DJ EUROPEAN MORNING BRIEFING: Stocks To Rebound

US SUMMARY: Tech Leads Wall Street Lower

DJIA 10854.86 loss 41.46 dn 0.4%
NASDAQ 2279.64 loss 23.05 dn 1.0%
S&P 500 1277.93 loss 5.00 dn 0.4%
Dow Future 10909.00 gain 18.00 up 0.2%
NASDAQ Future 1732.50 gain 4.50 up 0.3%
S&P Future 1285.25 gain 1.50 up 0.1%
10-Yr US Treasury: 4.34% up 0.01
(Futures values as of 0550 GMT)
Disappointing tech sector earnings set off a second day of selling on Wall Street Wednesday, though the markets showed strength in the face of a major selloff in Japan. The tech-dominated Nasdaq composite bore the brunt of investors' concerns. Treasurys ended little changed.

STOCKS: Despite the tech sector's losses, other stocks generally held firm, resisting a broader selloff after the Labor Department reported better-than-expected retail inflation data.

"The selling you're seeing is nearly all on the tech side, and you're seeing resilience in other parts of the market," said Russ Koesterich, senior portfolio manager at Barclays Global Investments in San Francisco. "This tells me that people aren't panicking over Japan or anything else."

Crude oil futures fell below $66 per barrel as traders took profits after the recent surge in energy prices, prompted by escalating tensions in the Middle East. A barrel of light crude settled at $65.73, down 58 cents, on the New York Mercantile Exchange.

The government's inflation data helped keep Wall Street's losses confined to the tech sector. The consumer price index, which measures the price of retail goods and services, fell 0.1 percent, better than the 0.2 percent rise expected on Wall Street. So-called "core" CPI, with food and fuel prices removed, rose 0.2 percent, in line with economists' forecasts.

Yet investors remained concerned that the disappointments in the tech sector could foreshadow lower-than-expected earnings across the board. With the runup in stocks since the beginning of the year, investors may be skittish about holding on to those gains, and could sell off heavily if earnings continue to fall below expectations.

"The consensus is looking for 13 percent earnings growth in Q4, which is a pretty high hurdle," said Brian Gendreau, investment strategist for ING Investment Management. "Earnings have been coming in better than expected for a long time. This time, if earnings don't come in better than expected, the market may take a hit."

Apple Computer Inc. reported record financial results for the holiday quarter as expected, but its shares dropped in after-hours trading after the company said results for the current period will be below Wall Street expectations.

J.P. Morgan Chase & Co. reported its net income jumped 61.9% in the fourth quarter to $2.7 billion, but acknowledged its core trading business is still producing erratic results despite an intensive overhaul.

Online auctioneer eBay Inc. Wednesday said earnings rose 36 percent rise in the fourth quarter, beating analysts' expectations, but its forecast that profit and sales for the year would fall short of estimates pushed shares down in late trade.

BONDS: After a choppy session, U.S. Treasurys exited New York trade back in neutral ground Wednesday.

A softer-than-expected reading on consumer price inflation in December lent support, prompting "some people to take profits on those longs," said Martin Mitchell, head of government trading at Stifel, Nicolaus & Co. in Baltimore.

That momentum was reversed later in the session though, with bonds weighed down by a Federal Reserve Beige Book report showing the economy continued to grow in late November and December. Also, sunny comments on the economy and the probability of at least one more interest rate hike from Richmond Fed President Jeffrey Lacker were pushing prices down.

"Lacker's comments were generally upbeat about growth, and it looks like the Fed is more optimistic (about growth) than the stock and bond markets seem to be," said Rick Klingman, head of Treasury trading at ABN Amro in New York.

Still, bond prices remained "at pretty lofty levels, and yields are certainly lower than anybody probably expected them to be at this point," said Scott Gewirtz, head of Treasurys trading at Lehman Brothers in New York.

Earlier, Fed Governor Susan Bies sounded slightly more dovish, saying the economy should slow to a more sustainable pace in 2006. But she said the central bank remains on high alert for inflation due to higher energy prices and added that officials "are much more data dependent in this year," highlighting figures such as capacity utilization and employment.

Minutes from the December Federal Open Market Committee meeting suggest that at least one more interest rate hike is in store, and beyond that the Fed will take things "a meeting at a time," Federal Reserve Bank of Richmond President Jeffrey Lacker said Wednesday.

ASIAN SUMMARY: Tokyo Stocks Rebound On Value Hunting

USD-Yen 115.26 gain 0.03 up 0.03%
AUD-USD 0.7465 loss 0.0012 dn 0.2%
Nikkei 225 15647.49 gain 306.30 up 2.0%
Hang Seng 15617.81 gain 136.60 up 0.9%
Taiwan Index 6512.29 gain 13.37 up 0.2%
S.Korea Kospi 1363.36 gain 10.45 up 0.8%
JGB Yield 1.4750% up 0.0450
(All values as of 0550 GMT)
STOCKS: Japanese stocks extended gains in the afternoon session in Tokyo after a planned half-hour delay. The key index gained more than 2 percent following heavy losses the day before in a shortened session due to a massive sell-off sparked by a probe of Internet startup Livedoor Co.

The market was lifted Thursday largely by bargain hunters targeting technology stocks battered in the two previous days.

Despite the losses, the investigation of Livedoor is welcome because it indicates regulatory strength, said Jeremy Batstone, director of private client research at Charles Stanley & Co. "In the past it might very well have been brushed under the carpet," he said.

BONDS: Prices of Japanese government bonds fell in line with strong gains in stocks, although a 30-year government bond auction proceeded smoothly, dealers said.

OIL: Crude oil prices inched up 1 cent to $65.74 as traders shifted focus from the Iranian nuclear dispute and political unrest in Nigeria to the release of a midweek U.S. petroleum supply snapshot expected to show a gain in refined products later in the global session.

EUROPEAN OUTLOOK: Positve Start For Stocks

Euro-USD 1.2096 loss 0.0020 dn 0.2%
Stlg-USD 1.7617 loss 0.0023 dn 0.1%
USD-Franc 1.2821 gain 0.0026 up 0.2%
(All values as of 0550 GMT)
European stocks are set to open higher, with government debt and the euro lower.

STOCKS: Investors are likely to pick up bargains and push stocks higher to start.

CMC Markets is calling the London FTSE up 27 points to 5691, the Frankfurt DAX up 45 to 5441, and the Paris CAC up 19 at 4791.

Jeremy Batstone, director of private client research at Charles Stanley & Co., said declines of the last three days indicate investors are re-appraising their economic outlook and moving their investments into sectors with more reliable cash flows.

"Investors are not quite so gung-ho for technology stocks and growth," he said. Instead they are moving into sectors, such as utilities, which offer a reliable yield.

Two standout blue chips reporting this session are LVMH in the luxury sector and drugs giant Novartis.

Swiss maker of computer mice and keyboards, Logitech International, Thursday reported an 11% rise in third quarter net profit and raised its guidance, but joined the ranks of technology companies missing market expectations in the last few days.

European shares closed sharply lower Wednesday, with technology issues leading the way after a disappointing sales report from Intel and a heavy sell-off in Asia and U.S. markets.

BONDS: Prices of European government debt are likely to open slightly lower on deteriorating technicals.

European government bonds were mixed Wednesday, succumbing to profit-taking on reported rate hike comments, later denied, from European Central Bank executive committee member Lorenzo Bini Smaghi, and a slight recovery in equities on bargain hunting toward the end of the session.

FOREX: The euro opens slightly lower after players unwound some safe-haven buying in the wake of Asian stock losses on Wednesday.

Some currency strategists have advocated buying traditionally safe currencies, such as the Swiss franc, as one of the first steps in protecting against a wave of risk aversion.

"In response to the potential to lower risk appetite, we recommend selling" the dollar versus the Swiss franc, said HSBC. Lehman Brothers advised selling the Australian dollar versus the Swiss franc, a pair that pits the ultimate global growth beneficiary against the ultimate flight-to-safety beneficiary.

If the pullback in Japan stocks does continue and turn out to be a harbinger of a damaging slowdown in the Japanese economy, that could be quite a worse story for the yen.

"It really depends on the extent to which foreign investors take profits from the Japan stock markets," said Naomi Fink, senior currency strategist at BNP Paribas in New York. But like most, she remains skeptical that the selling so far is anything but a correction.

"The Japan economy continues to overcome deflation, and global investors are likely to stay focused on Japanese recovery-dependent stocks like banks, real estate and construction," she said.

(MORE TO FOLLOW) Dow Jones Newswires

January 19, 2006 01:46 ET (06:46 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.

19 Jan 2006 06:46 GMT =DJ EUROPEAN MORNING BRIEFING: Stocks To Rebound -2-

(This repeats an item published at 0600 GMT)

CALENDAR: Thursday, Jan 19: Euro Zone CPI; US Energy

GMT Expected Previous
0700 GER Dec PPI +0.2%MM -0.1%MM
+5.1%YY +5.0%YY
0800 GER Lower house of parliament meets
0900 GER Franco-German summit of ministers and
central bankers
0900 ITA Nov EU Trade Balance -0.8B -0.3B
1000 ITA Nov Indus Orders +1.9%MM -1.1%MM
+2.9%YY +3.0%YY
1000 ITA Nov Indus Turnover
1000 EU Dec Euro zone core CPI, final +1.4%YY +1.4%YY
1000 EU Dec Euro zone CPI, final +0.3%MM -0.3%MM
+2.2%YY +2.3%YY
1000 EU Nov Euro zone Foreign Trade 0.0B -1.2B
1100 UK Q4 Quarterly Economic Survey
1300 UK Liberal Democrat shadow chancellor
Vincent Cable speaks on "A New Economic
Liberalism for the 21st Century"
in London
1330 US Dec Housing Starts -4.4% +5.3%
1330 US Jan 14 Jobless Claims +6K +17K
1500 US Jan 7 DJ-BTMU Business Barometer -0.4%
1510 US Pres Bush speaks on the economy in
Virginia
1530 US Jan 13 US Energy Dept Crude Oil Stocks (in -0.115M -2.9M
barrels)
1530 US Jan 13 US Energy Dept Distillate Stocks (in +1.185M +4.9M
barrels)
1530 US Jan 13 US Energy Dept Gasoline Stocks (in +1.405M +4.5M
barrels)
1530 US Jan 13 US Energy Dept Natural Gas Stocks (in -39 -20
billion cubic feet)
1700 US Jan Philadelphia Fed Business Index 13.0 10.9
1745 US Atlanta Fed Pres Guynn speaks on the
economic outlook in Augusta, Ga.
1800 US Dallas Fed Pres Fisher speaks at a
business group luncheon in Ft. Worth,
Texas
2130 US Jan 14 Money Supply
2300 US Tsy Dep Secy Kimmitt speaks on intl
investment in the US at the Council on
Foreign Relations in New York
-By Dennis Baker; Dow Jones Newswires; [email protected]

(MORE TO FOLLOW) Dow Jones Newswires

January 19, 2006 01:46 ET (06:46 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.

19 Jan 2006 06:46 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

(This repeats an item published at 0600 GMT)

ALK-Abello (ALK-B.KO): 1Q Earnings
Average EBIT (DJ, 5 analysts): DKK61M (DKK40M)
Average sales: DKK411M (DKK325M)
Note: The increases will come from ALK-Abello's recent acquisition of a French company and from organic growth, which is seen around 10%-11%. Analysts expect to hear the company reiterate its full-year guidance, and hope it'll also indicate whether it remains on track to launch its allergy tablet against grass later this year.

Bankinter (BKT.MC): FY Earnings
Average net profit (DJ, 5 analysts): EUR199.8M (EUR173.4M)
Average net interest income: EUR434.4M (EUR389.2M)
Average 4Q net profit: EUR46.2M (EUR42.6M)
Note: Profit boosted by strong lending and fee income. Analysts to focus on lending to small businesses and costs.

Delhaize (DELB.BT): 4Q Revenue
Average revenue (DJ, 5 analysts): EUR4.93M (EUR4.45M)
Note: Revenue seen boosted by a successful strategy in the U.S. where it has been upgrading stores, allied to a strong dollar. "We fear disappointing figures from Belgium on the back of three strikes and Delhaize's struggle with its price image," said Pascale Weber of KBC Securities in a note to investors. She expects comparable store sales in Belgium to decline by 2.5%. She has an outperform rating on the group. Delhaize reports 4Q sales before market opening.

Geberit (GEBN.EB): FY Sales
Average sales (DJ, 5 analysts): CHF1.911B (CHF1,906B)
Average 4Q sales: CHF424.4M (CHF421.1M)
Note: Analysts cite a slight pickup in demand in the German market. Geberit's 4Q is seasonally the weakest, only contributing around 21%-23% of FY sales. Analysts eye 2006 outlook, development in the German market, and comments on what the company wants to do with the excess cash, possibly announcing a share buyback. Geberit will announce the full set of 2005 results on March 16.

Investor (INVE-B.SK): FY Earnings
Average net asset value per share (DJ, 5 analysts): SEK178 (SEK121)
Forecast range: SEK176.5 - SEK179
Note: The NAV rise represents a gain of 9.9% from September 30, 2005. NAV is seen lifted by equity gains in core holdings, and payments from asset sales. Scope seen for bonus dividend given redemption programs in core holdings, and capital gains. Kaupthing sees extraordinary dividend of SEK1/share, in addition to ordinary dividend of SEK3/share.

Logitech (LOGI): 3Q Earnings
Average net profit (DJ, 7 analysts): $75.7M ($64.2M)
Average sales: $588.3M ($483.8M)
Average EBIT: $87.7M ($73.6M)
Note: Profit seen rising on continued strong demand for its audio, video and gaming products. Analysts to focus on gross margin development, growth in Asia, and update on the Christmas business.

LVMH (12101.FR): 4Q Revenue
Average revenue (DJ, 7 analysts): EUR4.34B (EUR3.81B)
Note: Deutsche Bank says all divisions should post double-digit growth. Societe Generale sees 15% growth at the core Louis Vuitton brand, boosted by the opening of three flagship stores and price increase in Japan. Fideuram Wargny expects strong organic growth at perfumes and cosmetics division. Analysts see possibility LVMH will release provisional operating profit too.

Novartis (NVS): 4Q Earnings
Average net profit (DJ, 5 analysts): $1.51B ($1.35B)
Average sales: $8.83B ($7.59B)
Note: Of more interest than results will be Novartis' acquisition plans - the company is speculated to be interested in buying biotech company Serono (SRA) - and phase III results for hypertension drug SPP100 and diabetes drug LAF237, says Kepler Equities analyst Denise Anderson. She expects positive, but not outstanding results. Rates at reduce with a CHF57 target.

Saurer (SAUN.EB): FY Orders
Average 2005 order intake (DJ, 3 analysts): CHF1.59B (CHF1.71B)
Average sales: CHF1.57B (CHF1.62B)
Note: The effect of a disappointing 1H will make itself felt, says Sarasin, even if textile unit has snapped back in 2H. Analysts are waiting for '06 guidance, especially for textile machinery. Data due pre-market.

Vedanta Resources (VED.LN): 3Q Earnings
Average EBITDA (DJ, 4 analysts): $261.75M ($120M)
Forecast range: $220M - $286M
Note: Earnings gain seen on combination of price increase in copper, plus an increased exposure to the copper price through the group's Konkola acquisition. Earnings also boosted by zinc and aluminum price increases and more production of zinc. Analysts not expecting much news flow from the company Thursday, considering the company has just updated on its plans for a new aluminum smelter and power plant in Jharsuguda, Orissa. Vedanta reports at 0700 GMT.

OTHER SCHEDULED EVENTS:

Aberforth Smaller Companies (ASL.LN): FY Earnings

Arkopharma (5420.FR): 4Q Revenue

Austrian Airlines (AUA.VI): FY Traffic Data

Avanza (AZA.SK): FY Earnings

Bank Austria Creditanstalt (BACA.VI): Investment Conference

BasWare (BAS1V.HE): FY Earnings

BIC Societe (12096.FR): FY Revenue

Christian Dior (13040.FR): FY Revenue

Debenhams: Trading Update

Douglas Holding (DOU.XE): FY Analyst Meeting

Enterprise Inns (ETI.LN): AGM

Geberit (GEBN.EB): FY Earnings

Grand Marnier (3803.FR): 4Q Revenue

GW Pharma (GWP.LN): FY Earnings

Hartford Group (HAR.LN): FY Earnings

Itesoft (402615.FR): 4Q Revenue

Kesa Electricals (KESA.LN): Trading Update

Metrologic Group (7397.FR): FY Earnings

Morse (MOR.LN): 2Q Revenue

Palfinger (PAL.VI): FY Earnings

Pohjola Group (POH1V.HE): EGM

St. James's Place Capital (STJ.LN): 4Q New Business

Ted Baker (TBK.LN): Trading Update

Wedins Norden (WED-B.SK): 1Q Earnings, AGM