7:07 AM ET Jan 17, 2006
LONDON (MarketWatch) -- European shares declined on Tuesday as oil prices
topped $65 a barrel and investors eyed losses in Japan and some mixed
corporate news.
Germany's DAX 30 eased 1.1% at 5,457, the French CAC 40 index lost 0.8% at
4,816, while the U.K.'s FTSE 100 index shed 0.4% at 5,715.
All three indexes gave up advances made on Monday, when U.S. markets were
closed for the Martin Luther King Jr. holiday.
The losses also came after a dismal performance in Tokyo, where the Nikkei
225 lost over 400 points.
"The (U.K.) market's been very strong (but) there's been a bit of a wobble
with some weird things going on in Japan. I think that's why it's down a
bit...(but) it's a fairly quiet day," noted Stuart Fowler, head of U.K.
equities at Axa Investment Management.
The front-dated light sweet crude contract climbed back over $65 a barrel
mark -- recently up $1.43 at $65.35 a barrel -- amid concerns about the
political situation in Iran, after the country broke the seals on some of
its nuclear research sites.
Europe and the U.S. are trying to call an emergency meeting of the
International Atomic Energy Agency, which could result in sanctions
against Iran. However, Iran, which is the world's fourth-largest oil
exporter, has warned that sanctions could result in higher oil prices.
"(Oil) is an important import cost for a lot of companies," said Fowler.
"If the oil price is lower then an awful lot of companies report higher
profits, so it has made a bit of a difference (to sentiment)," he noted.
Decliners included brewer Heineken, which fell 1.1%, and advertising group
Publicis, which lost 1.5%.
Turning to corporate news, Tesco, Britain's biggest supermarket chain,
eased 1.7% after it said that U.K. comparable sales excluding fuel rose
5.7%, slightly outpacing consensus estimates.
Tesco said seasonal foods sold well over Christmas and also saw growth in
non-food sales, especially home entertainment, electronics, clothing, toys
and gifts. International sales rose 16.1%.
Also in the U.K. publisher Pearson added 1.8% after closing 2005 in line
with expectations, leading to "significant" underlying growth in sales,
adjusted earnings per share, free-cash flow and return on invested
capital.
It noted a strong performance in the school, higher education,
professional and international markets divisions of its education
business. Elsewhere, Penguin's fourth-quarter frontlist performed well;
the Financial Times sustained its advertising-revenue growth and will
reach breakeven; and IDC expects to report its best year ever, the company
said.
Meanwhile, Vivendi Universal shares were steady after the scaled-down
French media-and-telecommunications conglomerate said it plans to delist
from the New York Stock Exchange and was also upgraded to buy from hold by
ABN Amro, which said "even in our base case, Vivendi's valuation looks
attractive."
Also, EADS added 0.2%, after its majority-held airplane unit Airbus said
orders in 2005 rose to 1,055, topping Boeing's 1,002 orders for the year.
It also delivered more planes that Boeing, at 378 planes compared to
Boeing's 290.
Brokers were busy, with Dutch bank ABN Amro and several insurance
companies coming under scrutiny.
ABN Amro shares added 0.2% after Credit Suisse First Boston upgraded it to
outperform from neutral as part of a review of the European banks sector.
Bear Stearns upgraded Swiss insurance company Zurich Financial Services to
peer perform from underperform saying that, while it has some longer-term
concerns about strategic positioning, it can see few clouds on the horizon
in 2006.
It also downgraded Sweden's Skandia Insurance to underperform from peer
perform, saying it believes the shares are overvalued by 9% at current
levels on a stand-alone basis.
Skandia shares lost 0.8% while Zurich Financial was recently down 1.5%.
Hotel and travel group Accor gained 2.8% in Paris after UBS said the
company is its top pick in the sector. The bank also raised its price
target.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This MarketWatch news update is provided to you courtesy of Thomson
Financial. The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
update our reports. If you have any questions please e-mail Olivier Masson
at olivier.masson@thomson.com or call +44 (20) 7369 7814. For more
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http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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