Europe down, Asia up ahead of more earns

[July 23, 2009]  LONDON (AP) -- European stock markets fell modestly Thursday despite Asian gains earlier as investors pored over a raft of earnings across the continent and awaited another batch of U.S. results.

The FTSE index of leading British shares was down 7.76 points, or 0.2 percent, at 4,485.97 -- after eight days of gains, the longest since an 11-day advance in December 2003 -- while Germany's DAX fell 6.57 points, or 0.1 percent, at 5,114.99. The CAC-40 in France was 13.35 points, or 0.4 percent, lower at 3,291.72. All three indexes are trading above where they started 2009 and near their highs for the year.

Earlier in Asia, the recent rally continued with Japan's Nikkei 225 stock average closing up 69.78 points, or 0.7 percent, to 9,792.94 after better than expected export figures, while Hong Kong's Hang Seng jumped 569.53, or 3 percent, to 19,817.70.

"At the moment, a preference for risk on the part of investors is still intact and equity markets are holding up reasonably well," said Neil Mackinnon, chief economist at ECU Group.

Most of the focus over the recent trading sessions has centered on earnings coming out of the United States. However, the European reporting season is slowly kicking into gear to, providing investors with crucial insights about whether the recession is easing as much as it apparently is in the U.S.

Thursday saw a slew of earnings in Europe, particularly in Switzerland where upbeat comments from pharmaceuticals company Roche Holding AG and engineering company ABB Ltd helped their share prices rally by around 3 percent in morning trading. The share price of Credit Suisse AG, one of the country's two heavyweight banks, was broadly unchanged after it reported in-line earnings.

Nevertheless, the recession in Europe continues to take its toll on a number of companies. Europe's biggest home improvement company Kingfisher PLC reported a 1.9 percent decline in same-store sales in the ten weeks to July 11 largely because of a slowdown in housing starts, particularly in France. Kingfisher shares were down 1.5 percent.

Meanwhile, Compass PLC, the world's biggest caterer, reported worse than expected sales and the company's share price was the biggest faller on the FTSE 100 index, down over 8 percent.

Markets around the world have rallied for over a week on strong U.S. corporate earnings reports from a range of companies, including heavy equipment maker Caterpillar Inc., Apple Inc. and Coca Cola Inc.

The catalyst to the advance were the U.S. banks, particularly Goldman Sachs Group Inc., but Wells Fargo & Co. and Morgan Stanley Co. provided investors a timely reminder Wednesday of the major problems still facing the industry particularly in the commercial property market.

There will be more U.S. earnings later, most notably from online retailer Amazon Inc., American Express Co., McDonalds Corp., Microsoft Corp. and Ford Motor Co., as well as closely-watched weekly U.S. jobless claims and monthly existing home sales figures.

"It could be a busy day with packed economic and corporate calendar and with earnings season continuing to impress we can't look far past another positive day led by earnings," said James Hughes, market analyst at CMC Markets.

Wall Street was poised for another solid opening later with Dow futures up 23 points, or 0.3 percent, at 8,856 and the broader Standard & Poor's 500 futures 2.8 points, or 0.3 percent, higher at 952.20.

Despite the ongoing strength in equity markets, investors remained wary, as the March to June rally was predicated on similar hopes about the state of the world economy.

Elsewhere in Asia, South Korea's Kospi closed up 0.2 percent, while mainland China's Shanghai index added 1 percent. Australian shares, down 0.1 percent, were among the few losing markets.

Oil prices moved in a tight range, with benchmark crude for September delivery down 3 cents at $65.37 a barrel by noon European electronic trading on the New York Mercantile Exchange.

The dollar rose 0.9 percent to 94.45 yen while the euro was steady at $1.42.

[Associated Press; By PAN PYLAS]

AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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