04 February 2011

European Stocks Retreat; Shell Slumps as TeliaSonera Shares Soar

European Stocks Retreat; Shell Slumps as TeliaSonera Shares Soar : Feb. 3 (Bloomberg) -- European stocks dropped as gunfire erupted in the middle of Cairo and Royal Dutch Shell Plc reported earnings that missed analysts’ estimates. Japanese shares slid, while U.S. futures fluctuated.

Shell slumped 2.8 percent after saying earnings from its refining division remained “under pressure” last quarter. Total SA lost 1.2 percent as its Yemen LNG venture said that production continued at full capacity even as protesters held a “Day of Rage” against the country’s president. TeliaSonera AB jumped 2.6 percent after Sweden’s largest telephone company said fourth-quarter net income climbed as demand increased.

The Stoxx Europe 600 Index lost 0.3 percent to 283.77 at 12:28 p.m. in London. Most European stocks fell yesterday as companies from Electrolux AB to Scania AB announced results that disappointed investors. The Nikkei 225 Stock Average also dropped 0.3 percent today as most Asian markets closed for the lunar new year, while futures on the Standard & Poor’s 500 Index expiring in March slipped 0.1 percent.

“We’re in a consolidation mood,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “One problem is Egypt as investors thought tensions were going to be solved quickly, but they’re actually worsening. There’s speculation it might spread to other regions. Shell earnings were a bit of a shock for investors.”

The benchmark Stoxx 600 gained 1.5 percent last month amid better-than-forecast economic reports and speculation that European leaders will increase their efforts to contain the region’s sovereign-debt crisis.

Gunfire erupted in Cairo’s Tahrir Square early today as Mubarak’s supporters battled with demonstrators demanding an immediate end to his 30-year rule. Five people have been killed in the clashes and Molotov cocktails were thrown in the square, Al Jazeera television reported.

U.S. Services, Jobs

A report today may show service industries in the U.S. kept growing in January at the fastest pace in more than four years. The median forecast in a Bloomberg News survey for the Institute for Supply Management’s non-manufacturing gauge is 57.1, matching December as the highest reading since May 2006. Readings greater than 50 mean that the index, which covers about 90 percent of the economy, expanded. The ISM will report at 10 a.m. New York time.

Also in the U.S., a Labor Department report at 8:30 a.m. in Washington may show fewer Americans filed first-time applications for unemployment benefits last week in a sign the job market is on the mend. New claims dropped by 34,000 to 420,000 from the prior week, according to the median prediction in a Bloomberg survey.

European PMI

A purchasing managers index report today showed Europe’s services and manufacturing industries expanded at a faster pace than initially estimated in January, led by surging output growth in Germany and France.

A composite index based on a survey of euro-area purchasing managers in both industries rose to 57 from 55.5 in December, London-based Markit Economics said today. That’s greater than the initial estimate of 56.3. A reading above 50 means growth.

European stocks have climbed this year as 36 of the 62 companies in the Stoxx 600 that have reported results since Jan. 10 posted per-share earnings that topped analysts’ estimates, according to data compiled by Bloomberg. Net income rose 12 percent as sales increased 15 percent in the fourth quarter.

Shell, Total Drop

Shell slumped 2.8 percent to 2,203.5 pence, its largest drop in five months. Europe’s biggest oil company posted fourth- quarter profit, excluding one-off items and inventory changes, of $4.1 billion. That missed the $4.7 billion mean estimate of 16 analysts surveyed by Bloomberg.

Total slid 1.2 percent to 43.49 euros even as Yemen LNG, a liquefied natural gas venture that includes Total, said that production remained at full capacity despite a day of protests calling for President Ali Abdullah Saleh to stand down.

Actividades de Construccion y Servicios SA slumped 8.2 percent to 34.30 euros, the largest drop in two years, after its largest shareholder sold a 5 percent stake in the Spanish construction company at a discount. Corporacion Financiera Alba sold the holding at 34 euros a share.

Kesko Oyj sank 5.9 percent to 33.32 euros, the biggest decline in almost nine months. Finland’s largest retailer reported fourth-quarter net income of 59 million euros ($81.2 million), missing the 61.4 million-euro mean estimate of eight analysts surveyed by Bloomberg.

Rautaruukki, TeliaSonera

Rautaruukki Oyj slid 4.3 percent to 17.50 euros. Finland’s largest producer of carbon steel reported a fourth-quarter net loss of 30 million euros, compared with the average estimate of a 19.4 million-euro profit from eight analysts in a Bloomberg survey.

TeliaSonera jumped 2.6 percent to 54.55 kronor after saying fourth-quarter net income rose to 5.31 billion kronor ($822.9 million) from 4.9 billion kronor a year earlier because of growth in the Nordic region and Spain. Analysts had predicted a profit of 5.21 billion kronor, according to a survey compiled by Bloomberg.

Deutsche Bank AG climbed 2.2 percent to 45.40 euros as Germany’s biggest bank said higher revenue from fixed-income and equities trading lifted fourth-quarter earnings at its investment bank. Pretax profit at the division rose to 625 million euros from 398 million euros in the year-earlier period, according to a statement today. Revenue from sales and trading climbed 30 percent to 2.44 billion euros, helped by a rebound in asset values, the company said.

GlaxoSmithKline Climbs

GlaxoSmithKline Plc jumped 2 percent to 1,149.5 pence after announcing that it will buyback as much as 2 billion pounds ($3.2 billion) in stock this year.

BT Group Plc surged 3 percent to 183.9 pence as the U.K.’s largest fixed-line phone company posted third-quarter adjusted operating profit of 1.48 billion pounds. Analysts had estimated profit of 1.45 billion pounds.

Konecranes Oyj soared 5.5 percent to 31.74 euros, the biggest gain in a month. The world’s biggest supplier of industrial cranes said fourth-quarter net income of 31.9 million euros beat the 26.9 million-euro mean estimate of eight analysts surveyed by Bloomberg.

Salzgitter AG rallied 3.2 percent to 61.39 euros as Germany’s second-biggest steelmaker was upgraded to “outperform” from “underperform” at Cheuvreux SA, which said “long steel is poised to halve its losses and flat steel to remain solid” and “2012 should see a more pronounced recovery.”

Rexel SA added 1.2 percent to 17.21 euros as the French electrical-equipment distributor was raised to “buy” from “neutral” at Goldman Sachs Group Inc.

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