Thursday May 8, 12:36 PM
Euroshares off lows midday as Dow set to rally, mixed earnings still weigh
LONDON (Thomson Financial) - Europe's leading exchanges remained lower midday ahead of the ECB's rate- setting meeting, but were off earlier lows as the Dow looks set to rally following sharp declines overnight.
At 12:08 p.m., the DJ STOXX 50 was down 9.55 points or 0.29 percent at 3,276.27, while the DJ STOXX 600 was 0.49 points or 0.15 percent lower at 328.88 as the Bank of England kept rates unchanged at 5 percent.
Spread bettors, IG Index said the Dow looks set to rally 65 points in opening deals, ahead of a flood of retail sales reports as retreating oil prices offer support.
World (WRGR.TA - news) oil prices ticked lower in European deals, having touched an all-time high yesterday.
Brent crude, having touched a new record of 122.79 earlier, was trading at 122.20.
Back in Europe, the interest-rate setting decisions by the European Central Bank and the Bank of England will be in focus today.
Meanwhile, the earnings season continues.
Unilever (LSE: ULVR.L - news) , up 3.45 percent, gained ground after the Anglo-Dutch consumer goods group reported first-quarter sales growth which was ahead of market expectations.
Underlying sales increased by 7.2 percent during the quarter. Market forecasts had ranged between 5.2 and 6.3 percent, with the consensus at 5.7.
Citigroup (NYSE: C - news) said the results were 'undoubtedly strong'.
Deutsche Telekom (Xetra: 555750 - news) shares stormed 2.17 percent higher after the company reported first-quarter net profit that came in better than expected, while other results were broadly in line with expectations, analysts said.
'We view the first-quarter report of Deutsche Telekom as clearly positive and confirm our Buy rating,' UniCredit (Milan: UCG.MI - news) analyst Thomas Friedrich wrote in a client's note.
'We expect a positive performance of the share price today.'
But Inbev fell 5.26 percent after it posted an unexpected drop in first-quarter profit, blaming tough comparatives, poor weather, commodity costs and inflation.
Gerard Rijk, analyst at ING, noted the results were weak overall.
'It is just an awful combination of high costs of goods sold, issues with Brazilian volume and pipeline problems in Russia,' the analyst said.
This dragged on Heineken (Amsterdam: HEIA.AS - news) , down 3.04 percent.
Daimien Caucheteux, analyst at Petercam, said he pointed out that both Inbev (Brussels: INB.BR - news) and Carlsberg (Copenhagen: DCARLB.CO - news) 's numbers had been hit by high raw material prices and this will undoubtedly also affect Heineken.
Vallourec (Paris: FR0000120354 - news) shed 1.82 percent in early deals after its first-quarter earnings report, released last night, missed expectations.
In response, Merrill Lynch (NYSE: MER - news) cut its stance on the stock to 'neutral' from 'buy', noting that the French steel tubes maker indicated that re-pricing of contracts outside the United States will only happen in 2009, later than the broker was expecting.
In Milan, shares in UniCredit SpA lost 2.54 percent after the bank cut its earnings per share target for this year and announced first-quarter results that disappointed market expectations in terms of revenues.
The bank (NASDAQ: TBHS - news) said it expects EPS to come in between 0.52 euros and 0.56 euros per share, against an earlier expectation of EPS at the end of this year of 0.66 euros per share.
Over in Germany, Munich Re shed 2.64 percent after it presented an unimpressive set of first-quarter results, which included a drop in net profit and a worse-than-anticipated combined ratio.
But Deutsche Postbank advanced 1.87 percent after beating market expectations. The group released a quarterly pretax profit of 166 million euros, down from 222 million, but ahead of the 137 million seen by analysts.
As for today's U.S. data, initial jobless claims and wholesale inventories are due for release.
Julius Baer (Virt-X: BAER.VX - news) climbed 3.45 percent amid vague talk that Standard Chartered (LSE: STAN.L - news) might be casting an eye over the Swiss private banking group.
Also among M&A chatter, L'Oreal (Paris: FR0000120321 - news) added 1.01 percent as Nestle (Virt-X: NESN.VX - news) 's CEO Peter Brabeck bought shares in the group, refuelling hopes Nestle may be planning to lift its stake in the French group.
Later, economists expect U.S. initial jobless claims to ease to 370,000 in the week ending May 3. In the previous week, claims increased 35,000 to 380,000.
Meanwhile, wholesalers are expected to have increased their inventories in March by just 0.5 percent, well below the 1.1 percent accumulation rate in the previous month.
'We believe that some unnecessary inventory building has occurred in the wholesale sector, forcing firms to cut production and liquidate stocks,' said economists from Lehman Brothers (NYSE: LEH - news) .
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