Euroshares outlook - lower after overseas losses, financials in focus

Euroshares outlook - lower after overseas losses, financials in focus

	Published : Thu, 15 Nov 2007 07:44 By : Agencies Print this Story

LONDON (Thomson Financial) - Europe's leading exchanges are headed for a lower open this morning following overnight losses in the US and Asian markets as the market awaits further news from the financial sector regarding the extend of subprime-related write-downs.

In addition, the UK is in the spotlight after the governor of the Bank of England, Mervyn King, said there is a growing dilemma of how to balance the downside risks to economic growth against the prospect of rising inflation.

Speaking after the release of the quarterly Inflation Report, King said the near-term outlook for the economy is 'less benign for both inflation and growth' following this summer's credit crunch.

And overseas, Wall Street closed with losses as further interest rate cuts by the Fed seem increasingly unlikely in the nearby future, given solid economic data seen last night. The DJIA ended the day 76.08 points or 0.57 points lower at 13,231.01, while the broader S&P 500 gave up 10.47 points or 0.71 pct to 1,470.58. The technology-laden Nasdaq fell 29.33 points or 1.10 pct to 2,644.32.

Asian markets were also lower with the Hang Seng shedding 316.37 points or 1.08 pct to 28,849.64, while the Nikkei 225 lost 103.26 points or 0.67 pct to 15,396.30.

The dollar continued its decline against the euro to 1.4682 usd, but gained on the pound, to 2.0563 usd, after suggestions that the Bank of England may cut interest rates further in the future.

Oil prices were steady in Asian trade ahead of the release of a weekly US government report on the country's energy stockpiles. But the market's decline was limited after OPEC rejected calls from the US, the world's largest energy consumer, to raise output. In early trading, New York's main contract, light sweet crude for December delivery, had eased seven cents to 94.02 usd a bbl from 94.09 usd in late US trades Wednesday.

And December gold futures surged 17 usd to 816.00 usd an ounce on the Nymex.

In Europe, the financial sector is expected to hit the spotlight again following a report in the Wall Street Journal that UBS may be headed for additional write-downs, which could accumulate to around 8 bln sfr in the fourth quarter, according to the newspaper.

In addition, articles in the Times and the Daily telegraph today suggest Barclays may reveal the amount of its write-downs resulting from the global credit crisis two weeks ahead of its year-end financial results following a steep fall in its share price last week.

In earnings news, Zurich Financial Services reported a better-than-forecast net profit for the first nine months of 2007 this morning, coming up to 4.157 bln usd, compared with 3.326 bln seen last year and 3.8-4 bln usd seen by analysts. The bank cited targeted growth across the group as well as operational strength in all business segments.

Meanwhile, France's Credit Agricole SA said last night, third-quarter net profit fell 16.8 pct to 954 mln eur compared to 1.146 bln a year earlier and 976 mln seen by analysts, as a trading loss and impairment charge at its investment bank weighed on results.

Credit Agricole said its corporate and investment division Calyon booked a 546 mln impairment charge for its Asset Backed Securities (ABS) and Collateralized Debt Obligation portfolio.

In other earnings news, Vallourec is in the spotlight this morning after raising its second half sales outlook after the close yesterday to 'more than 10 pct' on a same-structure basis, compared to guidance for growth of 7-10 pct given in July.

Also in the French market, Atos Origin today released third quarter numbers that came in at the higher end of expectations thanks to fast growth in its IT operations management division.

And in the luxury goods sector, Bulgari also pleased investors as it revised its guidance upward and said it expects sales, at constant currency rates, and net profits to rise about 12 pct in the full-year, compared with a previous forecast of a 10-12 pct rise. Analysts at Deutsche Bank said the third quarter figures were also solid, but noted that the consensus has already been ahead of the company's guidance.

In M&A news, Altadis is in focus after an announcement by Imperial Tobacco Group PLC last night, which said Altadis has recommended its cash offer of 50 eur per share to shareholders.

And according to Les Echos, ArcelorMittal would be interested in buying any assets sold by BHP-Rio Tinto, if the merger between the two mining groups goes ahead. 'If there are opportunities, we will certainly look at them,' chief executive Lakshmi Mittal told the paper.

Elsewhere, automaker Volkswagen AG is planning to build an assembly plant in the US to help reach a goal of boosting US unit sales to 800,000 by 2018, according to an interview by Volkswagen of America unit head Stefan Jacoby with Detroit Free Press.

And over in Switzerland, Roche Holdings AG said that the US Food and Drug Administration (FDA) has approved its Micera medication for the treatment of anemia associated with chronic renal failure in adults, including patients on dialysis and patients not on dialysis. However, the Swiss pharma group said a launch of the drug in the US depends on the outcome of an ongoing patent infringement case against Amgen Inc.

patrizia.kokot@thomson.com

pk/lam

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.