European Stocks Retreating on Retailers and Pharmaceuticals (Bloomberg) (15-01-2008)

Jan. 15 (Bloomberg) -- Retailers hurt European stocks that lost ground Tesco Plc reported disappointing holiday sales and Morgan Stanley downgraded pharmaceuticals Sanofi-Aventis SA and Novartis AG.

Kingfisher Plc, the region's largest home-improvement retailer, dropped after JPMorgan Chase & Co. lowered its recommendation on the stock. BP Plc retreated after Lehman Brothers Holdings Inc. advised clients to sell the shares.

The Dow Jones Stoxx 600 Index lost 0.3 percent to 343.91 at 8:05 a.m. in London, extending its decline this year to 5.7 percent on concern an economic slowdown and credit-market losses in the U.S. will crimp profit growth.

The Stoxx 50 fell 0.4 percent, while the Euro Stoxx 50, a measure for the euro region, decreased 0.2 percent.

Asian stocks retreated today, led by Toyota Motor Corp. and Honda Motor Co., after the yen strengthened to the highest in seven weeks.

Investors will also be watching reports on U.S. retail sales, producer prices and New York manufacturing today. Retail sales excluding automobiles decreased 0.1 percent after a 1.8 percent rise in November that was the biggest in almost two years, according to a Bloomberg survey.

Tesco declined 4.8 percent to 400 pence. Sales at U.K. stores open at least a year rose 3.1 percent in the six weeks ended Jan. 5, excluding gasoline, the company said today in a Regulatory News Service statement. That was below the third quarter's 4.1 percent growth and the 4 percent median estimate of 15 analysts surveyed by Bloomberg. Total group sales increased 13 percent.

Sanofi-Aventis, the world's third-largest pharmaceuticals manufacturer, lost 1.6 percent to 64.15 euros. Novartis, Europe's third-biggest, slid 1.4 percent to 62.3 Swiss francs.

Kingfisher lost 1.5 percent to 129.1 pence. JPMorgan cut its recommendation on Kingfisher to

"neutral" from "overweight", saying the slowing of the housing market will affect sales.

BP dropped 1.2 percent to 590 pence. Lehman cut its recommendation on BP, Europe's second-largest oil company, to "underweight" from "equal weight".

Imperial Energy Plc, a London-based company that explores for oil in Russia, tumbled 6 percent to 1,705 pence as ABN Amro Holding NV said it's selling 1.5 million shares in the company.

The bank is selling the shares on behalf of the company's Chairman, Peter Levine, it said in an e-mail sent to clients.

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