Tucson CitizenTucson Citizen

European markets down after last week’s gains

LONDON – European markets dipped Monday as investors booked profits from last week’s gains, while Asian stocks edged higher as the Chinese premier’s positive assessment of the world’s third-largest economy helped soothe nerves ahead of key earnings reports from leading U.S. companies.

In European afternoon trading, Britain’s FTSE 100 was down 1.1 percent to 4,047.51, Germany’s DAX fell 2.5 percent to 4,559.17 and France’s CAC 40 faltered 2.1 percent to 3,028.60.

Wall Street was set to open lower as investors remained cautious even after after Oracle Corp. said it plans to acquire Sun Microsystems Inc. for $7.4 billion.

Dow Jones industrial average futures slipped 1.2 percent to 7,990.00 and Standard & Poor’s futures lost 1.3 percent to 855.20.

Markets were largely encouraged last week by upbeat reports from U.S. banks Citigroup Inc., JPMorgan Chase & Co., Wells Fargo & Co. and Goldman Sachs Group Inc., although investors know that difficulties in the banking sector remain. Financial stocks, along with mining and oil companies, dragged on European indexes Monday.

“Generally speaking, we are just seeing a bit of profit-taking coming through,” said Stephen Pope, chief global markets strategist for Cantor Fitzgerald, adding that markets were “very much buoyed” by the reports from the likes of Goldman and JPMorgan last week.

Troubled banking giant UBS AG rose 0.1 percent after it sold its Brazilian business for about $2.5 billion to BTG Investments in an effort to reduce risk and streamline its operations.

Investors are also awaiting results this week that could test a growing belief that the world economy and banking system have turned a corner. Among the hundreds of U.S. companies due to report are Coca-Cola, Microsoft, IBM and McDonald’s. Bank of America Corp. said before the U.S. market opened Monday that it earned a surprise profit in the first quarter but that it also set aside $13.4 billion to cover losses on souring debt. The stock fell 7.1 percent in electronic premarket trading.

Meanwhile, oilfield services company Halliburton Co. said its first-quarter earnings fell 35 percent as oil and natural gas producers cut back on exploration and drilling because of low prices.

The Oracle-Sun deal provided a positive note, along with the announcement by British drug maker GlaxoSmithKline that it will pay $2.9 billion to buy American dermatology business Stiefel Laboratories Inc.

“Obviously it comes as a piece of good news in that there is a lot of M&A going on in the background,” said Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers in London.

Bowman said the deals “may just strengthen investor sentiment a little bit.”

In Asia, markets were modestly higher, led by Hong Kong and Shanghai stocks after Chinese Premier Wen Jiabao said Saturday the economy was faring “better than expected” as a massive stimulus package produces results.

Coupled with more pledges to pull the economy out its slump, the comments from Wen gave investors more reason to hope China will heal faster and help both Asian and overseas markets along the way.

With a number of markets already up more than 20 percent in less than two months, many are becoming wary of another bubble in the making and say any negative surprises could cause a bout of selling.

“Equities markets are beginning to be quite detached from the underlying economic fundamentals — once again,” said Kirby Daley, senior strategist at Newedge Group in Hong Kong. “The worst is far from over.”

Japan’s Nikkei 225 stock average recouped morning losses to rise 17.17 points, or 0.2 percent, to 8,924.75 while South Korea also made up lost ground, rising 0.6 percent to 1,336.39. Taiwan’s market was higher, though markets in Australia and Singapore retreated.

In China, Shanghai’s key index added 2.1 percent to 2,557.46 while Hong Kong’s Hang Seng climbed 1 percent to 15,750.91. Wen said the economy appeared to be bouncing back, with industrial output, consumer spending and factory investment on the rise.

“China’s package plan is already paying off and positive changes have taken place in the economy,” Wen said Saturday at a forum in China. “The situation is better than expected.”

In Japan, steelmakers strengthened after analysts issued upbeat appraisals of the sector and said producers may see lower price cuts from automakers. Nippon Steel, the country’s leading producer, advanced 4.3 percent.

Gains in Japan’s broader market were capped by losses by several companies, including Toshiba. The giant chipmaker — which projected a wider-than-expected fiscal-year loss, warned of contract job cuts and may need to raise fresh capital — dropped 4.8 percent.

In oil, benchmark crude for May delivery fell $2.75 to $47.58 a barrel in European trade. The contract rose 35 cents Friday to settle at $50.33.

In currencies, the dollar eased to 98.7140 yen from 99.15 yen, while the euro weakened to $1.2969 from $1.3045.

Citizen Online Archive, 2006-2009

This archive contains all the stories that appeared on the Tucson Citizen's website from mid-2006 to June 1, 2009.

In 2010, a power surge fried a server that contained all of videos linked to dozens of stories in this archive. Also, a server that contained all of the databases for dozens of stories was accidentally erased, so all of those links are broken as well. However, all of the text and photos that accompanied some stories have been preserved.

For all of the stories that were archived by the Tucson Citizen newspaper's library in a digital archive between 1993 and 2009, go to Morgue Part 2

Search site | Terms of service