Tuesday, 30/04/2013 Market Update (India)

Indian stock market and companies daily report (April 30, 2013, Tuesday) 

April 30, 2013, Tuesday, 05:13 GMT | 00:13 EST | 08:43 IST | 11:13 SGT

The Indian markets are expected to open in the green followingstrong start to SGX Nifty and major Asian indices after better-than-expected reading on US housing sales and amid speculation that central banks will continue the stimulation measures.

The US markets ended on a positive note on Monday with S&P 500 closing at a record high as traders reacted positively to the latest batch of economic news. The strength on Wall Street reflected a positive reaction to a report from the National Association of Realtors showing a bigger than expected rebound in pending home sales in the month of March. The pending home sales index rose by 1.5% in March 201 3 after falling by 1% in February 201 3. A separate report from the Commerce Department showed that personal spending climbed 0.2% in March 2013 following a 0.7% increase in February 2013.

Meanwhile in India, renewed hopes of an interest rate cut at the RBIRs.s monetary policy meet that is scheduled on May 3 helped stocks close higher on Monday. Going ahead, release of economic data points is likely to remain in focus on Tuesday, with traders likely to keep an eye on reports on home prices, consumer confidence, and Chicago-area business activity.


Markets TodayThe trend deciding level for the day is 19,367 / 5,897 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 19,449 - 19,511 / 5,926 - 5,947 levels. However, if NIFTY trades below 19,367 / 5,897 levels for the first half-an-hour of trade then it may correct up to 19,305 - 19,222 / 5,876 - 5,847 levels.


HMCL reaches on a wage settlement agreement with Gurgaon unionAccording to media reports, Hero MotoCorp (HMCL) has finally arrived at a wage settlement agreement with the Gurgaon union. While the entire terms of the agreement are not fully disclosed, according to media sources, the company has agreed to hike wages of permanent workers by Rs.9,000 a month over a three year period taking effect retrospectively from August 2012. According to the agreement, in the first year, the workers will get a hike of Rs.5,400 and the remaining Rs.3,600 will to be divided equally over the next two years. Besides the wage hikes, the management has also agreed to offer other benefits and bonuses to the workers.

The workers at the Gurgaon unit have been agitating for higher wages in a peaceful manner since the past few months. As a mark of protest, the workers have been sporting black arm-bands at the workplace and had also stopped taking tea and snacks offered by the company. The company currently employs around 1,200 permanent workers and 4,000 contract workers at its Gurgaon facility. The Gurgaon facility accounts for ~30% of HMCLRs.s total annual installed capacity of ~7mn units.

We see this as a positive development for HMCL as amicable solution to the wage settlement dispute removes the uncertainty associated with the disruption of operations at the plant. Further the impact of the wage settlement agreement on companyRs.s profitability is unlikely to be material as we expect a marginal impact of upto 1 5bp on FY2014/15 operating margins. We retain our FY2014/1 5E earnings estimates for the company. At Rs.1,649, the stock is trading at 11.8x FY2015 earnings. We maintain our Accumulate rating on the stock with a target price of Rs.1,819.


Result ReviewHindustan Unilever (CMP: Rs.465/ TP:-/ Upside:-)
HUL delivered healthy set of numbers for 4QFY2013. The companyRs.s top-line and bottom-line rose by 12.5% and 18.1% respectively. OPM stood at 13.7%, ahead of our estimates of 13.4%. The most positive aspect of the result is the 6% yoy volume growth posted by the company for the quarter. HUL managed to revive the volume growth by passing on some benefits of reduction in raw material costs to customers by way of price cuts and increased A&P expenditure. Soaps and Detergents segment grew by 12.6% yoy, led by key brands such as Dove, Lux, Lifebuoy, Rin and Surf. The high margin Personal Products segment rose by 12.1%. Beverages segment rose by 18.3% yoy. We maintain our Neutral recommendation on the stock.

Sterlite Industries (CMP: Rs.92/ TP: Rs.98/ Upside: 7%)Sterlite Industries (Sterlite) reported better than expected 4QFY2013 results both on both top line and net profit front. Net sales increased 17.2% yoy to Rs.12,609cr above our estimate of Rs.11,334cr. Net sales growth was driven by increase in all the segments. Aluminium, Copper and Zinc segment revenues grew 9.8%, 16.9% and 21.6% yoy to Rs.953cr, Rs.5783cr and Rs.4,950cr, respectively. On the operating front, SterliteRs.s EBITDA grew 14.6% yoy at Rs.3,306cr and EBITDA margin was 26.2% (above our estimate of 23.1%) mainly due to higher profitability from all the segments and hence, adjusted net profit increased by 1 9.7% yoy to Rs.2,041cr, which was above our estimate of Rs.1,522cr. We maintain our Accumulate rating on the stock with a target price of Rs.98.

Bosch (CMP: Rs.8,995/ TP: -/ Upside: -)Bosch (BOS) reported better-than-expected results for 1QCY2013 led by sequential expansion of 482bp in operating margins to 17.3% driven by a sharp 23.4% qoq decline in other expenditure. However, on a yoy basis the performance was impacted due to the ongoing slowdown in the automotive industry.

For 1QCY201 3, top-line posted a decline of 3.8% yoy to Rs.2,207cr as medium and heavycommercial vehicle and tractor segments of the automotive industry, the key drivers of the companyRs.s performance, witnessed a decline of 39% and 8.5% yoy respectively. As a result, the diesel systems segment of the company posted a decline of 13% yoy. While domestic sales declined 2.5% yoy, export sales posted a decline of 9.5% yoy during the quarter. On the operating front, EBITDA margin declined by a sharp 349bp yoy to 17.3% as employee and other expenditure as percentage of sales surged 210bp and 180bp yoy respectively. However, on a sequential basis, EBITDA margins improved 482bp led by lower other expenditure which benefitted from the cost reduction initiatives undertaken by the company. Hence, operating profit grew by a strong 43.5% qoq to Rs.382cr, significantly higher than our estimates of Rs.258cr. Led by a strong sequential operating performance, net profit posted a better-than-expected growth of 51% to Rs.260cr. Nonetheless, it declined 22.6% yoy largely due to contraction in operating margins.

While we are positive on the long term prospects of BOS due to its technological leadership and strong and diversified product portfolio, we expect the near-term environment to remain challenging given the continued slowdown in the domestic automotive industry. Nevertheless, current valuations of 20.5x CY2014E earnings, leaves limited room for any potential upside. Hence, we maintain our Neutral rating on the stock.

Exide Industries (CMP: Rs.135/ TP: Rs.146/ Upside: 8%)For 4QFY2013, Exide Industries (EXID) operating performance was slightly ahead of our estimates led by expansion in EBITDA margins on account of the sustained momentum in the four-wheeler (4W) replacement battery segment. The top-line for the quarter grew broadly in-line with our estimates and stood at Rs.1,541cr (6% yoy and 5.3% qoq) led by continued traction in the 4W replacement battery segment. However, sluggish demand in the 4W and 2W OEM battery segments restricted further growth in the top-line. The growth in the industrial battery segment too remained healthy led by pick-up in the home UPS battery segment. On the operating front, EBITDA margins improved sharply by ~200bp qoq to 13.3%, which was slightly ahead of our estimates of 12.5%. The margin expansion was carried out purely due to the decline in other expenditure (7% qoq). As a percentage of sales, other expenditure declined 190bp sequentially. The raw-material and staff cost as percentage of sales however remained stable on a sequential basis. Consequently, net profit surged 40.7% qoq (2.8% yoy) to Rs.146cr as against our estimates of Rs.126cr. The net profit also benefitted from a sharp jump of 148.8% qoq (105.9% yoy) in other income to Rs.30cr. We shall revise our estimates and release a detailed result note post our interaction with the management during the earnings conference call. At Rs.135 the stock is trading at 15.2x FY2015 earnings. Currently, we maintain our Accumulate rating on the stock with a target price of Rs.146.

Bank of Maharashtra (CMP: Rs.56 / TP: Under Review)Bank of Maharashtra reported stellar performance during the quarter, registering a bottom-line growth of 255.6% yoy, which was ahead of our expectation of 192.5% yoy growth. Strong NII growth (34.6% yoy, aided by similar growth in advance), robust non-interest income performance (more than double on a yoy basis) and flat provisioning expenses (on sequential improvement in asset quality and also due to high base), resulted in stellar earnings performance for the bank. Asset quality for the bank improved sequentially, as both Gross and net NPA levels declined by 1 1.4% and 19.3% qoq, respectively. At CMP, the stock trades at 0.6x FY2015x ABV. Post the recent surge in the stock, our target price has been achieved and hence our rating and recommendation on the stock is currently under review.

Hexaware (CMP: Rs.82 / TP:-/ Under review:- )For 1QCY2013, Hexaware reported broadly in-line set of results with operating margins coming ahead of expectations. The USD revenue came in at US$94mn, up 1.8% qoq volume growth. In INR terms, revenue came in at Rs.508cr, up 1.1%. The companyRs.s EBITDA margin grew by ~240bp (estimate 190bp) qoq to 19.3% on account of considerable increase in utilization by ~550bp qoq to 70.3% and offshore effort shift. PAT came in at Rs.79cr, up 19.8% qoq.

Management has given 0-2% qoq USD revenue growth for 2QCY2013, which is lower than the expectation of 1-3%. We maintain our accumulate rating on the stock. The stock is currently under review and will be releasing a detailed result update shortly.

KPIT (CMP: Rs.98 / TP:-/ Under review:- )KPIT Cummins Infosystems (KPIT) reported its 4QFY2013 results which were broadly in-line with our estimates on the revenue front but ahead on the operating front. The dollar revenues came in at US$105.5mn, up 2% qoq. In INR terms, revenues came in at Rs.569cr, up 1.2% qoq. EBITDA margin of the company expanded by 207bp qoq to 17.7%. For 4QFY2013, the company reported PAT of Rs.51cr, down ~15% qoq, while on a yoy basis the PAT grew 51.5%.

KPIT's USD revenue for FY2013 grew by 33%, exceeding management gudance of 32% and much ahead of industryRs.s FY2013 growth rate. For FY2014, management has cited guidance of 14-16%, which is encouraging. We maintain our buy rating on the stock. The stock is currently under review and will be releasing a detailed result update shortly.


Result PreviewGodrej Consumer (CMP: Rs.856/ TP: -/ Upside: -)
Godrej Consumer is expected to declare its 4QFY2013 results today. We expect the top-line to grow by 29.3% yoy to Rs.1,711cr. OPM is expected to increase by 18bp yoy to 18.9%. Bottom-line is expected to increase by 27.2% yoy to Rs.213cr. We maintain our Neutral recommendation on the stock.

Dabur India (CMP: Rs.147/ TP: -/ Upside: -)Dabur is expected to declare its 4QFY2013 results today. We expect the top-line to grow by 15.9% yoy to Rs.1,581cr. OPM is expected to increase by 1 1 bp yoy to 15.9%. Bottom-line is expected to increase by 18.5% yoy to Rs.202cr. We maintain our Neutral recommendation on the stock.

GSK Consumer (CMP: Rs.3,817/ TP: -/ Upside: -)GSK Consumer is expected to declare its 1 QCY201 3 results tomorrow. We expect the top-line to grow by 8.6% yoy to Rs.883cr. OPM is expected to decline by 89bp yoy to 19.0%. Bottom-line is expected to increase by 7.3% yoy to Rs.142cr. We maintain our Neutral recommendation on the stock.

Marico (CMP: Rs.223/ TP: -/ Upside: -)Marico is expected to declare its 4QFY2013 results today. We expect the top-line to grow by 21.8% yoy to Rs.1,118cr. OPM is expected to increase by 212bp yoy to 11.1%. Bottom-line is expected to increase by 44.5% yoy to Rs.103cr. We maintain our Neutral recommendation on the stock.

Sanofi India (CMP: Rs.2502/ Target:-/ Upside: -)Sanofi India for the, 1QCY2013 is expected to post a good set of numbers. The top line will grow by 24.3% to Rs.401cr. The OPM is expected to come to end the period at 14.6%, a decline of 70bps. Inspite, of the same the adjusted Net Profit is expected to grow by 25.0% yoy to end the period at Rs.50.1cr, on back of top-line growth. We recommend a neutral on the stock.

TVS Motor (CMP: Rs.39/ TP: -/ Upside: -)TVS Motor is scheduled to announce its 4QFY2013 results today. We expect the company to report a healthy top-line growth of ~11% yoy to Rs.1,800cr led by ~15% yoy growth in net average realization driven by higher share of three-wheelers in the product-mix. The total volumes however declined 3.6% yoy during the quarter on account of weak motorcycle (down 4% yoy) and scooter sales (down 16.8% yoy) amidst rising competition and moderating demand environment. We expect the EBITDA margin to remain flat yoy at 6% as increase in other expenditure is expected to be offset by easing raw-material expenses. Nevertheless, bottom-line is expected to decline 8% yoy to Rs.53cr due to higher tax outgo (tax rate expected to be at 22% as against 8% in 4QFY2012). At the CMP of Rs.39, the stock is trading at 6.8x FY2015E earnings. Currently, we have a Neutral rating on the stock.


Economic and Political News

- In-principle approval given for 12 NIMZs

- India may have to continue coal imports till 2017: Government

- India's GDP likely to improve to 5.7% in 2013: IMF

- Overseas fundraising down 13% in 2012-13


Corporate News

- CERC upholds NTPC's PPAs to supply 37,000 MW to 37 beneficiaries

- Lanco settles legal dispute with Perdaman Chemicals

- BP seeks $1.5 per mmBtu incentive for deepsea gas

- Airtel launches flat roaming rates for African customers

Tuesday, 30/04/2013 Market Update (Russia)

Russian stock market daily evening report (April 29, 2013, Monday)

April 29, 2013, Monday, 16:18 GMT | 11:18 EST | 19:48 IST | 22:18 SGTStocks
Market today. Negative mood dominated the Russian market today – shares quotes were reducing despite growth of the European indices. In the power sector positive mood was determined by the report of RusHydro. According to given report, operation profit of the company for 2012 grew 45% yoy. Unexpectedly VTB added due to rumor that additional emission of shares would be sold to strategy investor, but not placed at the open market.

Market tomorrow. Russian power and gas companies might face the pressure of offers of MED that provide for reduction of tariffs growth rates for gas to industrial consumers from 15% to 5% annually and 10% down to 6% for power.


BondsMarket today. The end of the month and coming May holidays provided low activity at the Russian debt market. At the meantime, foreign players stepped out several time with buying long-term notes, which provided price growth. In the corporate segment, the most part of the deals was likely of technical character.

Market tomorrow. Tuesday the market shows similar dynamics. There is no reason for taking profits even considering the coming long holiday period.


News brieflyNet profit of RusHydro by RAS for 1Q 2013 grew 48% yoy to 9.3 bn RUR. Company

TMK reduced volume of pipes shipped by 1.3% qoq in 1Q 2013 to 9.3 bn RUR. Company

RAS net profit of Russian Grids for 1Q 2013 grew 1.5 times up to 729 mn RUR. Company

Tatneft might pay dividends in the volume of 8.6 RUR per share. Company

Net profit of PIK for FY 2012 by IAS formed 3.1 bn RUR vs loss of 1 bn RUR in 2011. Company

Pipes output at VMZ grew in 1Q 2013 12% qoq to 385.7K tons. Company

IAS net profit of Pharmstandard for 2Q 2012 grew 1.5 times yoy to 6.9 bn RUR. Company

Net profit of OGK-5 for 1Q 2013 by IAS formed 1.98 bn RUR – at the level of the previous year. Company

Stella & Dot: Multi-million Dollar Jewelry Startup

Bloomberg's Carol Massar reports on the growing success of Stella & Dot, updating a classic business model for the 21st century.

The Top Ten Stocks for Tuesday, April 30

April 30 (Bloomberg) -- Bloomberg's Betty Liu, Michael McKee and Sheila Dharmarajan report on today's ten most important stocks including US Steel, Best Buy and Sirius XM radio. They speak on Bloomberg Television's "In The Loop."

Tuesday, 30/04/2013 Market Update (Africa)

South Africa - JSE lower, resource shares fall

Local marketsLosses in resource shares were leading the slide on the JSE on Tuesday, with the local bourse falling 0.77% by noon.

The rand was trading at R8.94 to the US dollar, remaining fairly stable despite news of slowing credit extensions in the private sector.

Brent crude oil rose 0.93% to sell at $103.76 a barrel, though analysts expect a fall if anticipation of growing crude inventories in the US is confirmed.

International marketsUS markets ended positively yesterday, with the Dow Jones and the S&P 500 each rising 0.72% and the Nasdaq gaining 0.85% ahead of the release of consumer confidence and real estate data.

The Japanese Nikkei had fallen 0.17% by its close this morning, while the Hang Seng gained 0.69% on positive home sales data from the US as well as optimism that central bank economic stimulus measures will continue. The Shanghai index was closed today.

In Europe, some markets were supported by the release of positive corporate earnings results. The German DAX had risen 0.80%, but the French CAC40 had slipped 0.10% and the English FTSE 100 was flat by noon SA time.

Share price newsAfter 55 deals totalling 90,846 shares, Aquarius Platinum (AQP) rose 7.91% to sell at R6 a share. The company announced financial and production results this morning. Industrial suppliers Iliad Africa (ILA) gained 2.88% after investors traded 189,290 shares in 44 deals, sending the share price up to R5 at midday.

Metmar (MML) continued to lose ground, falling 5% to R1.52 after 49 deals saw the exchange of 112,998 shares. Metmar released theiraudited abridged financial results for the year. After 351 deals of 272,372 shares, Lonmin slid 3.98% to sell at R38.40 a share, after the company published notice of an incident at their Number Two furnace.


Nigeria - FCMB declares N16.3bn profit, issues bonus shares

Shares in First City Monument Bank (FCMB) Plc fell by 8.5 per cent yesterday as investors reacted to non-payment of cash dividends by the bank for the year ended December 31, 2012.

The Nigerian Stock Exchange (NSE) made the audited results of the bank available on the trading floors yesterday showing a profit before tax of N16.25 billion in 2012, compared with a loss of N10.68 billion in 2011.

Despite the improved fortunes, the directors of the company did not recommend any cash dividend payout for the shareholders. Instead, a bonus issue of one new share for every 25 shares already held was recommended.

Apparently discouraged by the recommendation, some investors decided to sell and reap the capital appreciation of about 25 per cent the equity had amassed since the beginning of the year instead of waiting for the bonus issue.

The high supply without enough demand depressed the equity price of FCMB by 8.5 per cent from N4.70 to N4.30 per share.
Meanwhile, an analysis of the 2013 results of the bank showed that it ended the year with profit after tax of N15.12 billion as against a loss of N9.24 billion in 2011. Deposit rose by 57 per cent from N410.68 billion to N646.26 billion, while loans and advances improved by 10 per cent from N323.35 billon to N357.79 billion.
Total assets stood at N908.54 billion, up by 51 per cent from N601.61 billion the previous year. Earnings per share improved from negative 49 kobo to positive 81 kobo.

FCMB also reported its unaudited results for the first quarter (Q1) ended March 31, 2013, showing gross earnings of N31.41 billion, compared with N26.12 billion in 2012. Profit after tax and profit before tax rose marginally from N4.3 billion to N4.8 billion and N4.1 billion to N4.2 billion in 2012 and 2013 respectively.

Meanwhile, trading at the stock market was bearish as the Nigerian Stock Exchange (NSE) All-Share Index depreciated by 0.38 per cent to close at 33,030.83.

Tuesday, 30/04/2013 Market Update (UK)

Lloyds, BP among few gainers in lower London

MARKETWATCH — LAST UPDATE: 10:50 30/04/2013

MADRID (MarketWatch) -- Sentiment eroded further in London on Tuesday, with mining and some banking stocks driving the losses. But Lloyds Banking Group PLC (LYG.NaE) and BP PLC (BP.NaE) rose on earnings reports.

The FTSE 100 index fell 0.5% to 6,428.60, looking at a gain for the month of around 0.3%. The index closed up 0.5% on the prior session.

London stocks moved a leg lower after a gauge of manufacturing in the Chicago area slid to a more-than-three-year low in April, while the S&P/Case Shiller home price index rose 0.3% in February and U.S. stocks traded mostly lower.

On the upside in London, shares of Lloyds rose 2.4% after the bank said it swung to a hefty profit in the first quarter of the year, with impairment charges dropping off and no need to put money aside to cover the misselling of payment protection insurance products.

Also higher, shares of Royal Bank of Scotland Group PLC (RBS.NaE) rose 3.8%. The company is due to report first-quarter results on Friday.

However, shares of heavyweight Barclays PLC (BCS.NaE) fell 2%, and Standard Chartered PLC (SCBFF.NaE) dropped 1%.

Shares of BP rose 2% after the oil major posted a more-than-threefold rise in profit for the first quarter, driven by proceeds from the sale of its Russian joint venture TNK-BP that offset a fall in oil and gas production and downtime at a key Indiana refinery.

On the downside in London, shares of Centrica PLC (CPYYF.NaE) fell 3% after the utility was cut to underperform from neutral by Credit Suisse, which said trading conditions for its British Gas unit have deteriorated. It noted that Centrica (CPYYF.NaE) shares have performed well in the last 18 months.

Shares of heavyweight Unilever PLC (UL.NaE) fell 1% after the company said it will raise its stake in Hindustan Unilever, its India subsidiary, from 52.48% to up to 75%, spending around 4.1 billion euros ($5.4 billion).

Also on the downside, plenty of heavily weighted mining stocks were selling off. BHP Billiton PLC (BBL.NaE) fell nearly 3%, while Rio Tinto PLC (RIO.NaE) fell 2.4%. Shares of Anglo American PLC (AAUKF.NaE) fell 3.3%.

Tuesday, 30/04/2013 Market Update (Asia)

Sydney stocks lead broad gains in Asia

MARKETWATCH — LAST UPDATE: 04:22 29/04/2013

HONG KONG (MarketWatch) -- Most Asian markets nudged higher on Monday, with Australian stocks leading the advance as cautious investors bought into high dividend-yielding shares ahead of key global economic data later in the week.

Trading volumes were light with the Japanese and mainland Chinese markets closed for a holiday.

Investors also held off from making big bets ahead of this week's monetary policy decisions at the U.S. Federal Reserve and the European Central Bank, and key economic data including the U.S. non-farm payrolls figures for April, in addition to monthly manufacturing data from China.

'While conditions may have been on the quiet side on Asian markets today, things are bound to get livelier as the week progresses, with the economic calendar littered with potentially market-moving events,' said Tim Waterer, a senior trader at CMC Markets.

Australia's S&P/ASX 200 advanced 0.6% for its fifth advance in six sessions, Hong Kong's Hang Seng Index rose 0.2% and Taiwan's Taiex gained 0.1%.

South Korea's Kospi fell 0.2%.

In Monday's trade, banks and other stocks that yield high dividends advanced in Sydney. Australia & New Zealand Banking Group Ltd. (ANEWF.NaE) climbed 0.7% and Westpac Banking Corp. (WBK.NaE) climbed 1.7%.

Rivkin global analyst Tim Radford said investors said better-than-expected corporate results and expectations for a quarter-point interest rate cut by the ECB could push the Australian stock index to 52-week highs later this week.

Also in the financial sector, which accounts for about 45% of the ASX 200 index's weighting, shares of Commonwealth Bank of Australia (CBAUF.NaE) rose 1.1% and National Australia Bank Ltd. (NAUBF.NaE) moved up 1.4%.

But mining shares traded lower in part as prices for some metals declined Friday. May copper fell 1.6% after data showed the U.S. economy grew by a less-than-expected 2.5% in the first quarter. Gold and silver futures also lost ground.

Those price moves dragged down gold producer Newcrest Mining Ltd. (NCMGF.NaE) 0.5%, while Rio Tinto Ltd. (RTNTF.NaE) fell 0.8%.

A 15.3% slide put shares of Kingsgate Consolidated Ltd. (KSKGF.NaE) in the spotlight, with the gold producer hit hard after saying that it is reviewing spending plans in the wake of the decline in the commodity's prices.

Kingsgate also said it expects output in the fiscal year through June to come in at the lower end of its previous forecast of between 200,000 and 220,000 ounces.

In Hong Kong trading China Construction Bank Corp. rose 1.1% and Industrial & Commercial Bank of China Ltd. (IDCBF.NaE) inched up 0.2% after both banking giants beat estimates in first-quarter results.

But shares of Agricultural Bank of China Ltd. (ACGBF.NaE) pulled lower by 1.4% after missing analyst expectations.

China Eastern Airlines (CEA.NaE) tumbled 4.3% following the carrier's announcement Friday that it lost 132.4 million yuan ($21.5 million) in the first quarter.

However, Chinese telecom equipment major ZTE Corp. jumped 3.7% following its first-quarter results, released Friday.

Tuesday, 30/04/2013 Market Update (Europe)

Italy leads European stock-market gains

MARKETWATCH — LAST UPDATE: 09:24 29/04/2013

MADRID (MarketWatch) -- European stock markets notched moderate gains on Monday, while Italian stocks rallied on relief that a new government was sworn in over the weekend.

The Stoxx Europe 600 index rose 0.5% to end at 297.39, after closing up 3.7% last week, the biggest percentage gain since Nov. 23. The index has been up two of the past three weeks.

A higher opening for U.S. markets also underpinned European markets.

Analysts said that European markets have been cautiously gaining on expectations the European Central Bank will cut interest rates later this week. The U.S. Federal Open Market Committee also meets this week, though it's expected to keep policy unchanged.

Providing further fuel for the case for lower rates in Europe, data showed economic confidence in the euro zone fell more than expected in April. The European Commission said an index of business and consumer sentiment fell to 88.6 from a revised 90.1 in March.

Positive news from Italy also helped underpin markets Monday. Enrico Letta was sworn in as Italian prime minister on Sunday after a lengthy political deadlock. 'News from over the weekend that Italian PM Letta has formed a new government has provided confidence to the markets,' said Atif Latif, director of trading, equities and derivatives at Guardian Stockbrokers, in emailed comments.

Italian stocks rallied on Monday, with the FTSE MIB index closing up 2.2% to 16,929.68. Shares of banking group UniCredit SpA (UNCFF.NaE) rose 2.5%.

Yields at an Italian bond auction of notes maturing in 2023 earlier in the day dropped to their lowest level since October 2010.

Among other indexes, France's CAC 40 index gained 1.5% to 3,868.68, with heavyweight Sanofi SA (SNYNF.NaE) up 1.5% and BNP Paribas SA (BNPQF.NaE) up 1.9%.

The German DAX 30 index rose 0.8% to end at 7,873.50, with Volkswagen AG shares up 2.6%.

Analysts at J.P. Morgan Cazenove said the German DAX is unlikely to outperform this year and the focus will shift to peripheral markets, listing such reasons as its big representation of capital goods and auto stocks that are sensitive to bad news from the Chinese economy.

Also, the analysts see continued compression in peripheral bond yields, a strong positive for those equities. That in turn means the shine will come off Germany's safe-haven position, according to J.P. Morgan.

The FTSE 100 index gained 0.5% to 6,458.02. Heavyweight Reed Elsevier PLC (RUK.NaE) fell 1.8% after Citigroup downgraded the stock to neutral from buy.

Aberdeen Asset Management PLC (ABDNF.NaE) surged 8% after the fund manager posted a half-year rise in pretax profits and assets under management. Aberdeen lifted its dividend 36% even as it said it remains cautious on its outlook.

In Norway, Aker Solutions ASA (AKKVF.NaE) shares slumped more than 21% after the oil-field products and services group warned that earnings would 'considerably lag current consensus market estimates,' due to cost overruns.

Tuesday, 30/04/2013 Market Update (US)

S&P 500 hits record-high finish

MARKETWATCH — LAST UPDATE: 14:59 29/04/2013

NEW YORK (MarketWatch) -- U.S. stock indexes advanced on Monday, lifting the S&P 500 to a record close, as investors embraced the latest corporate earnings reports.

Finishing fractionally above its highest finish, registered just over two weeks ago, the S&P 500 index ended up 11.37 points at a 1,593.61, with technology the best performing of its 10 major sectors.

The S&P 500 is up 1.6% for the month, and a positive finish to April would deliver a sixth straight month of gains, the index's longest winning run since a seven-month stretch that ended in September 2009.

'Earnings have been better than expected, helping prop up investor enthusiasm for stocks,' said Mark Luschini, chief investment strategist at Janney Montgomery Scott. 'And corporate CEOs are offering reasonably good outlooks for at least domestic conditions in the second half of the year, and that's supporting equities.'

The U.S. government reported consumers spent more cautiously in March, while income growth softened.

'I think it's remarkable that the consumer is continuing' to spend, said Luschini, who noted that bond prices and gold were rising along with equities, bolstered by expectations that the Federal Reserve would stay with its current bond-buying program.

Having been up by as much as 132 points, the Dow Jones Industrial Average ended with a gain of 106.20 points at 14,818.75, a level putting it 46 points from its record close, set April 11.

The Nasdaq Composite gained 27.76 points to 3,307.02.

Technology shares were up most strongly, bolstered by Apple Inc. (AAPL.NaE) , which rose more than 3%. The iPhone maker took preliminary steps toward its first debt sales, according to IFR, a division of Thomson Reuters. The money will help fund a $100 billion capital return program for shareholders. (Read more on Apple (AAPL.NaE): Speculation on launch of iPhone 5S: http://www.marketwatch.com/story/mondays-movers-conceptus-sturm-ruger-2013-04-29.)

For every stock that fell more than two gained on the New York Stock Exchange, where 596 million shares traded.

Composite volume surpassed 2.8 billion.

Among notable advancers were ratings agency Moody's Corp. (MCO.NaE) and McGraw-Hill Cos (MHP.NaE). after an investors' group said it would not pursue claims against Moody's (MCO.NaE) and McGraw-Hill (MHP.NaE), which owns Standard & Poor's Ratings Services.

Tenet Healthcare Corp. (THC.NaE) rallied a day before the hospital operator reports quarterly earnings and after UBS ungraded the shares to buy from neutral and U.S. regulators proposed a 0.8% reimbursement increase for hospital patients being treated under the government's Medicare program.

Treasury prices mostly reversed course on gains, with the yield on the benchmark 10-year note at 1.669%.

On the New York Mercantile Exchange, crude prices climbed $1.50 to settle at $94.50 a barrel, and gold futures advanced $13.80 to end at $1,467.40 an ounce.

U.S. stocks ended mostly lower Friday after U.S. gross domestic product expanded at a slower-than-expected pace in the first quarter, but the S&P 500 posted a weekly gain of 1.7%.

Policy makers at the European Central Bank and the Federal Reserve are gathering separately this week, with the Fed expected to continue its current stimulus.

U.S. central bankers are unlikely to continue their recent talk of tapering down interest rates , given the recent softness in domestic economic data, said Luschini of the two-day meeting that concludes Wednesday.

The economic calendar Monday began with a report on consumer spending showing a rise of 0.2% in March. Economists surveyed by MarketWatch had forecast spending to rise just 0.1%, compared with a preliminary 0.7% increase in February and a 0.4% advance in January.

And stocks continued to climb after the National Association of Realtors reported pending sales of homes climbed 1.5% last month, with the trade group's chief economist noting that contract activity had narrowed in recent months due to limited supply.

On Friday, the government releases employment numbers for April, with the monthly data typically viewed as the most market-moving among the slated U.S. economic reports.

FTSE 100 falls despite mining shares recovery, with Arm down on sell note

Despite a recovery in the mining sector, leading shares are heading lower again.

With gold stabilising after its recent declines - which were based on worries about countries such as Cyprus selling some of their reserves along with signs of slowdown in China - and base metals such as copper recovering, mining shares regained some lost ground.

Fresnillo is up 45p at £11.25, Eurasian Natural Resources Corporation has climbed 9.1p to 247.2p and Xstrata has added 37.2p to 1003.5p after talk China had approved its merger with Glencore, up 16.7p to 337.8p.

All ten of the top ten risers in the leading index are commodity companies, as are the top ten in the FTSE 250.

But investors are still cautious, not least following Wall Street's fall overnight in the wake of the Boston marathon explosions. So the FTSE 100 is down 41.20 points at 6302.40, with little impact from UK inflation figures in line with forecasts.

Ahead of results next week, Arm is among the biggest fallers in the leading index. The chip designer is down 27p at 869.5p as Liberum Capital issued a sell note. Analyst Janardan Menon said:

We expect Arm's US dollar revenues to be broadly in line with guidance ($250m) and consensus estimates, while sterling revenues are expected to benefit from weakness in the currency. Arm had sequentially guided down its first quarter 2013 revenues, following strength in the fourth quarter of 2012. Going forward we expect year on year revenue growth rates to gradually decelerate as smartphone growth moderates. We also remain concerned about potential gains in smartphone and tablet share by Intel and maintain our sell recommendation on the stock.

In more detail, Menon added:
Our sell recommendation on Arm is based on three factors. 1) an expectation of Intel gaining share in Arm's key royalty markets – smartphones and tablets. 2) slowing growth rates in the smartphone and tablet markets which are expected to depress Arm's royalty growth 3) The high multiples the stock is trading at relative to its longer term growth outlook. While we do not expect these concerns to be specifically flagged in the first quarter results, we do expect newsflow in coming quarters to do so.

Elsewhere Associated British Foods has fallen 40p to £18.24 after Credit Suisse cut its recommendation from outperform to neutral. The bank's analysts said:

It is very easy to get carried away with ABF estimates, in our view. Add up Primark growth, margins in Grocery getting to 10%, returns on recent investments and reversing Chinese/Australian losses, and forecasts can get out of hand. But we think the nature of ABF is "swings and roundabouts" - it would be a truly exceptional few years were everything to go right.

The immediate outlook has both positives and negatives - the industry seems to expect EU Sugar prices to edge back (though oddly the buyers don't), Chinese Sugar losses are increasing and Ingredients remain challenging. Primark profit growth looks strong, but we doubt it can continue at the 7% like-for-like seen in the first half.

Burberry is down 33p at £12.51 following disappointing results from luxury goods giant LVMH.

Evening Tune...enjoy

The top 10 stocks for 16 April

Today in the market (Asia)

Asia stocks end off lows; Japan finishes lower

MARKETWATCH — LAST UPDATE: 02:36 16/04/2013

HONG KONG (MarketWatch) -- Japanese and Australian stocks fell Tuesday after worries over China and a slump in commodities prompted a sell-off on Wall Street, although many regional markets came off their lows as buyers circled back in after recent losses.

'With no news or data, Asia saw limited follow-through of the risk-off move, prompting a solid bout of short-covering,' said Sue Trinh, a strategist at RBC Capital Markets.

The Nikkei Stock Average ended fell 0.4% and the broader Topix lost 1.3% in Japan. Australia's S&P/ASX gave up 0.3% and Hong Kong's Hang Seng Index lost 0.x%, with all three markets paring early losses.

Rebounding from early declines, China's Shanghai Composite Index inched up 0.5% after a three-day losing streak, and South Korea's Kospi ended up 0.1%, after the government unveiled a supplementary budget that analysts said will provide a small fiscal stimulus to the economy.

Regional markets opened the day on a downbeat note after hefty overnight losses of between 1.8% and 2.4% for major U.S. stock benchmarks. But they steadily recovered as the day progressed, after all major regional markets slumped Monday in the wake of downbeat Chinese economic data.

U.S. equity index futures were pointing to a higher opening on Wall Street by late afternoon in Hong Kong, however. Dow Jones Industrial Average futures were up 63 points at 14,575, while S&P 500 futures gained 0.5%, to 1,550.80. Read Indications column.

Many regional financial, property and construction stocks advanced to support regional markets Tuesday.

In Shanghai, China Pacific Insurance Group Co. (CHPXF.NaE) rose 4.3% and China Railway Construction Corp. (CWYCF.NaE) added 1.6%, while in Seoul, Hyundai Engineering & Construction Corp. added 1.1% and Industrial Bank of Korea gained 0.8%.

The rise in Seoul came after the government introduced a 17.3 trillion won ($15.53 billion) supplementary budget, of which about a third will used for additional spending.

In Hong Kong, China Life Insurance Co. (LFC.NaE) gained 1.5% and China Overseas Land & Investment Ltd. climbed 0.9%.

But most regional commodity stocks ended lower, despite the recovery from the day's lows, following a $140 loss for gold futures and a plunge for silver futures traded in New York.

In Sydney, gold miners Newcrest Mining Ltd. (NCMGF.NaE) and Perseus Mining Ltd. (PMNXF.NaE) dove 5.1% and 5.8%, respectively.

In Hong Kong, Zhaojin Mining Industry Co. (ZHAOF.NaE) slid 3.4%, and retailer Chow Tai Fook Jewellery Group Ltd. (CJEWF.NaE) skidded 3.2%. Shares of Zhongjin Gold Corp. lost 3.3% in Shanghai, while Korea Zinc Co. , which has an exposure to precious metals, plummeted 4.9% in Seoul.

The broader resource sector also weakened after brokerages including HSBC, Royal Bank of Scotland and J.P. Morgan downgraded their economic forecasts in the wake of Monday's disappointing first-quarter economic data from China, one of the biggest consumers of global commodities.

'While a small miss in China's gross domestic product and industrial production data was the primary catalyst for the share-market selloff, the underlying reasons for the decline are a supply-driven decline in some commodity markets, a leverage-inspired crash in gold prices and, in the case of the Australian market, full valuations for many stocks,' said CMC Markets chief market analyst Ric Spooner.

Mining heavyweight BHP Billiton Ltd. (BHP.NaE) lost 0.5%, and Woodside Petroleum Ltd. (WOPEF.NaE) gave up 1.7% Sydney.

Jiangxi Copper Co. (JIAXF.NaE) and PetroChina Co. (PTR.NaE) gave up 1.9% each in Hong Kong, while in Shanghai, Jiangxi shed 0.7% and rebounded in afternoon trade to end 0.1% higher.

In Japan, exporters and financials -- which had powered gains of more than 25% for the two major stock benchmarks in the year to date -- suffered another day of weakness. Exporters in particular came under pressure as the U.S. dollar hovered around ?97, after testing the ?100 level unsuccessfully last week.

Sony Corp. (SNE.NaE) slid 4.1%, and Toyota Motor Corp. (TM.NaE) lost 1.6%, while among banks, Mitsubishi UFJ Financial Group Inc. (MTU.NaE) gave up 3.6%.

Shares of wireless telecom Softbank Corp. (SFTBF.NaE) plunged 6.8% in Tokyo, after Dish Network Corp. (DISH.NaE) topped its bid for U.S. peer Sprint Nextel Corp. (S.NaE).

Today in the market (Europe)

Europe stocks extend losses to third day

MARKETWATCH — LAST UPDATE: 09:07 16/04/2013

LONDON (MarketWatch) -- European stock markets extended losses into a third straight day on Tuesday, as concerns about global growth remained in the spotlight after Germany's ZEW index missed expectations.

Most markets, however, briefly trimmed declines in afternoon action, as upbeat earnings results from Goldman Sachs Group Inc. (GS.NaE) boosted shares of investment banks in Europe and U.S. construction data beat expectations.

The Stoxx Europe 600 index dropped 0.8% to close at 288.16, adding to a 0.7% loss from Monday, when markets tumbled globally as gold prices sank to a two-year low. Read: 6 reasons for gold's massive selloff: HSBC

The Stoxx's closing price marked the lowest level in a week, as worries over a slowdown in global growth resurfaced after a string of disappointing U.S. and Chinese data recently. The pan-European index was still holding a 3% year-to-date gain after cheap central bank liquidity boosted markets in the beginning of the year.

On Tuesday, drug makers were among heaviest decliners, dropping after being among few sectors on rise amid Monday's selloff. Shares of GlaxoSmithKline PLC (GSK.NaE) dropped 1.9%, Novartis AG (NVS.NaE) lost 1.7% and Roche Holding AG (RHHVF.NaE) shaved off 1.2%.

On a more upbeat note, major financial institutions put in notable performances after investment-bank heavyweight Goldman Sachs (GS.NaE) reported first-quarter profit that topped expectations. Shares of ING Groep NV (ING.NaE) gained 2.3%, UBS AG (UBS.NaE) rose 0.6% and Credit Suisse Group AG (CS.NaE) added 0.7%.

'Given that earnings remain robust and forward-looking guidance encouraging, we see nothing more than the market remaining in the lower range of the uptrend,' said Atif Latif, director of trading at Guardian Stockbrokers.

Other news from the U.S. briefly helped European stock markets trim losses, as data showed housing starts in March rose 7% to a seasonally adjusted annual rate of 1.04 million, the highest rate since June 2008.

Additionally, industrial production rose a stronger-than-expected 0.4% in March.

U.S. stocks traded higher on Wall Street, rebounding from the worst performance in five months seen on Monday, when gold prices slumped the most since the early 1980s.

German ZEW

European stock markets spent the trading day mired in red as the German ZEW economic sentiment indicator fell to a lower-than-expected 36.3 level in April from 46.5 a month earlier. The index, which measures investors' expectations for the coming six months, was forecast to fall to 43.0.

Germany's DAX 30 index closed 0.4% lower at 7,682.58.

The disappointing report added to worries over recent macroeconomic data pointing to a slowdown in the global economic recovery. On Monday, China posted first-quarter gross-domestic-product growth below expectations and the New York Fed's Empire State index fell to the slowest reading since January.

Asia stocks closed lower on Tuesday.

Back in Europe, mining firms moved higher, rebounding after a broad-based selloff the previous day triggered by the weak Chinese data and large declines in metals prices. Fresnillo PLC (FNLPF.NaE) gained 7.5% and Eurasian Natural Resources Corp. (EURNF.NaE) added 3.7%. Metals prices were mostly higher.

Shares of Glencore International PLC (GLCNF.NaE) gained 1.3% and Xstrata PLC (XSRAF.NaE) gained 2%, after Chinese authorities cleared a merger between the two mining firms.

'The sell off from yesterday was overdone on the back of aggressive gold selling and positive news from Xstrata (XSRAF.NaE)/Glencore (GLCNF.NaE) has helped money flow back into risk,' Latif from Guardian Stockbrokers said.

'Valuations still remain at the lower end of historical ranges and we are encouraged by buy-side volume on down days that continue to push the market higher,' he added.

The U.K.'s FTSE 100 index, however, declined 0.6% to 6,304.58, pressured by Associated British Foods PLC (ASBFF.NaE) losing 1.8%, after Credit Suisse (CS.NaE) cut the firm to neutral from outperform.

Among other major decliners, shares of LVMH Mo?t Hennessy Louis Vuitton dropped 3.8% in Paris, after the luxury retailer posted sluggish sales growth at its main fashion and leather goods businesses.

Shares of oil group Total SA (TOT.NaE) lost 1%, as oil prices slipped to the lowest level since December.

On a more upbeat note in France, Danone SA (GPDNF.NaE) climbed 2.2%, as the yogurt maker said sales in the Asia-Pacific, Latin America, Middle East and Africa regions offset weakness in the European market.

France's CAC 40 index slid 0.7% to 3,685.79.

Outside the major indexes, Akzo Nobel NV (AKZOF.NaE) climbed 1.9%, after ING lifted the paints and coatings firm to buy from hold, citing the potential for 'perfect tailwinds' in 2013 and 2014 to bring positive earnings surprises.

Today in the market (US)

Tuesday's movers: Apple snaps 3-day losing streak

MARKETWATCH — LAST UPDATE: 13:09 16/04/2013

SAN FRANCISCO (MarketWatch) -- Apple Inc. (AAPL.NaE) rebounded strongly on Tuesday after three sessions of losses as analysts reiterated the stock's buy ratings while Coca-Cola Co. (KO.NaE) closed at its highest level in almost 15 years.

Top tickers trending

AAPL: Apple (AAPL.NaE) shares rose 1.5% to close at $426.24. Investors focused on the positive aspects of a report from Piper Jaffray's Gene Munster in which he reiterated his overweight rating on the stock but cut its price target to $688 from $767.

'The bottom line, we believe even with 30% cannibalization from a cheaper iPhone, shares of AAPL are still a buy,' said Munster in a report.

He expects Apple (AAPL.NaE) to 'guide down' estimates for its third quarter ending in June. But 'as we get past the March results and look forward to the product launches through the rest of this year and into next year paired with reset numbers, we believe the stock can work,' he said.

Analysts from Stifel Nicolaus and Mizuho Securites also cut their price targets while maintaining buy ratings on Apple (AAPL.NaE), suggesting that the stock isn't likely recover to above $700 -- where it traded in September -- in the near term.

GLD: The SPDR Gold Trust (GLD.NaE) and the Market Vectors ETF Gold Miners were both drawing chatter on Twitter after gold futures on Monday suffered their biggest one-day decline since the 1980s. Gold for June delivery climbed $26.30, or 1.9%, to settle at $1,387.40 an ounce Tuesday on the New York Mercantile Exchange.

JNJ: Johnson & Johnson (JNJ.NaE) reported a 10.6% decline in first-quarter profit as a result of litigation and other expenses. Shares of the company closed up 2.1%.

TGT: Target Corp. (TGT.NaE) shares are under pressure after the retailer said it expects to report first-quarter earnings slightly below its previous forecast.

Decliners

Goldman Sachs Group Inc. (GS.NaE) shares fell 1.6%, one of the biggest losers in the S&P 500 . The Wall Street bank reported a rise in first-quarter profit that exceeded Wall Street expectations but revenue from fixed income, currency and commodity trading fell 7% from a year earlier.

Sarepta Therapeutics Inc. (SRPT.NaE) slumped 13% after the biotechnology company said that the Food and Drug Administration has requested additional information regarding one of its drugs.

U.S. Bancorp (USB.NaE) shares slid 1.8%, among the weakest stocks in the S&P 500. The bank reported higher quarterly earnings, but its net interest margin narrowed and mortgage-banking revenue declined.

Gainers

Coca-Cola shares gained 5.7% to $42.37, its highest close since July 1998, according to FactSet. The beverage giant said first-quarter earnings fell 15% partly due to restructuring costs but that it is taking steps to strengthen its U.S. business model in conjunction with five U.S. bottlers.

J.C. Penney Co. (JCP.NaE) shares rose 5.6% in response to a Bloomberg report that the retailer is looking into spinning off its real-estate holdings into a separate unit that could issue debt as part of its effort to raise cash.

Shares of Tesoro Corp. (TSO.NaE) advanced 5.3%. The stock, which rose 16% year to date, is rated overweight with a price target of $65 at Oppenheimer. However, Oppenheimer analysts cut its fiscal 2013 earnings estimate to $4.92 a share from $5.47 on Monday.

Vulcan Materials Co. (VMC.NaE) shares added 6.8%. The stock was upgraded to buy from neutral with a target price of $55 at Sterne Agee.

'We believe the company's end-market growth outlook and valuation are attractive, and we think the likelihood of several years of growth in U.S. construction trumps near-term macroeconomic concerns,' said analysts in a not.

Shares of W.W. Grainger Inc. (GWW.NaE) surged 7.2% to top the S&P 500 after the industrial-goods supplier reported better-than-expected first-quarter earnings.

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Asda, Morrisons, Sainsbury's and Tesco cut petrol prices

Motorists will be able to buy cheaper petrol from Tuesday after four leading supermarkets announced they were cutting their forecourt prices.
Asda sparked a price war after revealing that it would be slashing the price of its petrol by up to 2p a litre. Sainsbury's is also introducing a petrol cut of up to 2p a litre while Morrisons is cutting up to 3p a litre off petrol and 1p off diesel. The fourth supermarket to announce cuts was Tesco, which is bringing in a cut of up to 2p on its petrol.

These latest reductions follow supermarket cuts last week to the price of diesel and a general lowering of the wholesale price of fuel. Motoringgroups welcomed the news as likely to take pressure off squeezed household budgets, but warned that a lack of transparency means that drivers filling up face significant regional price variations.

Mark Todd, petrol director for Morrisons, said: "Further falls in wholesale prices mean we can pass savings on to customers and continue to offer some of the lowest prices on the market."

The latest Asda cut will mean its customers will pay no more than 133.7p a litre for petrol from Tuesday morning, with Asda diesel staying at 137.7p a litre.

Edmund King, president of the AA, said: "We predicted these cuts last week, with oil down to its lowest level in a month and the pound gaining on the dollar after its recent fall. This is perhaps another glimmer of sunlight for drivers after a hard, wet, pot-holed and expensive winter of driving."

The RAC's technical director, David Bizley, said: "Certainly, these price cuts will be widely welcomed by UK motorists and it is encouraging to see that the drop in the wholesale price of fuel is being passed on. Nonetheless, it is easy to underestimate the impact that the UK's high fuel prices are having on us as individuals. Our research has shown that almost half of motorists would avoid promotion or a new job that involves more driving, and a quarter believe prices negatively affect their working life. We will continue to campaign for greater price transparency."

Link: http://www.guardian.co.uk/money/2013/apr/15/petrol-price-cut-asda-morrisons-sainsburys-tesco

Today in the market (Asia)

Asian stocks stung by weak China data

MARKETWATCH — LAST UPDATE: 02:56 15/04/2013

HONG KONG (MarketWatch) -- Asian markets stumbled on Monday after China reported weaker-than-expected economic growth and industrial production, feeding doubts about the pace of recovery and the outlook for the region's largest economy.

The sluggish Chinese economic indicators added to the selling pressure in markets already weighed by a strong rebound in the yen, as well as a commodity-price slump and weak cues from Wall Street on Friday.

The Shanghai Composite ended 1.1% lower, and Hong Kong's Hang Seng Index gave up 1.4% after figures showing the Chinese economy expanded 7.7% in the first quarter from the year-earlier period.

The slowdown followed a 7.9% expansion in the fourth quarter and was weaker than the 8% growth anticipated by economists. Industrial output for March, at 8.9% from the year-ago month, was also weaker than projected.

'The official 'target' for GDP this year is 7.5%, so this print remains on track from that perspective, but consensus expectations for 8% to 8.5% may need to reconsider their positions. Expectations for [People's Bank of China] policy-tightening by year-end needs to be shelved for now,' said TD Securities head of Asia-Pacific research Annette Beacher.

J.P. Morgan cut China's economic growth estimate for 2013 to 7.8% from 8.2% after the data release.

Stock indexes in other regional markets that count China as a key trading partner also extended early losses.

Japan's Nikkei Stock Average dropped 1.6%, Australia's S&P/ASX 200 lost 0.9%, Taiwan's Taiex gave up 0.7% and South Korea's Kospi shed 0.2%.

'2013 is starting to look eerily like 2012. ... Another year of propped-up growth via state spending and a credit deluge would, we fear, push China dangerously close to proving [former premier] Wen Jiabao correct -- that the current economic model is 'unsustainable,'' economists at IHS Global Insight led by Alistair Thornton wrote to clients.

'There is plenty more downside risk out there than upside risk. We have lost confidence in a robust recovery,' they said.

A number of Chinese stocks fell sharply on disappointment over the economic data.

Sany Heavy Industry Co. lost 2.4%, Ping An Insurance Group Co. dropped 1.6%, and Great Wall Motor gave up 1.4% in Shanghai trading.

In Shenzhen, Zoomlion Heavy Industry Science and Technology Co. (ZLIOF.NaE) dropped 5.5% -- also weighed by a profit warning issued Friday -- and Chongqing Changan Automobile Co. shed 4%.

In Hong Kong, Industrial & Commercial Bank of China Ltd. (IDCBF.NaE) retreated 1.5%, and footwear maker Belle International Holdings Ltd. (BELLF.NaE) gave up 2.2%.

Monday's drop in Japanese equity markets came after the U.S. Treasury on Friday warned Japan not to actively weaken its currency. The yen rebounded sharply after the remarks, with the U.S. dollar dropping below ?98 on Monday, versus ?98.92 in the U.S. late on Friday.

'Currency wars are back on the agenda as U.S. and Europe 'remind Japan of its pledge not to drive down its currency,'' said Evan Lucas a market strategist at IG Markets. 'The inverse correlation between the yen/Nikkei [Average] is almost ironclad, and will add to the downward pressure regionally.'

In Tokyo trading, Honda Motor Co. (HMC.NaE) gave up 1.8%, Hitachi Ltd. (HTHIF.NaE) shed 3.2%, and Bridgestone Corp. (BRDCF.NaE) retreated 2.5% on the local currency's rise.

On the upside, a report Saturday in the Nikkei business daily that Sharp Corp. (SHCAF.NaE) would unload its more than 9% stake in Pioneer Corp. (PNCOF.NaE) helped lift both firms' shares significantly. Pioneer's shares climbed 4.3%, and Sharp's soared 10.5%.

Commodity stocks in the region suffered particularly hard Monday after gold futures, which slumped to hit their lowest level in 21 months in the U.S. on Friday, continued to drop in Asia on Monday after the Chinese data, accompanied by declines in other commodities. (Read more about oil's decline below $89 a barrel in Asia: http://www.marketwatch.com/story/oil-below-89-as-china-data-deepen-demand-worries-2013-04-15.)

BHP Billiton Ltd. (BHP.NaE) skidded 3.1%, and Newcrest Mining Ltd. (NCMGF.NaE) plunged 8.2% in Sydney.

In Tokyo, steel maker JFE Holdings Inc. (JFEEF.NaE) stumbled 3.8%, while in Seoul, Korea Zinc Co. plummeted 14%.

In Hong Kong, oil major Cnooc Ltd. (CEO.NaE) lost 3.1%, and Zhaojin Mining Industry Co. (ZHAOF.NaE) slumped 10%; in Shanghai, Zijin Mining Industry Co. fell 5.6%, and Jiangxi Copper Co. (JIAXF.NaE) tanked by 4.7%.

Today in the market (Europe)

Europe stocks slide after China GDP; miners sink

MARKETWATCH — LAST UPDATE: 09:11 15/04/2013

LONDON (MarketWatch) -- European stock markets posted sharp losses on Monday, with miners leading the drive south as gold prices tanked and data showed China's economy grew more slowly than expected in the first quarter.

The Stoxx Europe 600 index dropped 0.7% to close at 290.43, after declining 0.9% on Friday.

'There are plenty of negative fundamentals out there today. The Chinese GDP data started the weak on a soft note and then we had U.S. data that also weighed on markets,' said Victoria Clarke, economist at Investec Securities.

'We've seen a switch from [the rally in] Q1 to Q2, where there are worries that this turns into a longer soft patch and not just in the U.S., but in the global economy. Payroll-tax hikes and the sequester in the U.S. have started to have an impact,' she said.

In the first quarter this year, European and U.S. stock markets rallied on both massive easing from central banks globally and expectations of a pick up in the economic recovery.

Mining firms led declines on Monday, keying off losses in Asia, after data showed gross domestic product for the first quarter in China expanded 7.7%, falling short of expectations of an 8% rise. In the fourth quarter last year the economy grew 7.9%.

Additionally, industrial production rose 8.9% in March, well below the Dow Jones Newswires forecast for a 10% gain.

'While today's weak data certainly put into question the strength of the recovery in China, the manufacturing PMIs and leading indicators so far do not suggest that China has entered a renewed phase of deceleration in GDP growth,' analysts at Danske Bank said in a note.

'We still expect GDP growth to improve in Q2 13 and China to be in a moderate recovery in 2013 but we might have to alter that view if the manufacturing PMIs start to weaken in the coming months,' they added.

Metals prices also slumped, with gold prices shaving off more than $120 to around $1,374.70 an ounce. Silver sank 11% to $23.43 an ounce.

Shares of Fresnillo PLC (FNLPF.NaE) tumbled 15% in London, Polymetal International PLC (POYYF.NaE) gave up 13%, Randgold Resources Ltd. (GOLD.NaE) sank 8.3% and Kazakhmys PLC (KZMYF.NaE) lost 9%.

The U.K.'s FTSE 100 index dropped 0.6% to 6,343.60.

On the data front in the U.S., the New York Fed's Empire State index fell to 3.1 points in April, below expectations of a 7.8 reading. Readings above zero indicate respondents on net saw better conditions.

Additionally, a gauge of confidence among house builders fell for a third month in April.

U.S. stocks traded lower open on Wall Street.

Back in Europe, shares of drug maker Roche Holding AG (RHHVF.NaE) rose 2.7% to 231.10 Swiss francs ($249), as J.P. Morgan Cazenove reiterated its overweight rating on the stock and lifted the target price to 280 Swiss francs from 270 francs. The goal translates to a roughly $75 target on the U.S.-listed Roche (RHHVF.NaE) shares.

Other drug makers were also higher, with shares of Novartis AG (NVS.NaE) up 1.8% and Sanofi SA (SNYNF.NaE) 3% higher in Paris.

France's CAC 40 index , however, lost 0.5% to 3,710.48. Accor SA (ACRFF.NaE) slid 4.2%, after Credit Suisse cut the hotels operator to underperform from outperform.

Oil giant Total SA (TOT.NaE) slipped 1.7%, tracking oil prices lower.

Shares of advertising firm Publicis Groupe SA (PGPEF.NaE) shaved off 5.2%, after the company reported lower-than-expected organic revenue growth for the first quarter, saying 2013 is turning out to be a difficult year.

Shares of Compagnie de Saint-Gobain SA (CODGF.NaE) advanced 0.9%, as Bank of America Merrill Lynch lifted the construction firm to buy from underperform.

Germany's DAX 30 index closed 0.4% lower at 7,712.63, with shares of Commerzbank AG (CRZBF.NaE) down 1.4% and Deutsche Bank AG (DB.NaE) 0.5% lower.

Outside the main index in Germany, Shares of Sky Deutschland AG (SKDTF.NaE) gained 0.3%, after J.P. Morgan Cazenove raised the firm to overweight from neutral, citing higher confidence in profitability and margins.

Today in the market (US)

U.S. stocks drop as gold free fall hits miners

MARKETWATCH — LAST UPDATE: 14:55 15/04/2013

SAN FRANCISCO (MarketWatch) -- U.S. stocks Monday were on track for their worst day in seven weeks, with the Dow industrials off more than 100 points, after data pointing to a China slowdown and less optimism among home builders sapped momentum in what's been a near-vertical stock rally.

The Dow Jones Industrial Average fell 160 points, or 1.1%, to 14,705. The S&P 500 lost 21 points, or 1.3%, to 1,568. The Nasdaq Composite sank 52 points, or 1.6%, to 3,243.

U.S. stocks extended losses in Europe and Asian equities after China announced gross domestic product for the January-March quarter grew 7.7% from a year earlier, less than forecasts calling for growth of 8%, while industrial production in April slowed to 8.9%, the weakest in more than a year.

Gold was hit hard by that news, deepening Friday's losses with a decline of more than 8% to fall below $1,400 an ounce. Other metals and oil also tumbled.

On the S&P 500, resource stocks including Newmont Mining Corp. (NEM.NaE) and Freeport McMoRan Copper & Gold Inc. (FCX.NaE) led losses. Of the 10 sectors, all but telecoms were lower, led by nearly 3% drops in the materials and energy sectors.

On the Dow, heavy equipment maker Caterpillar Inc. (CAT.NaE) fell the most, followed by other blue chips considered heavily exposed to China or global resource demand: oil-major Chevron Corp. (CVX.NaE) , Alcoa Corp. , Exxon Mobil Corp. (XOM.NaE) and General Electric Co. (GE.NaE)

The China data 'set the negative tone off for stocks,' said Nick Raich, chief executive officer of The Earnings Scout.

'The slower-than-expected growth coming out of China is putting on fears that maybe there's a little bit of a slowdown occurring. I don't think we should be terribly surprised,' he said, pointing to underperforming emerging-market stocks and commodities as indicators for a slowdown in global growth.

Declines deepened after a report showed the National Association of Home Builders/Wells Fargo housing-market index dropped to 42 in April from 44 in March, short of a forecast rise to 46. Ahead of the bell, an Empire State manufacturing index fell to 3.1 points in April from 9.2 in March, below forecasts calling for an index of 7.8 and the slowest reading since January.

The day's selloff, potentially the worse since Feb. 25, risks pausing a rally that has seemed unstoppable. No matter the worry, from the Cyprus bail-out that risked breaking up the euro zone, to U.S. budget cutbacks, buyers have repeatedly shown an interest in buying stocks on the dip. As a result, ugly sell-offs have often turned into mild retreats by day's end, causing some strategists to wonder if investors are getting too complacent--particularly given last week's disappointing data on U.S. retail sales.

'This may not be a day where [the market] comes back, but certainly there's more than enough cash to fill in. If there isn't, and the consumer is taking a holiday, don't expect much out of the whole quarter,' said Ron Weiner, president and CEO of RDM Financial.

Citi, Spring, Life

The most high-profile earnings report of the day, plus some deal news, provided a glimmer of green on traders' screens.

Citigroup Inc. (C.NaE) shares rose 2.3% after the banking company said first-quarter profit rose 30%. Helped by better capital markets revenue and fewer losses in businesses it is trying to drop, the company reported adjusted earnings were $1.29 a share, topping forecasts of $1.17 a share.

Charles Schwab Corp. (SCHW.NaE) shares fell 2.4% after the retail brokerage posted first-quarter net income of 15 cents on revenue of $1.29 billion. Forecasts were calling for net income of 16 cents on sales of $1.27 billion.

Shares of Sprint Nextel Corp. (S.NaE) jumped 13%, the S&P 500's top stock, after Dish Network Corp. (DISH.NaE) said it would offer $25.5 billion for Sprint (S.NaE), in a bid to derail an acquisition for the group by Softbank Corp. (SFTBF.NaE) of Japan. .

Life Technologies Corp. (LIFE.NaE) rose 7.6%, the second best on the S&P 500, after Thermo Fisher Scientific (TMO.NaE) said it would buy the biotech researcher for about $13.6 billion.

After entering bear-market territory on Friday with a 20% drop from its peak, gold for May delivery was down $125, or 8%, at $1,375.90 an ounce, undermined by the China data, which added to already negative sentiment.

'It's a slaughter,' said Carsten Fritsch, senior commodity analyst at Commerzbank AG.

Societe Generale said gold is likely to drop to $1,265 now.

It was among many asset classes being hit hard. In addition to losses for Asia and European markets, led by mining stocks, oil for May delivery was down 2.5%, to $88.99 a barrel. Silver for May delivery skidded 11%, to $23.43 an ounce.

The Australian dollar was most impacted by weak China data, while the U.S. dollar continued to back away from four-year highs reached last week against the Japanese yen after the U.S. Treasury Department on Friday warned Japan not to actively devalue its currency.

Today in the market (UK)

Randgold, miners sink in London as gold dives

MARKETWATCH — LAST UPDATE: 13:08 15/04/2013

LONDON (MarketWatch) -- Miners including Randgold Resources Ltd. (GOLD.NaE) and Rio Tinto PLC (RIO.NaE) tumbled in London on Monday, hammered by worse-than-expected economic data from China and selloffs in metals, where gold slid more than $120.

The FTSE 100 index dropped 0.6% to close at 6,343.60, adding to a 0.5% drop from Friday.

Mining firms slumped across the board after both gross-domestic-product data and industrial-production figures from China missed expectations. GDP for the first quarter climbed 7.7% from a year earlier, weakening from 7.9% growth in the fourth quarter, and missing projections for 8% growth.

Meanwhile, industrial production rose 8.9% in March, below the Dow Jones Newswires forecast for a 10% gain.

Miners are sensitive to growth indications from China, as the country is a major user of natural resources.

Metals prices were also hit, especially gold for June , which tanked $122.20 to $1,379.20 an ounce.

Shares of precious metal miner Randgold Resources Ltd. (GOLD.NaE) sank 8.3%, Fresnillo PLC (FNLPF.NaE) slumped 15% and Polymetal International PLC (POYYF.NaE) gave up 13%.

Shares of heavyweight Rio Tinto PLC (RIO.NaE) fell 3.5% and BHP Billiton PLC (BBL.NaE) dropped 3.6%.

Oil firms were also lower, tracking losses for oil prices. Shares of BG Group PLC (BRGXF.NaE) shaved off 2.4%, Royal Dutch Shell PLC (RDS/A.NaE) gave up 0.6% and BP PLC (BP.NaE) inched 0.3% lower.

Bucking the negative trend in London, shares of United Utilities Group PLC (UUGWF.NaE) climbed 2.5%, as the Sunday Times reported the utility firm has hired Goldman Sachs to boost its adviser team amid speculation of a foreign take over bid. A representative from United Utilities (UUGWF.NaE) said the company doesn't comment on market speculation, but confirmed the firm has hired Goldman Sachs as an adviser as part of an ongoing tendering process.

Outside the major index in London, shares of betting firm Ladbrokes PLC (LDBKF.NaE) slid 8% after the company warned that first-quarter operating profit is expected to be 13 million pounds ($19.94 million) lower at ?37.4 million, largely because of like-for-like costs and machine tax in the U.K.

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U.K. Home Sellers Raise Prices for Fourth Month, Rightmove Says

U.K. home sellers raised asking prices in April for a fourth consecutive month amid a shortage of properties for sale, according to Rightmove Plc. (RMV)

Prices sought rose 2.1 percent from March to an average 244,706 pounds ($376,000), the property-website operator said in a report published today. In London, they fell 0.5 percent. U.K. asking prices increased 6.9 percent in the first four months of the year and were 0.4 percent higher than a year earlier.

The scarcity of homes on the market is supporting prices and masking the weakness of demand in many areas as Britain risks falling into a third recession in five years. In his budget last month, Chancellor of the Exchequer George Osborne pledged 3.5 billion pounds of loans plus 130 billion pounds of guarantees to spur housebuilding and help people struggling to afford a home.

“With mass-market buyers still sitting on the sidelines, the size of the active market is a lot smaller, making it easier for an upswing in activity to feed through to an upturn in prices,” said Miles Shipside, director at Rightmove. “This should not be confused with an overall market recovery, as while spring may be here the ongoing chill of the recession is still in the air.”

The number of properties advertised for sale nationwide fell 4 percent from a year ago, the report showed.

Sellers in East Anglia led the increase by raising asking prices by 4.4 percent in April, followed by 3.9 percent gains in Wales and Southwest England, Rightmove said. In London, sellers reduced average values sought for the first time this year to 493,635 pounds, though prices remained 6.2 percent higher than a year ago.

Recent house-price data have been mixed, with Nationwide Building Society saying in a March 28 report that the outlook for home values was “unusually uncertain.” Halifax, the mortgage unit of Lloyds Banking Group Plc, said last week that prices may continue on a “modest” upward trend this year.

Private equity firm CVC circles £750m Betfair

THE PRIVATE equity firm behind Formula One has targeted online bookie Betfair as its next acquisition opportunity.

CVC Capital Partners is believed to have the company in its sights, two and a half years after Betfair floated at a value more than double what it is now worth.

Moves to acquire the company are at an early stage, with CVC yet to arrange financing for the deal. One source said that the private equity group has not yet approached Betfair about a potential buyout.

The online bookie has seen its market value wane since its initial public offering in October 2010, when it floated at over £15 per share. On Friday the company’s shares fell below £7 per share, although they have risen in value since January on bid speculation. Its current market capitalisation is around £720m, although CVC would have to pay slightly more for the firm.

Betfair is best known for its exchange model, in which punters bet against each other rather than the bookmaker itself, and Betfair skims money from the winner. However, under Breon Corcoran, the chief executive who joined from PaddyPower last summer, Betfair has a new focus on its fixed odds business, which operates like a traditional bookie. It recently bought the customer database from loss-making bookie Blue Square, and has removed its exchange model from certain markets where there is a legal grey area.

Its exchange business also faces new competition from Ladbrokes, which bought exchange betting operator Betdaq recently. CVC, whose interest was first revealed by Sky News, did not comment.

Citigroup Headlines a Big Week of Earnings Reports

World food prices up by 1% in March 2013 – FAO

Prices of food in March went up by one percent globally.

The increase in prices is largely fueled by the rise of dairy products, according to the UN Food Price Index (FPI) released April 11, 2013.

The Food and Agriculture Organisation (FAO) said there was 11% increase in dairy products which carried a 17% weight among the various commodity prices included in the calculation of the overall FPI.

According to the Rome-based UN food agency, the Dairy Price Index jumped by 22 points in March to 225, one of the largest recorded changes explaining that the price surge was caused by hot, dry weather in Oceania, which has led to milk production falling off steeply.

“The exceptional increase is in part a reflection of market uncertainty as buyers seek alternative sources of supply,” the Food Price Index report says.

On the other hand the FAO Cereal Price Index averaged 244 points, unchanged from February leading to stable global price of rice.

The Oils/Fats Price Index fell 2.5% from February and the FAO says was due mostly to soy oil prices, which dropped on account of favourable weather conditions in South America, a record 2013 US soybean crop and a cancellation of purchases by China. Palm oil prices were also slightly down.

Meat prices went down 2% from February, according to the FAO as it averaged nearly 176 points in March.

The FAO Sugar Price Index edged higher 2.8 points, or one percent, from February, the agency indicated.

Tesco drops ban on GM poultry feed

Tesco has dropped its 11-year commitment not to sell poultry reared on genetically modified feed.
The original controls were put in place to reflect the concerns of shoppers, who question the impact of GM crops on human health and the countryside.

Tesco’s announcement came from group technical director, Tim Smith.

Mr Smith wrote on the Tesco website: ‘Over recent weeks UK poultry and egg suppliers have been telling retailers that it is increasingly difficult for them to guarantee that the feed they use is entirely GM-free, for two reasons. First, soya is the best source of protein to feed livestock.

‘And as soya producers are increasingly turning to GM soya, it means they are producing less non-GM soya, so there simply isn’t enough non-GM feed available. We could not continue with a promise we cannot be sure it is possible to keep and we want to be up-front about the changes we are making.’

Morrisons and Asda have already dropped their own bans on GM feed. Marks & Spencer and Sainsbury’s are still refusing to use GM for their chickens.

Axa warns of house market ruin

Hundreds of thousands of homes
will be “unsellable”, devastating
regional housing markets, if the
Government fails to agree a deal
on flood insurance with industry
soon, claims the boss of AXA UK. 

A 13-year-old agreement between Government and the Association of British Insurers ends in June. The deal sees the industry subsidise the policies of homes built on flood plains. But insurers argue the state has not upheld its side of the bargain, to invest heavily in flood defences, and is negotiating for a different system.

Despite the pressing nature of the issue – insurers paid out more than £1bn in flood-related claims last year – the talks have dragged on. Even if a new system were agreed now it could not be on the statute books by the end of June.

Only a temporary extension of the current deal could allow homeowners to avoid annual premiums reaching unaffordable levels of £30,000 or see their homes left without cover. Paul Evans, AXA UK’s group chief executive, warned that this would mean families would not be able to obtain mortgages.

He told The Independent on Sunday: “We are extremely concerned about the impact on homeowners. Homes would be unsellable. There would be the worst of both worlds: people would be trapped in homes that they couldn’t afford to insure and wouldn’t be able to sell.”

The current deal results in a typical premium of just £340 for houses where a pay-out from flood damage is usually more than £20,000. However, homeowners are already seeing significant hikes in their cover.

The home of Frank Burr, an 87-yearold pensioner in Wraysbury, Middlesex, has never been hit by floods in the 40 years he has lived there. This month he was quoted £2,900 for a policy with flood damage cover – without it cost just £1,900.

Up to 5.2 million homes have at least some risk of flood damage, with at least 200,000 particularly in danger. Insurers are looking to protect themselves by hiking premiums on homes that have only a remote possibility of being flooded.

Mr Burr said: “This place has never been flooded and is never likely to be flooded as I live in a high spot in the village. I’m paying for celebrities with homes on the Thames that always get flooded.”

Paul Cobbing, the chief executive at the National Flood Forum, added: “There will be consequences if there is a lack of solution. Housing markets over the next few months will change.”