Stocks stall amid mixed results, dlr awaits CPI
Thu Nov 16, 2006 5:37am
By Lincoln Feast
LONDON, Nov 16 (Reuters) - Uncertainty over the path of interest rates and mixed earnings reports shackled European shares on Thursday, with the dollar nudging higher ahead of key U.S. inflation data.
Gold, a traditional hedge against inflation, dipped ahead of the U.S. consumer prices report due at 1330 GMT, while oil -- the major variable in price pressures in recent months -- edged above $59 a barrel.
Stocks dipped in Japan <N225> but ticked higher elsewhere in Asia <MSCIAPJ>.
In Europe, the FTSEurofirst 300 Index <FTEU3> was unchanged at 1,470.9 points, hovering just below last week's 5-1/2 year peak as mixed earnings offset merger talk powering the autos sector <SXAP>.
Volkswagen (VOWG.DE: Quote, Profile, Research) was driven 2 percent higher by speculation of a takeover from rival Porsche (PSHG_p.DE: Quote, Profile, Research) and an upgrade from Goldman Sachs, while truckmaker MAN (MANG.DE: Quote, Profile, Research) jumped 3.7 percent on talk of a counter-bid from takeover target Scania (SCVb.ST: Quote, Profile, Research).
DaimlerChrysler (DCXGn.DE: Quote, Profile, Research) rose 2.4 percent on talk that Wolfgang Bernhard, the restructuring expert reported to be quitting Volkswagen, could return to DaimlerChrysler.
French bank BNP Paribas (BNPP.PA: Quote, Profile, Research) was down 2.5 percent after its earnings failed to impress traders, but National Grid (NG.L: Quote, Profile, Research) jumped 3.8 percent after the UK energy network firm beat first-half profit forecasts and unveiled a restructuring plan.
With Europe's third-quarter reporting season now more than half completed, analysts say company profitability continues to enjoy an extended sweet spot.
Data from UBS shows that 58 percent of earnings have beaten estimates in the latest quarter, above long-run averages.
"We reiterate our view that this indicates a strong earnings season for European corporates," said Nick Nelson, European equity strategist at UBS.
CPI LOOMS
The dollar edged higher as markets awaited a clue on U.S. rates from the consumer prices data, which is expected to show a fall in headline prices thanks to lower energy costs.
Crude <CLc1> edged above $59 a barrel on Thursday, extending gains after U.S. weekly inventories data showed unexpectedly large falls in supplies of gasoline and heating oil.
While oil prices have fallen substantially from mid-year peaks, Wednesday's minutes from the Federal Reserve's last meeting showed continuing concerns about inflation, dimming prospects of an interest rate cut any time soon.
"There has been a lot of debate as to whether the inflationary pressures have been fully shaken out of the U.S. economy after the ongoing hawkish stance of the Fed, so there may be some expectation that we'll find a definitive answer in today's CPI reading," said Stuart Scrase, senior forex dealer at CMC Markets.
The dollar was trading slightly firmer versus the euro <EUR> at $1.2807 and the yen <JPY> at 118.10.
The yen hovered near a record low versus the euro <EURJPY> at 151.20 yen after Japan's central bank sounded a neutral note on its plans to raise borrowing costs.
Bank of Japan Governor Toshihiko Fukui stressed that the bank has no preset conceptions on when to raise rates, also dampening any market expectations of a rate rise by the end of the year.
Government bonds were little moved ahead of the U.S. data, with 10-year Treasury notes <US10YT> yielding 4.605 percent.
Euro zone bunds rebounded from the previous session's sell-off, with the December Bund future 9 ticks higher at 117.95 <FGBLZ6>.
Gold <XAU> dipped to $623.40/4.40, down from an earlier high of $624.75 but supported by demand from India.