* Financials dip, Ashmore update disappointsBy David BrettLONDON, Oct 13 (Reuters) - Britain’s top share index was
down around midday on Thursday, with miners hit by weak data
from China and financials awaiting results from U.S. bank JP
Morgan, as the bulls again lost their nerve around key technical
levels.London’s blue-chip index was down 49.67 points, or
0.9 percent at 5,392.13 at 1026 GMT, having earlier hit an
intraday high of 5456.09, as investors tested a ceiling that has
capped index gains over the past few months.”We’re at a bit of a crucial level for the FTSE; 5400 to
5435. To close above there and beyond is quite a significant
move because we’ve rejected this level on six occasions in the
past two months. Its a well-known hurdle for the index,” said
Angus Campbell, head of sales at Capital Spreads.The mining sector was the biggest drag on the
FTSE, down over 2 percent after super consumer China reported
its trade surplus narrowed in September for a second month in a
row as growth in exports and imports both came in below
forecasts, reflecting global economic weakness.Anglo American fell almost 4 percent as analysts
said if Chilean state copper giant Codelco exercised an option
to buy a 49 percent stake in Anglo American Sur, it could stunt
the miner’s growth strategy.BofA-ML said the loss of the assets could mean a $1.4
billion (9 percent) hit to group EBITDA and a 12-15 percent
decrease in earnings.Rio Tinto was dragged lower in the sell-off, down 2
percent in spite of a decent third-quarter update, and a
forecast of continued strong commodities demand.Miners, up nearly 20 percent in the last seven trading days,
have led the recent market rally, which pulled the FTSE 100 up
more than 10 percent.Investors’ sentiment had been boosted as European
politicians looked to shore up a shaky banking system and take
steps to resolve the euro zone debt crisis.Lawmakers in Slovakia struck a deal on Wednesday to ratify a
plan to bolster the euro zone’s rescue fund by Friday,
effectively ending a stand-off that had threatened the
currency’s main safety net, but analysts said that faith might
be misplaced.”Just like a second marriage, the equity market rally is a
triumph of hope over experience,” said Louise Cooper, market
analyst at BGC Partners.FINANCIALS WANEBanks such as Barclays fell, too, down
1.4 percent, though it has gained more than 30 percent since
last Tuesday.Investors were awaiting results from JP Morgan due
out at 1100 GMT for clues as to the health of the sector and a
view on the global economic outlook.Signs weren’t good from other financial stocks as Ashmore
slid 5.5 percent in heavy trade after the emerging
markets-focused investment house reported assets fell 10 percent
in the last quarter.Analysts at Charles Stanley say that while the long-term
growth story at Ashmore remains appealing, “the recent signs of
risk aversion in emerging market bonds and slower flows suggest
earnings expectations will be under pressure”.Hedge fund firm Man Group , which on Wednesday said
its flagship hedge fund posted heavy losses last week, fell 7
percent, while fund manager Schroders shed 4.4 percent
as it got caught up in the sell-off.Bucking the broader trend for the financials was Hargreaves
Lansdown , up 1.5 percent after the British investment
manager reported a robust quarterly performance against the
backdrop of falling markets.”Even in markets like this, Hargreaves will outperform as
the attractions of consolidating investments on the Vantage
platform remain regardless of equity market conditions,” Peel
Hunt said.Away from the financials, Rolls-Royce hit an all-time
high, rising 6.5 percent in strong volume after Pratt & Whitney
said it would spend $1.5 billion to buy the UK aero engine
maker’s share of the International Aero Engines consortium that
produces engines for Airbus’s A320 plane family.International Airlines Group climbed 0.7 percent as
Deutsche Bank upgraded its recommendation on the firm to “buy”
from “hold” and lifted its earnings forecasts, after robust
traffic data and on compelling valuation grounds.On the macroeconomic front, Britain’s trade figures
surprised on the upside as export values hit a record high in
August and import values fell slightly.U.S. stock index futures pointed to a lower start on Wall
Street on Thursday, ahead of international trade numbers and
latest weekly jobless claims due at 1230 GMT.
Napolitano talked of “acute tensions and uncertainties” in the center-right coalition and commentators said there was a growing possibility of elections next spring, a year ahead of schedule.In an unusually blunt statement, the president asked if the Berlusconi government still had the necessary unity to pass urgent measures for the country and demanded that Berlusconi offer “a credible response” to the nation.Berlusconi planned an address to parliament either on Wednesday or Thursday before a confidence vote likely to be held the next day.Napolitano’s statement was a clear reference to repeatedly delayed measures to boost Italy’s chronically slow economic growth, and continuing squabbles over an austerity package — passed under pressure from the European Central Bank — to balance the budget by 2013.Berlusconi decided to address parliament after the coalition — racked by internal dissent — suffered a major embarrassment when it failed to pass a key budget provision on Tuesday.Berlusconi has insisted that failure to approve the balance sheet for last year’s state spending by one vote was just an “accident” caused by the absence of several coalition members from the chamber.But political analysts said some of those who did not vote including Economy Minister Giulio Tremonti, who is constantly at loggerheads with Berlusconi, stayed away intentionally to send a message about the deep malaise within the coalition.Analysts said the government was unlikely to fall immediately but its ability to take action, at a time when the economy is under huge pressure from the markets, would be constantly hampered by internal disputes—the reason for Napolitano’s concern.Yields on Italian government bonds are dangerously high considering its massive public debt, because of investors’ lack of confidence that Berlusconi’s government can take decisive action.EARLY ELECTIONS”We could have a government crisis at any time and even head toward early elections,” said Massimo Franco, political commentator for the respected Corriere della Sera newspaper.After the government failed to pass the measure, the opposition called for Berlusconi to resign, saying the loss meant he no longer had a viable working majority.Berlusconi would have to resign if he lost the confidence vote.Lower house speaker Gianfranco Fini, who broke with Berlusconi last year, said the loss of the vote was “unprecedented” because the government is constitutionally obliged to approve what is considered a routine measure.Apart from Tremonti, several other senior coalition members were absent, including Berlusconi’s key ally, Northern League party leader Umberto Bossi.So far, Berlusconi’s majority in parliament has held up in repeated confidence votes but there has been mounting press speculation of a revolt within his PDL party.The 75-year-old prime minister is facing internal challenges from a number of center-right ministers who are unhappy with the way he is running the coalition and the damage his personal and judicial woes have done to Italy’s reputation.After Tuesday’s loss, the opposition called on Berlusconi to face the fact that he no longer had a workable majority and step down.”This government has no program left, it has no coalition, it has no objectives except to guarantee itself power,” said Massimo Donadi, head of parliamentarians in the opposition Italy of Values party.Berlusconi has come under mounting attack as the financial crisis and growing divisions in his center-right coalition fuel speculation that his government will collapse before the end of its term in 2013.Ratings agency Fitch last week cut Italy’s credit rating by one notch with a negative outlook, following a downgrade by Moody’s and Standard and Poor’s, underlining market concern over the stability of its public finances and its chronically weak growth.A 60-billion-euro austerity package to balance the budget by 2013 was passed last month only after weeks of hesitation and delay, while the timetable for a decree to pass economic reforms and approve the sale of state assets has slipped to October 20.
The group’s outlook so far of German steel production of
45.5 million tonnes remains within reach but is now at risk,
Kerkhoff said, adding that last year’s output of 43.8 million
tonnes would be reached.There are signs that the slowdown will be temporary and can
be overcome in the course of next year, he added.ThyssenKrupp and Salzgitter , Germany’s
biggest steelmakers, have already started curtailing their
production.The industry in Europe is suffering from weaker demand and
destocking by their customers, forcing some to idle blast
furnaces to shore up prices.But the World Steel Association struck an optimistic note on
Wednesday, raising its 2011 and 2012 forecast for global steel
demand, driven by China.
The group’s outlook so far of German steel production of
45.5 million tonnes remains within reach but is now at risk,
Kerkhoff said, adding that last year’s output of 43.8 million
tonnes would be reached.There are signs that the slowdown will be temporary and can
be overcome in the course of next year, he added.ThyssenKrupp and Salzgitter , Germany’s
biggest steelmakers, have already started curtailing their
production.The industry in Europe is suffering from weaker demand and
destocking by their customers, forcing some to idle blast
furnaces to shore up prices.But the World Steel Association struck an optimistic note on
Wednesday, raising its 2011 and 2012 forecast for global steel
demand, driven by China.
“Just waiting for good timing,” Ramon Ang, president of San
Miguel, told Reuters in a mobile text message.He made the clarification following media reports saying SMC
Global Power had pushed back plans to sell shares due to
volatile market conditions.Standard Chartered Bank had been tapped as sole
financial adviser, bookrunner and lead manager together with
Goldman Sachs , UBS , and CIMB Securities
(Singapore) Pte. Ltd.ATR Kim Eng Capital Partners Inc and SB Capital
Investment Corp, a unit of Security Bank Corp are
domestic lead underwriters.
X5 said earlier on Monday it expects full-year gross rouble sales growth to be closer to 35 percent than an earlier target of 40 percent, citing worsening economic conditions.
