DJ EUROPEAN MORNING BRIEFING: Cease-Fire To Aid Stocks

US SUMMARY: Inflation Figures Highlight Coming Week

DJIA 11088.03 loss 36.34 dn 0.3%
NASDAQ 2057.71 loss 14.03 dn 0.7%
S&P 500 1266.74 loss 5.07 dn 0.4%
Dow Future 11156.00 gain 36.00 up 0.3%
NASDAQ Future 1500.25 gain 4.25 up 0.3%
S&P Future 1276.50 gain 4.25 up 0.3%
Euro-USD 1.2745 gain 0.0020 up 0.2%
10-Yr US Treasury: 4.97% up 0.04
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Investors are back on inflation watch, and this week's data could throw some light on the Federal Reserve's rate intention. Treasurys are likely to see more volatility, while the dollar and oil start on firm ground.

STOCKS: Tuesday brings the producer price index, which is expected to rise 0.2 percent for July, on par with June's increase. With food and fuel prices removed, core PPI is expected to climb 0.3 percent, less that June's 0.5 percent jump.

On Wednesday, the consumer price index for July is expected to rise 0.4 percent, up from a 0.2 percent increase in June. Core CPI is expected to climb 0.3 percent, the same increase as in June.

If any of the CPI or PPI figures come in above expectations, that could mean more inflation pressure in the market, and stocks will likely fall in anticipation of another Fed rate hike.

On Friday, the University of Michigan releases its consumer sentiment index for August. The index is expected to fall to 83.9 from an 84.7 reading in July.

Second-quarter earnings season is winding down, though the markets largely ignored a solid quarter in favor of Fed-watching.

A pair of Fed officials are slated to speak this week, with Dallas Fed President Richard Fisher set for Wednesday and Fed Governor Randall Krozner speaking Thursday.

Stocks dropped in light trading Friday after Apple Computer said its mishandling of employee stock options will require it to make significant changes in its third-quarter results compared to last year's earnings.

"We're in a seasonally slow part of the year and there are a lot of unknowns on the horizon right now," said Mike Malone, trading analyst, Cowen & Co. "Based on that, there really is no urgency to get overly aggressive."

FOREX: The dollar is giving back a bit of ground, after charging higher on Friday on strong U.S. economic data that raised prospects of more Fed tightening.

"Those fretting over the possibility of a `hard landing` can breathe a little easier now that retail sales has confirmed renewed consumer spending in the third quarter," noted Michael Woolfolk, senior currency strategist at the Bank of New York.

Woolfolk said this made any expectations that the Fed could be gearing up to start cutting interest rates by next year "premature," and said the "risk of further rate hikes later this year" will rest squarely on upcoming data.

In particular he cited the core component of inflation data expected this week, which participants will be watching to see if inflation remains a sticky issue for the U.S. consumer.

As of Friday, the market was pricing in roughly a 40% chance that the Fed will hike rates in September.

BONDS: Treasury prices open under pressure this week, after falling Friday because of strong July retail sales data, released earlier in the session.

The government reported that last month retail sales rose by a better-than-expected 1.4%, after a revised 0.4% decline in June. With car sales stripped out, retail sales rose by 1.0%, above the 0.5% gain predicted by forecasters.

"Once again, the consumer has confounded us," said Joel Naroff, of forecasting firm Naroff Economic Advisors. "Instead of running on empty as a result of the high energy costs, households seem to have a new energy bar and hit the malls like crazy in July," he said.

The strength of the consumer sector reawakened lingering worries that although the Fed decided to hold interest rates steady last Tuesday, they may well have to raise them again later. Naroff explained that the Fed "is banking on a significant economic slowdown to curb the inflationary pressures, and this report doesn't tell them they have gotten it."

OIL: Cameron Hanover analyst Peter Beutel characterized Friday's oil markets as "exhausted, and applying bandages: there was a lot of money made and lost" last week. Light, sweet crude for September delivery rose 35 cents to settle at $74.35 Friday on the New York Mercantile Exchange.

ASIAN SUMMARY: Stocks Rise As Cease-fire Sends Oil Down

USD-Yen 116.28 loss 0.02 dn 0.02%
AUD-USD 0.7676 gain 0.0023 up 0.3%
Nikkei 225 15790.82 gain 225.80 up 1.5%
Hang Seng 17249.71 loss 0.24 0.0%
S&P/ASX 200 4941.50 gain 23.50 up 0.5%
Taiwan Index 6597.62 gain 26.52 up 0.4%
S.Korea Kospi 1296.65 gain 4.55 up 0.4%
JGB Yield 1.8850% up 0.0450
(All values as of 0450 GMT)
STOCKS: Japanese shares advanced Monday with tire-maker Bridgestone and clothing chain operator Fast Retailing both rising more than 5%. Early morning blackouts in Tokyo failed to disrupt trading on the city's stock exchange despite reportedly affecting operations at some banks.

Hedge funds bought stock futures across Asia as oil prices fell.

FOREX: The yen was little changed against the dollar, as markets waited for important U.S. inflation data this week. The dollar faces substantial resistance at around JPY116.80. But if the inflation figures exceed forecasts, the dollar could hit JPY117.40, according to Resona Bank trader Hiroshi Imaizumi.

BONDS: Prices of Japan's government debt issues edged lower as local stocks gained. Friday's losses in U.S. Treasurys also weighed.

METALS: Spot gold was trading at $631.25/oz, down from the New York close of $634, as the Mideast cease-fire comes into effect. Traders look for gold to remain bound by the 100-day moving average $625.50, and $640-645 resistance ahead of key U.S. economic data. Copper futures were mixed with renewed labor talks set for the Escondida mining operation in Chile.

OIL: Nymex crude was down 70 cents at $73.65 ahead of the Lebanon-Israel 0500 GMT cease-fire But John Kilduff at Fimat USA Inc. said, "Our advice still holds: buy the dips."

EUROPEAN OUTLOOK: Stocks To Get Early Boost

Euro-USD 1.2756 gain 0.0025 up 0.2%
Stlg-USD 1.8942 gain 0.0030 up 0.2%
USD-Franc 1.2388 loss 0.0030 dn 0.2%
(All values as of 0450 GMT)
European stocks are set for a positive opening, with prices of government debt under pressure. The euro is seen slightly higher against the dollar.

STOCKS: European markets should enjoy an early lift, buoyed by the political moves in the Middle East.

U.K. spreadbettor CMC Markets is calling the FTSE up 9 points at 5829, the DAX up 39 at 5667 and the CAC up 26 at 5012.

European shares traded mostly lower on Friday, pulled down by a weaker start in the U.S. equity market. Telecom shares declined for a second day as fears intensified that operators may have to cut prices after Deutsche Telekom said that it's aiming to become the price leader in Germany and as analysts made downgrades in the sector.

FOREX: The euro opens slightly higher but is likely to hold in narrow ranges against the dollar.

"The U.S. dollar is likely to remain within its well-worn ranges" this week, said Marc Chandler, global head of foreign exchange at Brown Brother Harriman.

Chandler said that in the wake of the Fed decision to pause last Tuesday, traders had put on a "substantial" amount of positions betting against the dollar, which he figured were "limiting the dollar's immediate decline."

Switzerland's central bank will continue to pursue a strategy of gradual interest-rate increases, said Jean-Pierre Roth, Swiss National Bank president, according to the Sunday edition of Neuer Zuercher Zeitung newspaper.

BONDS: Prices of government debt are likely to start lower Monday. Analysts say there's currently a high degree of uncertainty in the market as to the Fed's future policy course."We just saw strong retail sales from the U.S., which added to the uncertainty lingering in the market," said Sarah Luetgert, fixed-income strategist at WestLB.

Recent euro zone data also has the market on the defensive. Although the ECB raised rates 25 basis points only a week ago, analysts think that another similar rise is still on tap in the fourth quarter.

Looking ahead, Monday brings the flash estimates for second-quarter growth for both Germany and the euro zone as a whole. Analysts expect to see an acceleration to 0.8% on the quarter in both growth rates.

European government bonds drifted lower Friday as security concerns faded and strong economic data from the euro zone reminded investors that another interest rate hike by the European Central Bank might be in the cards.

(MORE TO FOLLOW) Dow Jones Newswires

August 14, 2006 01:45 ET (05:45 GMT)

14 Aug 2006 05:45 GMT =DJ EUROPEAN MORNING BRIEFING: Cease-Fire To Aid Stocks -2-

CALENDAR: Monday, Aug 14: UK Prices; Euro Zone GDP

GMT Expected Previous
0600 GER 2Q GDP, flash 0.8%QQ 0.4%QQ
1.8%YY 1.4%YY
0830 UK July PPI Output +0.4%MM +0.1%MM
+2.9%YY +3.3%YY
0830 UK July PPI Input +1.0%MM -0.2%MM
+9.0%YY +11.0%YY
0830 UK PPI Core Output +0.3%MM +0.3%MM
+2.7%YY +2.9%YY
0900 EU 2Q Euro Zone GDP, prelim 0.8%QQ 0.6%QQ
2.3%YY 2.0%YY
2330 UK July RIBS Housing Survey +30 +28
N/A GER Jan07 Federal auction of 6-mos Bubills for
EUR6B
-By Dennis Baker; Dow Jones Newswires; [email protected]

(MORE TO FOLLOW) Dow Jones Newswires

August 14, 2006 01:45 ET (05:45 GMT)

14 Aug 2006 05:46 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

Aareal Bank (ARL.XE): 1H Earnings
Average net profit (DJ, 6 analysts): EUR48M (EUR30M)
Average Operating Profit: EUR76.2M (EUR57M)
Note: Operating profit seen +34%, with growth spurred by lower administrative costs at EUR182.2M from EUR195M, as well as by lower loan loss provisions of EUR43.8M compared to EUR60M last year. NII seen -12% to EUR201M from EUR227M, commission income seen almost unchanged at EUR77.5M from EUR78M last year, while the trading income should return to the black at EUR6.3M from a loss of EUR23M in 1H last year. Analyst says bank should at least reach EUR8B in new business volume this year, versus a target of EUR6.5B-EUR7.5B.

Hochtief (HOT.XE): 2Q Earnings
Average operating profit (DJ, 6 analysts): EUR97.2M (EUR97.2)
Average net profit: EUR20.6M (N/A)
Average sales: EUR13.5B (N/A)
Note: Company blames weak 1Q numbers on high earnings in the comparable year-earlier period from sale of airport shares. Analysts will eye company's full-year forecasts. Hochtief aims for a pretax profit above the year-before level, adjusted to remove the airport-sale effect.

Michael Page (MPI.LN): 1H Earnings
Average pretax profit (DJ, 5 analysts): GBP45.9M (GBP30.5M)
Average gross profit: GBP166.5M (N/A)
Note: Gross profit in 1H will be a 30% increase on the previous year, the company said in its July trading statement. News is expected on progress in the Australian division, where growth slowed in 2Q, as well as on market conditions for the rest of the year. Analysts will also be looking for any inflation in the company's underlying cost base.

Rodamco Europe (28932.AE): 1H Earnings
Average EPS (DJ, 3 analysts): EUR2.10 (EUR1.90)
Note: The increase will be fueled by higher rental income. AEK analyst says he will focus on profit outlook as current one is considered conservative. Earnings report due at 0600 GMT Monday.

OTHER SCHEDULED EVENTS:

Altinex (ALX.OS): 2Q Presentation

Bac Majestic (7689.FR): 3Q Revenue

Belships (BEL.OS): 2Q Earnings

Betcorp (BCL.LN): FY Earnings

Deutsche Bahn (DBU.YY): 1H Earnings

Dignity (DTY.LN): 2Q Investor Report

Dresdner Bank (DRB.YY): 1H Earnings

Edinburgh Small Companies (EFS.LN): EGM

Fornix Biosciences (43999.AE): 1H Earnings

Geci International (7963.FR): 1Q Revenue

Genesys (427027.FR): 2Q Earnings

Ignis (IGNIS.OS): 2Q Earnings

MVV Energie (MVV1.XE): 3Q Earnings

PSI Group (PSI.OS): 2Q Presentation

Q-Cells (QCE.XE): 1H Earings

Rodriguez Group (6299.FR): 3Q Revenue

SolarWorld (SWV.XE): 2Q Earnings

Sydbank (SYDB.KO): 2Q Earnings

Telecom Reseaux Services (7176.FR): 1Q Revenue

Total Systems (TTS.LN): AGM

Touax (3300.FR): 1H Revenue

Trefoil Ltd (TREF.OS): 2Q Earnings

UMS Schweizerische Metallwerke (UMS.EB): 1H Earnings

Veidekke (VEI.OS): 2Q Presentation

Vivacon (VIA.XE): 1H Earnings

Xstrata (XTA.LN): EGM

Yleiselektroniikka (YLEPS.HE): 1H Earnings

(MORE TO FOLLOW) Dow Jones Newswires

August 14, 2006 01:46 ET (05:46 GMT)

14 Aug 2006 05:46 GMT =DJ EUROPEAN MORNING BRIEFING: Div Payments & Ex Div Dates

Aegon (AEG): 1H 2006 Ex-Dividend Date

Vastned Retail (28891.NV): 1H 2006 Ex-Dividend Date

Vtech Holdings (0303.HK): FY 2006 Dividend Payment Date

(END) Dow Jones Newswires

August 14, 2006 01:46 ET (05:46 GMT)