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Tuesday July 13, 03:56
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Carmakers and steel manufacturers led Europe markets higher today
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Carmakers and steel manufacturers led Europe higher into the afternoon, but gains were limited after downgrades in the chip sector overshadowed encouraging earnings from Philips.
The FTSE Eurotop 300 was up 0.3 per cent at 983.32, while the Xetra Dax in Frankfurt rose 0.5 per cent to 3,913.83. In Paris, the CAC-40 climbed 0.5 per cent to 3,668.31, and London’s FTSE 100 gained 0.1 per cent to 4,365.3.
US technology stocks took a hit overnight after cautious comments from Merrill Lynch on oversupply in the global semiconductor industry. The investment bank downgraded the sector to "underweight" from "overweight" and cut its recommendations on specific stocks, including world leader Intel, which reports later on Tuesday, to "neutral" from "buy".
This led the Nasdaq Composite 0.5 per cent lower to 1,936.92. The Dow Jones Industrial Average fared better after a fall in crude oil prices and finished 0.2 per cent higher at 10,238.22.
However, Philips, the Dutch electronics giant, reported a stronger-than-expected rise in second-quarter net profit, thanks to recovering sales of semiconductors and consumer electronics. The semiconductor unit returned to operating profit driven by strong demand, the company said.
Philips was upbeat about growth in the second half: "We are confident that in the second half of the year we will see ongoing growth in revenues and earnings across our divisions," said Gerard Kleisterlee, chief executive. The shares added 0.9 per cent to €21.24.
Elsewhere in the European semiconductor sector, Infineon, which Merrill cut to "neutral" from "buy" in the previous session, reversed early gains to trade 0.3 per cent lower at €9.82. STMicroelectronics lost some of its early gains, but stood 0.5 per cent higher at €16.85, while ASML, the Dutch chip equipment maker, jumped 1.3 per cent to €12.98 despite Merrill’s overall sector downgrade.
Carmakers were higher after European new car registrations rose by 5.6 per cent in June, and after market-soothing sentiment from Opec, the oil cartel, put the brakes on rising crude prices.
In Germany, Volkswagen was up 1 per cent at €33.16, DaimlerChrysler added 1.5 per cent to €36.71 and BMW climbed 1.4 per cent to €39.96. In France, Peugeot was 1.2 per cent higher at €45.45 and Renault was up 0.6 per cent at €60.75.
Steel manufacturers were aided by strong earnings from South Korea’s Posco, which beat forecasts with record quarterly earnings, citing stronger steel prices and strong demand from China, in spite of the country’s attempts to curb imports of the commodity.
Arcelor, the world’s biggest manufacturer, was up 1.5 per cent at €12.95, while Corus, the Anglo-Dutch steelmaker, remained steady into the afternoon at €0.59.
Publicis, the French advertising agency, jumped 2 per cent to €23.03 after Maurice Levy, chief executive, said the company would not make a bid for US rival Grey Global.
Interbrew, the Belgian beermaker, was down 2 per cent to €25.31 after it said internal volume sales rose 5.5 per cent in the first half, failing to meet analysts’ expectations of 7.3 per cent. However, the company, which is due to merge with Brazil’s AmBev to form the world’s largest brewer, said it was sticking to profit targets.
ABB, the Swiss engineering group, said late on Monday its divestment programme was on track after the sale to a private equity consortium of its upstream oil, gas and petrochemicals division for $925m. The shares were up 0.6 per cent to SFr6.67.
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