarks finished in the red on the last trading day of a quarter which saw the S&P 500 rise by almost 9% at one point. That after, mid-way through the session, Spain´s announcement of a smaller than expected capital shortfall at its banks –of 53.9bn euros- led to an advance in shares which almost took them into the blue. Thus, investors have been left wondering whether the end-of-quarter weakness –despite fund managers´ presumed best attempts at window dressing- is a harbinger of further weakness to come or, rather, just a light dose of profit-taking. Sportswear firm Nike announced earnings after the bell –on Thursday- which came in ahead of expectations, although it faces the hurdle of slowing growth in China. This pressured its shares. Bank of America has agreed to a $2.43bn settlement with investors who suffered losses during its acquisition of Merrill Lynch. Losses, also reported Thursday night, by Research In Motion, the maker of the still popular but no longer market-leading Blackberry smart-phone, were not as bad as feared. Its stock bounced back by 5% after earlier having risen by close to 20%. Worth noting perhaps, some market commentary on the company continued to be rather poor. Crown Castle agreed to acquire the rights to operate 7,200 cellular towers from T-Mobile USA for $2.4bn, giving the carrier's owner Deutsche Telekom cash to invest in its US wireless network. From a sector stand-point the worst performers were: Renewable energy equipment(-4.22%), Tires (-1.93%) and computer hardware (-1.92%). Amongst the most heavily traded issues on the NYSE were: Ford, Sprint and Bank of America. Weak income numbers On the macro-economic front, US personal consumption expenditures (PCE) in August were up 0.5%, in line with expectations, after rising 0.4% in July. However, personal income was up 0.1%, slightly below expectations of a 0.2% increase. The July reading was revised to show a 0.1% gain from 0.3% previously. The personal savings rate fell to 3.7% from 4.1% in July. The Core PCE index rose 0.1% in August, as expected. Core prices were up 1.6% from a year earlier, versus a 1.3% annual increase in July. The notoriously volatile regional Chicago NAPM manufacturing sector purchasing managers' index for the month of September has come in at 49.7 (Consensus: 53), after a reading of 53 for the previous month. The new orders sub-index has come in at 47.4 (from 54.8) while the prices paid sub-index has printed a reading of 63.2 (after 57). "While this report is soft on the whole, the Chicago PMI had been running well above the ISM since 2011. We view the September print as bringing the Chicago PMI in line with the softer prints in the other manufacturing surveys rather than signaling a more substantial future decline," comment analysts at Barclays Research. The University of Michigan's gauge of consumer confidence for the month of September has come in at 78.3 (Consensus: 79) after the previous month's reading of 74.3 and a preliminary print of 79.2. The current situation sub-index fell to 85.7 from 88.3 (Consensus: 88) -largely reflecting stagnant income trends- but the expectations component actually rose; to 73.5 from 73.4 (Consensus: 73). Inflation expectations one year out fell to 3.3% year-on-year from 3.5%, while expectations five years out remained unchanged at 2.8% year-on-year. Other asset classes little changed Front month West Texas crude futures closed up slightly, by 0.27%, at the 92.10 dollar level on the NYMEX. 10 year US Treasuries rose by 6/32 dollars, with yields at 1.63%. Credit Suisse expects to see the ounce of gold trading above the 1,800/oz. mark in three months´ time. S&P 500 - Risers Accenture Plc (ACN) $70.03 +7.11% Cerner Corp. (CERN) $77.39 +3.88% Coach Inc. (COH) $56.02 +3.15% Edwards Lifesciences Corp. (EW) $107.37 +1.75% Watson Pharmaceuticals Inc. (WPI) $85.16 +1.73% Cognizant Technology Solutions Corp. (CTSH) $69.89 +1.70% Cisco Systems Inc. (CSCO) $19.09 +1.60% Janus Capital Group Inc. (JNS) $9.44 +1.51% Iron Mountain Inc. (IRM) $34.11 +1.46% PPL Corp. (PPL) $29.05 +1.43% S&P 500 - Fallers First Solar Inc. (FSLR) $22.15 -4.18% Juniper Networks Inc. (JNPR) $17.11 -3.17% Seagate Technology Plc (STX) $30.96 -3.04% JDS Uniphase Corp. (JDSU) $12.38 -2.98% LSI Corporation (LSI) $6.91 -2.95% Lexmark International Inc. (LXK) $22.25 -2.71% Alpha Natural Res (ANR) $6.57 -2.67% Express Scripts Holding Co (ESRX) $62.63 -2.52% Denbury Resources Inc. (DNR) $16.16 -2.30% Federated Investors Inc. (FII) $20.69 -2.27% Dow Jones I.A - Risers Cisco Systems Inc. (CSCO) $19.09 +1.60% Home Depot Inc. (HD) $60.37 +0.82% International Business Machines Corp. (IBM) $207.45 +0.75% American Express Co. (AXP) $56.86 +0.51% Kraft Foods Inc. (KFT) $41.35 +0.38% Procter & Gamble Co. (PG) $69.36 +0.09% Dow Jones I.A - Fallers Intel Corp. (INTC) $22.66 -1.86% McDonald's Corp. (MCD) $91.75 -1.63% Bank of America Corp. (BAC) $8.83 -1.56% Alcoa Inc. (AA) $8.85 -1.45% Microsoft Corp. (MSFT) $29.76 -1.33% E.I. du Pont de Nemours and Co. (DD) $50.27 -1.12% Caterpillar Inc. (CAT) $86.04 -1.01% Coca-Cola Co. (KO) $37.93 -0.99% Hewlett-Packard Co. (HPQ) $17.06 -0.96% AT&T Inc. (T) $37.70 -0.76% Nasdaq 100 - Risers Research in Motion Ltd. (RIMM) $7.50 +5.04% Cerner Corp. (CERN) $77.39 +3.88% Baidu Inc. (BIDU) $116.89 +2.00% Cognizant Technology Solutions Corp. (CTSH) $69.89 +1.70% Infosys Technologies Ltd. (INFY) $48.54 +1.70% Cisco Systems Inc. (CSCO) $19.09 +1.60% Warner Chilcott Plc (WCRX) $13.50 +1.43% Monster Beverage Corp (MNST) $54.06 +1.16% Alexion Pharmaceuticals Inc. (ALXN) $114.40 +1.02% Citrix Systems Inc. (CTXS) $76.53 +0.93% Nasdaq 100 - Fallers Green Mountain Coffee Roasters Inc. (GMCR) $23.74 -4.08% Seagate Technology Plc (STX) $30.96 -3.04% Express Scripts Holding Co (ESRX) $62.63 -2.52% Apple Inc. (AAPL) $667.10 -2.09% Netflix Inc. (NFLX) $54.44 -2.00% Flextronics International Ltd. (FLEX) $6.00 -1.96% Altera Corp. (ALTR) $34.00 -1.93% Fossil Inc. (FOSL) $84.70 -1.88% Marvell Technology Group Ltd. (MRVL) $9.15 -1.88% Intel Corp. (INTC) $22.66 -1.86% Newspaper Round Up Monday newspaper round-up: Greece, BoE, Colombia German Chancellor Angela Merkel must "come clean at long last" and admit that Greece will need help for another seven or eight years, the German opposition leader said over the weekend. "The Greeks must stand by their commitment, but we must give them time. We cannot tighten the screws any futher," said Peer Steinbruck, the Social Democrat candidate for chancellor. He said the political and economic fall-out from Greek ejection from the euro would be devastating and must be avoided.The plea came amid reports that Berlin is so worried that a Greek crisis would spin out of control that it is ready to back the next €31bn payment to Athens under its EU-IMF Troika rescue, despite failure to comply with the terms. Wirtschaftswoche, a German news magazine, said Greece's parliament merely needs to vote on a list of detailed reforms, The Telegraph reports. Paul Fisher, the Bank of England's executive director of markets, is being groomed to replace Paul Tucker as the Bank's deputy governor for financial stability. Mr Tucker is one of three front-runners to succeed Sir Mervyn King as governor next June. If he does not get the job, observers expect him to leave the Bank. His promotion or departure would leave the post vacant, with Bank insiders saying Mr Fisher is being prepared internally for the role. The path from executive director of markets to deputy governor was the one taken by Mr Tucker when he was promoted in March 2009. Also like Mr Tucker, Mr Fisher is on the rate-setting Monetary Policy Committee as well as the Financial Policy Committee and has been a principle private secretary to a former Bank governor, The Telegraph says. Few Chinese really need the excuse, but the start of Golden Week could herald an exodus of two million shoppers in search of Western bargains and luxury. They are part of a still-fervently optimistic nation that believes it will earn more, spend more and provide a better life for its offspring in future, according to a Boston Consulting Group study being published today. Figures from HSBC yesterday showed that manufacturing had slumped for the eleventh month in a row in September and export orders had fallen at their sharpest rate in three and a half years — but "for the average person in China the slowdown is very hard to see, the typical Chinese consumer just hasn't felt it yet", Michael Silverstein, a senior partner at Boston Consulting, said, The Times reports. As many as 40,000 complex financial products could have been mis-sold to small businesses, according to the City watchdog's latest estimate of the scale of the banking scandal. The Financial Services Authority (FSA) confirmed it had increased its estimate of the number of so-called interest rate swap arrangements that were sold by more than 40%, up from 28,000 initially. The new figure comes after the regulator was supplied with new information by the banks and suggests the industry could be facing a hefty compensation bill, writes The Independent. The co-founder of US private equity group TPG has warned that if stock markets do not improve, investors in buyout groups will have to accept lower returns. Historically private equity groups have promised investors that they themselves will only take a cut of the profits from their investments if they achieve a minimum 8% return. For most of its short history, the best buyout groups have had no trouble delivering. But now the industry is struggling with low returns and that 8% has become a more elusive target. "If we continue to have zero interest rates, that 8% hurdle should go," David Bonderman, co-founder of TPG said on the sidelines of a conference in Hong Kong, The Financial Times explains. Some of the world's largest oil companies are jostling for licences to explore for shale gas in Colombia, one of many countries hoping to replicate the North American boom in unconventional gas. ExxonMobil, Royal Dutch Shell and ConocoPhillips are among the more than 80 companies bidding for licences, according to Javier Gutiérrez, chief executive of Ecopetrol, Colombia's state-run energy company. "There is definitely more interest in this licensing round than in previous ones," he told the Financial Times. The enthusiasm marks a turnround for Colombia, a country that was long a byword for political violence and instability, The Financial Times explains.