Euroshares outlook - flat to lower open seen as investors mull Philips results

Euroshares outlook - flat to lower open seen as investors mull Philips results

	Published : Mon, 15 Oct 2007 06:45 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading European exchanges are looking at a flat to lower open as investors digest solid quarterly results from consumer electronics giant Philips and new financial targets for the soon-to-be-merged Gaz de France and Suez.

Helping set the tone in Europe, Wall Street ended higher last Friday as tech stocks charged higher on takeover news and other sectors gained on data that indicated the economy is expanding at a healthy pace.

The major indexes managed to post gains for the week.

In Asia, stocks edged higher in cautious trade ahead of some key US data and the start of third-quarter earnings season with heavyweights including Citigroup, Google and Intel due to report this week.

The Hang Seng Index ended the morning up 268.68 points, or 0.9 pct at 29,107.05.

Japan's Nikkei 225 225 Stock Average ended the morning up 43.72 points, or 0.3 pct at 17,374.89.

Oil prices dipped in Asian trading, but stayed within sight of fresh record highs underpinned by US economic data last week that signalled solid demand for crude in a tight market.

New York's main oil futures contract, light sweet crude for delivery in November, was 12 cents lower at 83.57 US dollars a barrel in morning trade.

The contract closed at a fresh high of 83.69 dollars a barrel in New York trades on Friday -- after almost touching the intra-day high of 84.10 dollars reached in September -- as tensions rose between Turkey and Kurdish rebels in Iraq.

Brent North Sea crude for November delivery was 34 cents lower at 80.21 dollars a barrel.

Last month the Brent contract hit an all-time record high of 81.05 dollars.

Turning back to Europe, investors mulled quarterly results from one of the continent's largest companies.

Consumer electronics group Philips reported sales and operating profit ahead of market forecasts in the third quarter, and said that it will announce further steps in its programme to return cash to shareholders.

Sales were 6.524 bln eur, up from 6.313 bln and higher than market expectations of 6.316 bln. Operating profit was 438 mln eur, up from 71 mln eur and well above the 343-349 mln eur expected.

But net profit came in below expectations. The bottom-line figure was 331 mln eur, up from an adjusted 1 mln eur and missing forecasts of 362-392 mln eur.

Philips said it sees 'potentially weaker' US markets, but said that it expects other markets, and especially the emerging ones, to compensate.

Over in France, luxury goods maker LVMH is expected to report third quarter sales in the region of 3.658-3.970 bln eur.

They anticipate overall growth of 6.1-8.5 pct versus the third quarter of 2006, with organic growth in the 11-13 pct range.

Analysts will be looking in particular for any updates on trading in the US, in relation to the economic uncertainty there, and in Japan, where LVMH has been recovering from a sluggish performance last year.

Staying in France, Gerard Rameix, secretary general of French financial regulator AMF, said in an interview with Le Journal des Finances that he expects to present the final report on the investigation into EADS share transactions to the AMF board in March 2008.

The AMF is conducting a probe into the alleged sales by EADS shareholders and executives of millions of euros worth of shares last Spring, just before the announcement of major delays to the superjumbo A380 sent the stock price tumbling.

Gaz de France and Suez said their merger will be completed in the first half of 2008. They are targeting 10 pct EBITDA growth in 2008 and a 10 to 15 pct dividend rise a year until 2010.

Air France-KLM will also come under scrutiny as an investor day gets underway at the Franco-Dutch airline.

Austrian Airlines, meanwhile, will post its third-quarter passenger figures.

In the retail sector, fashion retailer H&M is set to report September sales.

Over in the UK, investors can expect a trading statement from brewer SABMiller.

On the economic front, inflation will take centre stage as Portugal, Finland and Italy all release their September consumer price reports.

Later in the session, investors will turn their attention to the US, with earnings releases from Citigroup and biotech group Genentech.

On the economic calendar, the Empire State manufacturing survey will offer investors a snapshot on the current health of the US factory sector.

mark.cotton@thomson.com

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