Tuesday May 6, 09:38 AM
Euroshares open flat after Wall Street decline, Swiss Re falls after Q1 UPDATE
(updating with full report)
LONDON (Thomson Financial) - Europe's leading exchanges hovered around the flatline in opening deals, following a lacklustre performance on Wall Street and in Asia overnight. Shares in Swiss Re (Virt-X:
RUKN.VX - news) sharply declined after the world's largest re-insurer missed market expectations with its first-quarter report.
At 09:15 a.m., the DJ STOXX 50 was down 2.40 points or 0.07 percent to 3,278.94, while the DJ STOXX 600 fell 0.32 points or 0.10 percent to 327.96.
Wall Street ended lower Monday following Microsoft (NASDAQ: MSFT - news) 's decision to withdraw its bid for Yahoo (NASDAQ: YHOO - news) and as oil prices rose to a new record of over $120 a barrel.
The DJIA ended the day down 88.66 points or 0.68 percent to 12,969.54, while the S&P 500 closed down 6.41 points or 0.45 percent to 1,407.49. The tech-laden Nasdaq (NASDAQ: news) was 12.87 points or 0.52 percent lower at 2,464.12.
In Asia, markets largely tracked Wall Street's decline, with the Hang Seng (news) recovering late in the session as resource stocks such as CNOOC (0883.HK - news) and Citic Resources (1205.HK - news) advanced on the strength of oil.
The Hang Seng Index was 78.06 points or 0.30 percent higher at 26,262.01, while the Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, ended the morning down 17.61 points or 0.47 pct at 3,743.40.
Back in Europe, markets were largely hovering around the flatline after last night's lacklustre trade on Wall Street and with gains among oil and gas stocks offset by disappointing earnings results in other sectors.
'We are settling within a range now and although the newsflow this morning is predominantly negative, we can see some support among financials,' a trader in Frankfurt said, pointing to news that UBS (Virt-X: UBSN.VX - news) will sell Alt-A and subprime positions worth $20 billion to BlackRock (NYSE: BLK - news) .
News that U.S. retailer Target Corp will sell nearly half its credit-card receivables to JP Morgan for $3.6 billion was also capping losses in the sector this morning, he added.
'It indicates that things are settling down and the banks are getting back to business as usual,' the trader said.
Meanwhile, the world's largest reinsurer Swiss Re shed 5.6 percent after it missed consensus forecasts with its first quarter earnings report.
Analysts at Sal Oppenheim highlighted the group's combined ratio of 96.9 percent, worse than the 95 percent expected by the broker.
Analysts at Landsbanki Kepler said in a note to clients that the additional write-down unveiled today was unexpected after management reassured several times on the quality of their portfolio.
Still in Switzerland, UBS lost 4.3 percent after it unveiled a first quarter net loss of 11.535 billion Swiss francs, largely in line with analyst expectations of 12 billion francs following the bank's profit warning on April 1.
The negative newsflow is set to continue as the bank said it expects the currently difficult environment to remain. It also announced 5,500 job cuts by mid-2009.
Swiss engineering group Rieter Holding AG (RIENE.SW - news) fell more than 7 percent after issuing a profit warning after the market-close last night.
Over in France, Veolia Environnement (Paris: FR0000124141 - news) fell 4.47 percent after it too reported a lower-than-expected operating profit for the first quarter of 2008.
'(...) despite good sales, the level of EBIT is disappointing and could maintain investor wariness (regarding Veolia),' said analysts at Oddo Securities.
In other earnings-related new this morning, Swiss staffing group Adecco SA (Virt-X: ADEN.VX - news) was a top performer today, up 3 percent, after the Swiss staffing group released first quarter earnings which beat expectations and showed good cost control, according to analysts.
A London-based analyst also noted that the group reiterated its long-term targets, which is reassuring following speculation in the media that a downward adjustment would be unveiled today.
Other companies reporting earnings this morning included Adidas (Xetra: 500340 - news) , Swiss Life (Virt-X: SLHN.VX - news) and Holcim (Virt-X: HOLN.VX - news) .
In other news this morning, Tullow oil (Dublin: TQW.IR - news) stormed more than 16 percent higher after the group said a 'significant' column of light oil has intersected at the Mahogany-2 well in the Jubilee field offshore Ghana, suggesting the company was right to believe this is a significant discovery.
Among tech-stocks, Infineon (Xetra: 623100 - news) rallied 4.2 percent as traders said they were indications that chip prices would increase in May.
Among one of several analysts talking of increased prices, Lazard Capital analyst Daniel Amir said in a note to investors that contract prices for NAND memory chips should increase 10 percent to 15 percent in May.
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