Euroshares outlook- seen down; Wall St low on guarded Bernanke speech; oil eases

Euroshares outlook- seen down; Wall St low on guarded Bernanke speech; oil eases

	Published : Fri, 19 Jan 2007 08:36 By : Agencies Print this Story

LONDON (AFX) - Leading European exchanges are expected to open moderately lower taking their cue from a weaker session on Wall Street as hopes of a cut in interest rates receded on the back of guarded comments from Fed chairman Ben Bernanke regarding the US budget, while easing oil prices could also weigh on sentiment, dealers said.

According to spread-bettors IG Index, the Xetra DAX is seen opening 24 points weaker at 6,665, while the CAC 40 is expected 18 points to the worse at 5,537.

Overnight on Wall Street, stocks retreated as hopes of an interest rate cut faded on the back of a guarded speech by Fed chairman Ben Bernanke, while muted numbers from Apple also weighed on technology stocks.

The technology-laden Nasdaq Composite index declined 36.21 points to 2,443.21 -- its biggest one-day drop since Nov 27, when it fell by 2.21 percent. The Nasdaq is still up more than 1 percent on the year, however.

Meanwhile, the DJIA slipped 9.22 points to 12,567.93

US macro data released Thursday indicated slowly rising prices for consumers, as well as a surprising plunge in jobless claims to an 11-month low and a ramp-up in housing construction.

The reports pointed to an economy that's more resilient than the market had thought, leading more investors to lower their expectations for a rate cut. A cut could boost consumer spending by making debt less cumbersome and help companies pull in higher profits.

Over in Asia, the Hang Seng Index ended the morning adding 6.77 points at 20,304.28, while over in Tokyo the Nikkei 225 slipped by 60.49 points at 17,310.44 at the close.

Crude oil prices remained below 51 usd in Asian trading hours, at levels not seen since May 2005, as the market focussed on a larger-than-expected rise in US crude stockpiles, dealers said.

Overnight, crude slid below the 50 usd per barrel mark for the first time since May 25, 2005.

Oil heavyweights Total, BP, Royal Dutch Shell, Eni and Repsol will be eyed.

On the corporate front in Europe, electrical retailers should remain in focus, with investors digesting full-year numbers from Schneider Electric, which come hot on the heels of strong numbers from midcap UK peer Kesa yesterday but a poor performance at DSG International earlier this week.

Schneider reported fourth-quarter sales of 3.664 bln eur, up 12.3 pct. Full year sales came in 17.6 pct higher at 13.730 bln eur, while the group said it expects organic growth for the current year to exceed expectations.

A Paris-based trader said the results were 'better than expected', noting the market had been looking at full-year sales to be up 10 pct. Consensus estimates from Thomson showed analysts had expected fourth-quarter sales of 3.549 bln eur and full-year sales of 13.606 bln.

Elsewhere, steel giant ThyssenKrupp reported that its first-quarter pretax profit almost doubled to 1.0 bln eur from 425 mln the previous year, on sales of 12.2 bln eur from 10.9 bln.

The steel conglomerate is also 'optimistic' it will exceed its earlier 2007 pretax profit guidance of 2.5 bln eur.

The 1.0 bln eur pretax figure easily beat the expectations of analysts, who had forecast the steel conglomerate to post a pretax profit of 839 mln eur.

Analysts will also be looking for an update on ThyssenKrupp's long-running struggle to acquire Canadian steel maker Dofasco Inc, currently owned by Arcelor Mittal. The Germans expect a decision on the matter from a Dutch court on Jan 23.

Regarding the pharma sector, Omega Pharma NV has posted a trading update which shows full-year sales in line with the company's own estimates of 1 bln eur, driven by growth in the Belgian over-the-counter market.

Full-year sales rose to 1.007 bln eur, compared to 959.9 mln last year, at the top end of the 1.002 bln-1.007 bln eur range given by analysts polled by AFX News.

The pharma sector will also see some M&A action, as investors mull news that Indias largest pharma group, Ranbaxy, could be considering tying up with private equity firms to bid for Merck KGaA's generic drugs unit as it embarks on an aggressive global expansion, the Financial Times reported, citing an interview with Malvinder Mohan Singh, the company's chief executive.

Acquiring Merck Generics would put Ranbaxy in a much stronger position in key global markets 'and make us the seventh-largest generic maker globally', Singh told the FT.

Still on the M&A front, the utilities sector will remain in focus as the market awaits Spains response to the EU ruling on E.On and Endesa, although the EU yesterday warned it had not received any notification from Spain that it has withdrawn the new conditions it attached to the proposed acquisition.

At the end of December, the EU executive demanded that Spain make the changes after ruling its conditions illegal.

The obligations, imposed by the Spanish minister of industry, tourism and trade, but deemed unlawful by the EU, specify that Endesa can maintain its brand for a five-year period and that companies owning electricity assets outside mainland Spain must stay within the Endesa group for a period of five years.

Broker comment is also poised to attract interest, with car manufacturers in focus as UBS raised its recommendation to 'buy' for Fiat while cutting Porsche to 'neutral' from 'buy'.

ASML could also benefit from a recommendation upgrade to 'equal-weight' from 'underweight' by Lehman, while Swiss Re could also edged higher after Merrill Lynch upped the stock to 'neutral' from 'sell'.

Looking ahead to Wall Street, the market awaits fourth-quarter results from Motorola due ahead of the market, while figures from Citigroup for the same quarter should also provide focus.

Meanwhile, the University of Michigan consumer sentiment index is seen rising to 92.0 in January from 91.7 previously.

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