DJ EUROPEAN MORNING BRIEFING: Stocks Face Early Pressure

US SUMMARY: Commodities Surge Crushes Stocks, Bonds

DJIA 11500.73 loss 141.92 dn 1.22%
NASDAQ 2272.70 loss 48.04 dn 2.07%
S&P 500 1305.92 loss 16.93 dn 1.28%
Dow Future 11543.00 loss 1.00 0.0%
NASDAQ Future 1665.50 gain 0.75 0.0%
S&P Future 1311.50 loss 0.25 0.0%
10-Yr US Treasury: 5.16% up 0.03

(Futures values as of 0450 GMT)

Anxious investors sent stocks plunging Thursday as surging commodities prices fed fears that the Federal Reserve would extend its two-year streak of interest rate hikes. The major indexes saw their biggest one-day drops since mid-January. Prices of Treasurys slumped as well.

STOCKS: The sharp decline reflected Wall Street's deep disappointment with the Federal Reserve's statement on Wednesday that more rate tightening could be needed to counter inflationary pressures from energy and metals. Investors were hoping for signals that rates have been raised enough to keep inflation in check.

But Thursday, worries about overseas supplies sent crude futures racing past $73 a barrel, and gold prices jumped to a fresh 25-year high. The commodities strength spooked a market looking for clarity on an economy teetering between growth and inflation.

"I think there are inflation concerns all over the marketplace right now," said Brian Williamson, equity trader at Boston Company Asset Management.

"The market had priced in a very optimistic Fed outlook, and of course we didn't get it," said Ed Peters, chief investment officer at PanAgora Asset Management. "Secondly, we do have this problem with commodities, and it continues to build."

The Commerce Department said retail sales grew 0.5 percent last month, less than the 0.6 percent increase in March and the 0.8 percent gain economists had predicted. The department also reported that business inventories rose a better-than-forecast 0.7 percent for March as companies kept lean warehouse stockpiles.

Meanwhile, the Labor Department said first-time jobless claims fell by 1,000 to 324,000 last week, above estimates for 315,000 but still evident of the job market's strength.

BONDS: U.S. Treasury bond prices were led lower by long-dated maturities Thursday, with a lackluster reception to the sale of new 10-year notes encapsulating the market's bearish tone.

A deluge of corporate bond issuance amid the dominant bearish sentiment for Treasurys offset a surprisingly weaker than expected April retail sales report.

"The trend is your friend, and retail sales were not weak enough to prevent supply and bearish sentiment dictating flows," said Michael Cheah, portfolio manager at AIG Sun America Asset Management.

The relatively low demand for the 10-year comes at a time when there are concerns over inflation and a weakening dollar.

"There is some anxiousness at the back end," and one has "to think we could see 5.25% in the 10-year," said Kevin Flanagan, fixed income strategist at Morgan Stanley. Much will depend upon next week's inflation data and a stronger than expected rise in prices will hurt the long end, he added.

ASIAN SUMMARY: Tokyo Stocks Plunge On Dollar Worry

USD-Yen 110.15 loss 0.50 dn 0.5%
AUD-USD 0.7768 gain 0.0010 up 0.1%
Nikkei 225 16522.67 loss 339.40 dn 2.0%
Hang Seng 16917.22 loss 223.50 dn 1.3%
Taiwan Index 7300.94 loss 60.51 dn 0.8%
S.Korea Kospi 1439.09 loss 25.61 dn 1.8%
JGB Yield 1.9700 up 0.0050
(All values as of 0450 GMT)
STOCKS: Japan's Nikkei Average tumbled Friday, led lower by technology and automotive shares. The combination of the U.S. dollar's continuing weakness against the yen and sharp loses in New York trading weighed on sentiment. Shares in Australia fell as miners saw small losses.

BONDS: Prices of Japanese government debt were mixed. Investors are waiting for Bank of Japan governor Toshihiko Fukui's speech Monday for any cues on near-term monetary policy, says Mitsubishi UFJ Securities senior strategist Naomi Hasegawa. The market has worried about an early BOJ rate hike.

METALS: Gold climbed $6.80 to $715.30 an ounce Friday. "I think it's mainly the weak U.S. dollar, high oil prices, tension in the Middle East and also the collapse in stock prices last night. There are a lot of funds buying," said Ellison Chu, senior vice president of precious metals trading at Standard Bank. Copper futures were mostly higher.

OIL: Futures eased 38 cents lower to $72.94 a barrel Friday on some profit-taking before the weekend.

OTHER NEWS: China's trade surplus in April was $10.46 billion, the government said Friday, against forecasts of $7.2 billion. China's consumer price index rose 1.2% in April from the same month last year, a rise from March's 0.8% but well below forecasts of 1.5%

EUROPEAN OUTLOOK: Higher Costs To Spark Stocks Selloff

Euro-USD 1.2857 gain 0.0020 up 0.2%
Stlg-USD 1.8847 gain 0.0023 up 0.1%
USD-Franc 1.2113 loss 0.0020 dn 0.2%
(All values as of 0450 GMT)
European shares and government debt prices are likely to start lower, with the euro opening on the rebound.

STOCKS: European shares are set to decline to start, with the industrial weighted DAX seen opening 24 points lower due to it's correlation with the Nikkei market. Doubts about European growth draw fuel from higher raw material costs, which will cause many companies to shelve expansion plans.

U.K. spreadbettor IG Index is calling the DAX down 24 points at 6031, the CAC down 6 at 5257 and the FTSE unchanged at 6042.

European stock markets failed to hold early gains Thursday, ending lower under the pressure of telecommunications sector concerns, rising commodities prices, a falling dollar and a triple-digit decline in the Dow industrials. London shares closed slightly lower, but commodity and oil stocks remain well underpinned.

BONDS: Prices of European government bonds are likely to open lower, amid the regenerated fear of higher interest rates around the world.

"The tone in the market remains bearish, with the Federal Reserve leaving the door open for further tightening and speculation still alive that the ECB might hike interest rates by 50 basis points in June and not only by 25 points," said Jens-Oliver Niklasch, fixed-income strategist at Landesbank Baden-Wuerttemberg.

Although Niklasch doubts that a 50-basis-point hike by the ECB in June is likely, he said sound economic data would keep speculation about the future tightening pace alive.

"We expect the central bank to raise rates to 3.25% by the end of the year," said Niklasch.

Meanwhile in the U.K., much stronger-than-anticipated economic data intensified speculation that the Bank of England might raise interest rates, analysts said.

Fears about higher interest rates across the globe and a set of strong economic data from Europe triggered another selloff in European government bonds Thursday, even though the stock market had its doubts about the data's strength.

FOREX: The euro is retaining much of its overnight gains, though shy of its one-year high of $1.2873 reached in New York trading. Sterling reached a one-year high of $1.8853.

The market is growing worried about the widening U.S. trade deficit. The latest data are due at 1230 GMT and expected to show a gap of $67.5 billion.

Most analysts expect that any positive dollar reaction to the data will be muted, given the market's bearish attitude towards the U.S. currency.

The dollar was down sharply against its major counterparts Thursday as disappointing U.S. retail sales ignited another selloff of dollars. Hawkish comments from European Central Bank governing council member Axel Weber added to the dollar's bleak performance.

CALENDAR: Friday, May 12: French, German Inflation Data

GMT Expected Previous
0600 GER April CPI, final +0.4%MM 0.0%MM
+2.0%YY +1.8%YY
1000 FRA March OECD Main Economic Indicators &
Standardized Unemployment Rates
1045 FRA April CPI, estimate +0.4%MM +0.3%MM
+1.7%YY +1.5%YY
1045 FRA March Trade Balance -2.2B -2.02B
1230 US March Trade Deficit $67.5B $65.74B
1230 CAN March Trade Surplus N/A C$6.31B
1230 US April Import Prices +1.2% -0.4%
1345 US May University Of Michigan Consumer 86.0 87.4
Sentiment Index, prelim
1500 US Tsy Secy Snow speaks at U.S. Chamber
of Commerce's Small Business Summit in
Washington
N/A GER March Balance of Payments

-By Dennis Baker; Dow Jones Newswires; [email protected]

(MORE TO FOLLOW) Dow Jones Newswires

May 12, 2006 01:49 ET (05:49 GMT)

12 May 2006 05:49 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

Allianz (AZ): 1Q Trading Update
Note: Friday seen shedding more light on performance of banking, insurance and asset-management divisions, after company May 2 pre-released prelim 1Q net profit, operating profit, revenue and 2006 profit outlook figures. Dresdner Bank net profit seen halving to EUR227M vs EUR466M a year ago, in a Dow Jones Newswires survey among 7 analysts; operating profit seen at EUR332M, +54. Non-life insurance combined ratio seen at 93.3% vs 92.1%. Company to restate operating profit and combined ratio under a new income-statement structure. More information about realized gains, 05 European embedded value eyed.

Arcelor (5786.FR): 1Q Earnings
Average net profit: EUR715.5M (EUR934M)
Average EBITDA (DJ, 5 analysts): EUR1.35B (N/A)
Average EPS: EUR1.11 (EUR1.52)
Note: Profit seen dropping due to lower steel prices and higher energy costs, but are expected to predict a better outlook for the remainder of the year due to rising prices for many steel types so far this year, notably in Europe and Asia. Carbon steel prices are expected to have risen in Europe, recovered in Asia and been stable in the U.S., said one analyst. "Arcelor will try to claim better resistance than Mittal" to price changes by arguing its product line is less commoditized, said one analyst, who requested anonymity. But that argument may be spurious as Mittal's products are appropriate for the high-growth regions that are its main markets, he added. Arcelor is also expected to claim it has better offset the rise in energy costs.

Industry analysts expect Arcelor's long products division, which makes beams and girders, to act as a stabilizing force in results thanks to a pricing mechanism at Arcelor that allows it to hand price changes on to customers.

The result for flat steel, on the other hand, which automakers use to build cars, is expected to get a beating compared to last year. "It'll go down a lot. It'll be the worst result of the year," said Caja Madrid analyst Inigo Recio. Analysts expect a bullish outlook. Some expect Arcelor to announce a price hike for the third quarter similar to that already announced for the first and second quarter - a crucial way for the company to pass on price changes to customers.

Even if Arcelor does not announce such a plan, "the trend is pretty clear," said Exane Equity Research analyst Sylvain Brunet, who expects Arcelor eventually to hike prices EUR50 for every ton of hot rolled coil for third-quarter deliveries. "That would be very good because it will impact the margins," said Caja Madrid's Recio. "2006 is going to start bad and get continuously better."

Dexia analyst Mickael Van den Hauwe expects Arcelor to post a quarter-on-quarter 8% rise in EBITDA to EUR1.23B. If Arcelor does outperform Mittal in the first quarter, it can be expected to claim this is a clear sign that it has a better future as a separate entity and the two companies are incompatible. But Mittal will claim that it is a reason why the two companies need to be together - greater size allowing them to reduce costs and negotiate better deals with customers.

Autostrade (AUTO.MI): 1Q Earnings
Average IFRS net profit (DJ, 4 analysts): EUR120.5M (N/A)
Note: The company hasn't yet transcribed 1Q 05 net profit under Italian GAAP of EUR40M into IFRS, making comparisons tricky, analysts note. Revenue estimated at EUR685M, compared with EUR650M under Italian GAAP in 1Q '05. In any case, they say the numbers themselves - due out Friday afternoon - will be of much less interest than any update on progress in the company's planned EUR25B merger with Spain's Abertis Infrastructures (ABE.MC).

Banche Popolari Unite (BPU.MI): 1Q Earnings
Average net profit (DJN, 3 analysts): EUR201M (N/A)
Note: Net interest income is seen at EUR394M, net commissions at EUR215M. Operating income seen at EUR394M. Under Italian GAAP, 1Q '05 net profit was EUR142M, net interest income EUR387M, commissions EUR204. The company will hold a conference call Monday at 1230 GMT.

Banca Popolare Italiana (BPI.MI): 1Q Earnings
Average net profit (DJN, 3 analysts): EUR30M (N/A)
Note: The company will provide restated figures for 1Q '05 under IFRS. Total income is seen at EUR34.5M. Analysts expect provisions to fall to EUR56M.

Bank Pekao (PEO.WA): 1Q Earnings
Average consolidated net profit (DJ, 7 analysts): PLN402M (PLN331M)
Note: The company is expected to deliver an 11% rise in revenues of PLN600M versus PLN542M. Analysts expect strong growth in fees and commission income, combined with strict cost control. They also eye details regarding a merger with Bank BPH (BPH.WA).

Delhaize (DEG): 1Q Earnings
Average net profit (DJN, 5 analysts): EUR97M (EUR81.3M)
Average sales: EUR4.8B (EUR4.32B)
Note: Earnings seen powered by strong sales in US where company does more than 70% of its business, and stronger USD. EBIT +12% to EUR229M vs EUR205M. Focus on outlook, performance of weak Belgian operations.

(MORE TO FOLLOW) Dow Jones Newswires

May 12, 2006 01:49 ET (05:49 GMT)

12 May 2006 05:49 GMT =DJ EUROPEAN MORNING BRIEFING: Div Payment & Ex Div Dates

Adidas-Salomon (ADS.XE): FY 2005 Dividend Payment Date

Adidas-Salomon AG (ADS.XE): FY 2005 Ex-Dividend Date

AF Gruppen (AFG.OS): FY 2005 Ex-Dividend Date

All Cards Service Center (ACSC.SK): FY 2005 Dividend Payment Date

Alliance Trust (ATST.LN): FY 2005 Dividend Payment Date

Aubay (6373.FR): FY 2005 Ex-Dividend Date

AXA (AXA): FY 2005 Dividend Payment Date

Baywa (BYW.XE): FY 2005 Dividend Payment Date

Baywa (BYW.XE): FY 2005 Ex-Dividend Date

Beazley Group (BEZ.LN): FY 2005 Dividend Payment Date

Biacore International (BCOR.SK): FY 2005 Dividend Payment Date

Blydenstein Willink (34034.AE): FY 2005 Dividend Payment Date

Boliden (BLS.T): FY 2005 Dividend Payment Date

Dialight (DIA.LN): FY 2005 Dividend Payment Date

Farstad Shipping (FAR.OS): FY 2005 Ex-Dividend Date

Fisher (James) & Sons (FSJ.LN): FY 2005 Dividend Payment Date

Fornix Biosciences (43999.AE): FY 2005 Dividend Payment Date

Forth Ports (FPT.LN): FY 2005 Dividend Payment Date

Fugro (35256.AE): FY 2005 Ex-Dividend Date

Grupo Ferrovial (FER.MC): FY 2005 Dividend Payment Date

HExagon (HEXA-B.SK): FY 2005 Dividend Payment Date

Investment Kinnevik - A Shares (KINV-B.SK): FY 2005 Ex-Dividend Date

ITAB Industri (ITAB-B.SK): FY 2005 Ex-Dividend Date

Koninklijke Brill (44252.AE): FY 2005 Ex-Dividend Date

LISI (5035.FR): FY 2005 Dividend Payment Date

Meda (MEDA-A.SK): FY 2005 Dividend Payment Date

MTL Instruments Group (MYI.LN): FY 2005 Dividend Payment Date

Narkes Elektriska (NEA-B.SK): FY 2005 Ex-Dividend Date

NIBE Industrier (NIBE-B.SK): FY 2005 Ex-Dividend Date

Novotek (NTEK-B.SK): FY 2005 Ex-Dividend Date

Rok Property Solutions (ROK.LN): FY 2005 Dividend Payment Date

Scania - A Shares (SCV-A.SK): FY 2005 Dividend Payment Date

Scania - B Shares (SCV-A.SK): FY 2005 Dividend Payment Date

Standard Chartered (STAN.LN): FY 2005 Dividend Payment Date

Unite Group (UTG.LN): FY 2005 Dividend Payment Date

Van Lanschot (30263.AE): FY 2005 Ex-Dividend Date

VBG (VBG-B.SK): FY 2005 Ex-Dividend Date

VLT (VLT-B.SK): FY 2005 Dividend Payment Date

Wimpey (George) (WMPY.LN): FY 2005 Dividend Payment Date

Yara International (YAR.OS): FY 2005 Ex-Dividend Date

(END) Dow Jones Newswires

May 12, 2006 01:49 ET (05:49 GMT)

12 May 2006 05:49 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events -3-

OTHER SCHEDULED EVENTS:

Aeroporto di Firenze (AFI.MI): 1Q Earnings

Algoriel (7223.FR): 4Q Sales

Athlon (38021.AE): 1Q Earnings

Banca Intesa (BIN.MI): 1Q Earnings

Banche Popolari Unite (BPU.MI): 1Q Earnings

Bastogi (B.MI): 1Q Earnings

BNP Paribas (13110.FR): AGM

Boero Bartolomeo (BOE.MI): AGM

Boewe Systec (BSY.XE): 1Q Earnings

Brioche Pasquier (6627.FR): AGM & EGM

Camillo Eitzen & Co (CECO.OS): 1Q Earnings

Campofrio (CPF.MC): 1Q Earnings

CanArgo Energy Co (CNR): 1Q Earnings

Cassa di Risparmio di Firenze (CFI.MI): AGM

Cegedim (5350.FR): 1Q Sales

Centrale Latte Torino (CLT.MI): 1Q Earnings

Cepsa (CEP.MC): 1Q Earnings

CHL (CHL.MI): 1Q Earnings

CorrOcean (COR.OS): 1Q Earnings

Cremonini (CRM.MI): 1Q Earnings

Crespi (Giovanni) (CRE.MI): AGM

Crew Gold Corporation (CRU.T): EGM

CSP International Industria Calze (CSP.MI): 1Q Earnings

De Longhi (DLG.MI): 1Q Earnings

Demasz (DEMASZ.BU): 1Q Earnings

DnB NOR Bank (DNBNOR.OS): 1Q Analyst Meeting

DTZ Holdings (DTZ.LN): Trading Update

Ducati Motor Holding (DMH): 1Q Earnings

Eidesvik Offshore (EIOF.OS): 1Q Presentation & AGM

Eitzen Maritime Services (EMS.OS): AGM

Essilor International (12166.FR): AGM

Eurazeo (12112.FR): AGM & EGM

Exense (EXE.OS): AGM

Exprivia (XPR.MI): 1Q Earnings

Fastweb (FWB.MI): 1Q Earnings

Fidia (FDA.MI): 1Q Earnings & AGM

Flughafen Wien (VIEV.VI): April Traffic Data

Fraport (FRA.XE): April Traffic Data

Garboli-Conicos (GAR.MI): 1Q Earnings

Gefran (GE.MI): 1Q Earnings

Gemina (GEM.MI): 1Q Earnings

Gericom (GRO.XE): 1Q Earnings

Getaz Romang (GRHN.EB): AGM

(MORE TO FOLLOW) Dow Jones Newswires

May 12, 2006 01:49 ET (05:49 GMT)

12 May 2006 05:49 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events -4-

GKN (GKN.LN): AGM

Granitifiandre (GRF.MI): 1Q Earnings & AGM

Guinor Gold Corporation (GNR.T): 1Q Earnings

Helvetia Patria Holding (HEPN.EB): AGM

Hera (HER.MI): 1Q Earnings

IDS Scheer (IDS.XE): AGM

IMA (IMA.MI): 1Q Earnings

IMI (IMI.LN): AGM

IMMSI (IMS.MI): AGM

Interpump Group (IP.MI): 1Q Earnings

Interroll Holding (INRN.EB): AGM

Intertek Group (ITRK.LN): AGM

Isoft (IOT.LN): Trading Update

Kaitech (KAI.MI): 1Q Earnings

Laird Group (LARD.LN): AGM

Laurus (34077.AE): AGM

Marzotto & Figli (MZ.MI): AGM

Medion (MDN.XE): AGM

Medi-Stim (MEDI.OS): AGM

Michelin (12126.FR): AGM

MTU Aero Engines (MTX.XE): AGM

Natural (NTL.OS): 1Q Earnings

Nobel Biocare Holding (NOBE.VX): Information Meeting

O2 (OOM.LN): 1Q Earnings

Olidata (OLI.MI): 1Q Earnings

OrExo (ORX.SK): 1Q Earnings

Parmalat (PLT.MI): 1Q Earnings

Pininfarina (PINF.MI): AGM

Premafin Finanziaria (PF.MI): 1Q Earnings

Prosodie (415203.FR): 1Q Sales

PSI Group (PSI.OS): 1Q Earnings

Reply (REY.MI): 1Q Earnings

Risanamento Napoli (RN.MI): 1Q Earnings

Sabaf (SAB.MI): 1Q Earnings

Sadi (SDA): AGM

Salzgitter (SZG.XE): 1Q Earnings

ScanMining (SCMI.SK): AGM

Schaffner Holding (SAHN.EB): 1H Earnings

Schiapparelli 1824 (SCH.MI): 1Q Earnings

SHL Group (SHL.LN): AGM

Software (SOW.XE): AGM

Sol (SOL.MI): 1Q Earnings

Sorin (SRN.MI): 1Q Earnings

Steen & Strom (SST.OS): AGM

Tadpole Technology (TAD.LN): AGM

Thomson (TOC): AGM

Tod's Group (TOD.MI): 1Q Earnings

Total (TOT): AGM

Toupargel-Agrigel (3924.FR): 1Q Earnings & AGM

TVK (TVK.BU): 1Q Earnings

United Internet (UTDI.XE): 1Q Earnings

WCM (WCM.XE): 1Q Earnings

(MORE TO FOLLOW) Dow Jones Newswires

May 12, 2006 01:49 ET (05:49 GMT)

12 May 2006 05:50 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events -2-

Eni (E): 1Q Earnings
Average EBIT (DJ, 8 analysts): EUR5.33B (EUR4.38B)
Average adjusted net income, which excludes inventory gains and special
charges: EUR2.66B (EUR2.39B)
Note: Analysts are expecting strong performance from Eni's core exploration and production division, whose EBIT should post a 62% rise at EUR4.09B from EUR2.51B. Production is expected to increase to 1.82 million barrels of oil equivalent a day from 1.70 million boe/d.

"Growth volumes continue to come from new projects in Libya and Angola," JP Morgan said in a note. Earlier this week, Eni paid $902 million to secure a controlling stake in an Angolan offshore oil field which is believed to hold 1.5 billion barrels of oil.

Analysts will look closely at comments from Chief Executive Paolo Scaroni, who approaches the end of his first year in the post, regarding Angolan prospects, talks with Russian gas giant Gazprom and the impact on earnings of the loss of Dacion field in Venezuela. The Venezuelan field should bring a small fall in production starting from the second quarter but "the impact on 2006 earnings per share is immaterial," Goldman Sachs said in a note. Eni reports before the market opens. Hannover Re (HNR1.XE) is expected Friday to post 1Q net profit of EUR116M, +18% vs the EUR98M IFRS-restated 1Q '05 figure, according to the average of forecasts from 11 analysts polled by Dow Jones. Lower exposure to large disaster claims and rises in both gross and net premiums seen helping underwriting result, reflected in improved combined ratio to 95.7% vs 96.8%. Net investment income is also seen 9.6% higher at EUR263M vs EUR240M. Analysts will focus on the confirmation of a full-year target of at least 15% after-tax RoE, and an update on restructured US specialty business. Shares -0.3% at EUR30.30. (UXD)

Hannover Re (HNR1.XE): 1Q Earnings
Average net profit (DJN, 11 analysts): EUR116M (EUR98M)
Note: Lower exposure to large disaster claims and rises in both gross and net premiums seen helping underwriting result, reflected in improved combined ratio to 95.7% vs 96.8%. Net investment income is also seen 9.6% higher at EUR263M vs EUR240M. Analysts will focus on the confirmation of a full-year target of at least 15% after-tax RoE, and an update on restructured US specialty business.

Iberia (IBLA.MC): 1Q Earnings
Average net loss (DJN, 4 analysts): EUR35.8M (EUR16.1M net loss)
Average sales: EUR1.176B (EUR1.18B)
Note: Higher fuel costs, pricing pressures and calendar factors linked to the Easter holiday, which fell in March last year and in April this year, are seen behind the wider loss. EBITDAR seen -48% to EUR88.3M vs EUR169.5M. Focus on oil price hedging, union negotiations and launch of low-cost carrier.

InBev (INB.BT): 1Q Earnings
Average revenues (DJ, 5 analysts): EUR2.76B (N/A)
Average EBITDA: EUR776M (N/A)
Note: The analysts stressed that the figures are "best guesses" since it is the first time the company - created from the merger of Belgium's Interbrew and Brazil's Ambev - is reporting first-quarter numbers.

"The first quarter is the strongest quarter for South America," said Marc Leemans at Bank Degroof who rates the stock as "hold." "But it is the weakest quarter for Western Europe and this year has been particularly cold."

He says that, rather than looking at the numbers, he will be interested to see whether the stringent cost cutting and restructuring in Western Europe will start to show results.

Trevor Stirling at Bernstein Research said he is expecting modest margin improvement in Western Europe as a result of price hikes in Belgium and lower promotional discounts in the U.K. "We also hope that management will be in a position to give some guidance on the likely impact of ZBB in Western Europe following the recent announcement of an agreement with the Belgian trade unions of 295 job losses," he said in a note to investors. InBev reports at 0500 GMT.

Mittal Steel Co. (MT): 1Q earnings
Average net profit (): $667.3M ($1.1B)
Note: Profit seen dropping due to lower steel prices and higher energy costs, but are expected to predict a better outlook for the remainder of the year, due to rising prices for many steel types so far this year, notably in Europe and Asia. Carbon steel prices are expected to have risen in Europe, recovered in Asia and been stable in the U.S., said one analyst. Mittal is expected to post a 49% fall in EPS to 91.3 cents, from $1.78 a year earlier, according to a poll of three analysts. Mittal's year-earlier results exclude contributions from ISG, which was acquired in April 2005.

If Arcelor outperforms Mittal in the first quarter, it can be expected to claim this is a clear sign that it has a better future as a separate entity and the two companies are incompatible. But Mittal will claim that it is a reason why the two companies need to be together - greater size allowing them to reduce costs and negotiate better deals with customers.

MOL (MOL.BU): 1Q Earnings
Average net profit (DJN, 11 analysts): HUF49.78B (HUF71B)
Note: Analysts see the gas deal gain amounting to about HUF60B. The factors behind the profit decline are disappointing downstream performance, a loss in the natural gas business and significant financial losses due to a weaker HUF. Operating profit is seen -25% at HUF68.43B versus HUF91.6B.

PKO Bank Polski (PKO2.WA): 1Q Earnings
Average consolidated net profit (DJ, 7 analysts): PLN437M (PLN416M)
Note: PKO BP is expected to deliver a 6% rise in revenues of PLN907M versus PLN859M. Analysts will watch for fees and provisions income to see whether it offsets falling interest margins, and doen't expect to see any one-offs.

RCS Mediagroup (RCS.MI): 1Q Earnings
Average EBITDA (DJN, 4 analysts): EUR28.4M (N/A)
Average sales: EUR517.2M (EUR500M)
Note: The company will provide 05 IFRS results. As other publishers RCS is impacted by the fading government's paper subsidy. With EBIT of EUR16.2M Vs EUR15.6 a year ago. Eyes on advertising revenue growth and on potential acquisitions.

Telefonica (TEF): 1Q Earnings
Average net profit (DJN, 8 analysts): EUR1.16B (EUR912M)
Average sales: EUR11.8B (EUR8.3B)
Note: Earnings seen buoyed by growth in high-speed Internet access both in Spain and Latin America. Operating income before depreciation and amortization +35% to EUR4.6B vs EUR3.4B. Focus on outlook, market share of Spain Internet operations.

Thales (12132.FR): 1Q Revenues
Average sales (DJN, 5 analysts): EUR2.02B (EUR2.01B)
Note: Investors will be looking to see organic growth meet or exceed 5.4% growth rate in 1Q 05 compared to 1Q 04. Also looking to see whether the important aerospace sector has recovered and the results of existing contracts with Airbus, Dassault corporate jet and the French state.

ThyssenKrupp (TKA.XE): 2Q Earnings
Average net profit (DJN, 10 analysts): EUR314M (EUR1.05B)
Average sales: EUR11B (EUR10.48B)
Note: 2Q net profit under IFRS ws lower than 2Q 2005, which was boosted by a EUR810M one-off gain from real estate divestments. Pre-tax profit seen at EUR509M, +14% vs EUR445M in 2Q 05. Focus will be on the exact amount and the consolidation of the break fee from the failed Dofasco takeover. Analysts' expectations range from EUR150M to EUR112M. Market will await whether ThyssenKrupp is going to increase its FY 06 guidance as it has done before at the 2Q release.

(MORE TO FOLLOW) Dow Jones Newswires

May 12, 2006 01:50 ET (05:50 GMT)