US stocks closed slightly lower, bringing to an end their recent good run, with investors uneasy about developments in Greece while in the home front there was also an element of disappointment at the housing sales figures.

Corporate news was mixed. PC box shifter Dell dragged the NASDAQ Composite lower after it offered lower than expected sales guidance for the current quarter in a statement released after the bell on Tuesday evening. Dell’s earnings for the three months to the end of January were a tad shy of market expectations, which also soured sentiment towards the stock.

In after-hours trade on Wednesday, Dell’s rival, Hewlett-Packard (H-P) was under the cosh after quarterly revenue numbers failed to impress.

Clothes retailer TJX has announced a $1.3bn share repurchase programme, along with an increase in its dividend policy. The company reported fourth-quarter earnings per share of 62 cents, a big jump from the 42 cents reported the year before, and bang in line with estimates.

Elsewhere in the retail sector, the world’s largest retailer by sales, Wal-Mart was off the pace after its fourth quarter figures came up short of expectations. The market was looking for turnover of $30.7bn, it got a figure barely above $30.0bn.

Quarterly results out from house builder Toll Brothers and retailer Dollar Tree also underwhelmed the market.

Newspaper publisher Gannett, on the other hand, surged after announcing that it will more than double its quarterly dividend to 20 cents a share, from 8 cents before.

Oil drilling contractor Nabors Industries was wanted after fourth quarter sales and earnings both surprised to the upside. Sector peers Halliburton and National Oilwell Varco rose in sympathy.

By contrast, natural gas firm Cheseapeake Energy was on a lower setting after quarterly earnings announced late on Tuesday failed to fire the market with enthusiasm.

MACROECONOMY

Existing home sales rose to a 4.57m annualised rate in January (consensus: 4.66m). The previous month´s reading has been revised down to a 4.38m rate, from a previous estimate of 4.61m. Barclays Capital however believes that it is an ‘up beat’ report, and highlights that ‘revisions to previous months were generally small and broadly offsetting.’

Like-for-like chain-store sales rose at a 3.0% week-on-week pace according to a survey from ICSC.

OTHER MARKETS

West Texas crude for April delivery edged up 3 cents to $106.28 a barrel in NYMEX trading.

10-year US Treasuries rose by half a dollar, with yields falling to 2.00% as a result.

S&P 500 – Risers
Nabors Industries Ltd. (NBR) $21.78 +6.97%
Intuit Inc. (INTU) $60.92 +5.91%
Gannett Co. Inc. (GCI) $15.61 +4.21%
Mosaic Company (MOS) $58.80 +3.32%
Mylan Inc. (MYL) $23.44 +3.26%
Halliburton Co. (HAL) $38.23 +3.24%
National Oilwell Varco Inc. (NOV) $87.18 +3.07%

S&P 500 – Fallers
Newfield Exploration Co (NFX) $36.88 -12.71%
Dell Inc. (DELL) $17.15 -5.82%
JDS Uniphase Corp. (JDSU) $13.93 -4.62%
First Solar Inc. (FSLR) $40.45 -4.55%
CONSOL Energy Inc. (CNX) $35.77 -4.33%
Netflix Inc. (NFLX) $112.40 -4.26%
Comerica Inc. (CMA) $29.49 -4.10%
Hartford Financial Services Group Inc. (HIG) $20.11 -4.06%

Dow Jones I.A – Risers
Caterpillar Inc. (CAT) $115.81 +0.70%
Pfizer Inc. (PFE) $21.36 +0.66%
Coca-Cola Co. (KO) $69.25 +0.62%

Dow Jones I.A – Fallers
Wal-Mart Stores Inc. (WMT) $58.60 -2.45%
Bank of America Corp. (BAC) $7.95 -1.97%
Intel Corp. (INTC) $26.73 -1.58%
Kraft Foods Inc. (KFT) $37.99 -1.50%
Hewlett-Packard Co. (HPQ) $28.94 -1.40%
Cisco Systems Inc. (CSCO) $20.12 -1.18%
JP Morgan Chase & Co. (JPM) $38.07 -1.01%

Nasdaq 100 – Risers
Garmin Ltd. (GRMN) $48.86 +9.33%
Intuit Inc. (INTU) $60.92 +5.91%
Mylan Inc. (MYL) $23.44 +3.26%
Urban Outfitters Inc. (URBN) $29.33 +2.95%
Baidu Inc. (BIDU) $133.71 +2.35%
Sears Holdings Corp. (SHLD) $52.08 +2.24%

Nasdaq 100 – Fallers
Dell Inc. (DELL) $17.15 -5.82%
First Solar Inc. (FSLR) $40.45 -4.55%
Logitech International S.A. (LOGI) $8.61 -3.37%
Nll Holdings Inc. (NIHD) $23.51 -2.77%

According to the City editor of Sky News, Mark Kleinman, RBS has agreed with the government to pay employees of the Global Banking and Markets (GBM) division between £390m and £400m in bonuses; that’s in aggregate, not each …

The numbers the investment analysts are interested in are those on the profit and loss table. Forecasts by analysts can be made to look daft by unforeseen non-cash adjustments but for what it is worth market consensus is for RBS to make £3.37bn in profit before tax on revenue of £27.0bn.

The median value of the range of market forecasts should be treated with suspicion, however, as each analyst’s forecast is likely to be based on a different interpretation of what the so-called ‘headline’ or ‘underlying’ figure is. This suspicion is strengthened by the fact that Nic Clarke, the banking analyst at broker Charles Stanley, is about a billion pounds off consensus with his RBS forecast and about £2.7bn north of consensus with his Lloyds prediction.

As Clarke points out, RBS’s third quarter profits were distorted by non-operating items such as a charge for movements in the fair value of own debt of £2,357m, compared to a gain of £339m in the second quarter. On an operating profit basis RBS reported a profit of £2,198m in the first nine months of 2011, compared to £1,858m in the same period in 2010.

Credit Suisse, meanwhile, reckons the restructuring of the GBM division is key. ‘The January 12th announcement was light in terms of detail [on the GBM restructuring], with targeted RWA [risk weighted assets] reduction not compatible with the reduction in businesses outlined. Depending on how management present and additional detail provided, this could drive further near term performance. We think the market is underestimating the costs of deleveraging and restructuring. Further we reiterate our view that this is a first step on a necessary path to reduce future capital needs and simplify the business,’ the Swiss bank opined.

‘We will look for continued execution in what was a tough environment in Q4 [fourth quarter]. We expect Q4 non-core assets to reduce by ¥2.3bn to ¥115.4bn. We could also get news on the APS [asset protection scheme] and sale process insurance,’ Credit Suisse added.

Royal Bank of Scotland is not the only Footsie company declaring results on Thursday but the likes of RSA, BATs, Capita and Centrica will struggle to wrest the headlines away from the storied bank.

Insurer RSA is tipped to declare profit before tax of £719.2m on revenue of £8,272m, The already generous dividend yield is expected to be boosted by a full year dividend of 9.32p, up from 8.82p in respect of 2010.

Credit Suisse thinks the results will be solid but with mixed messages for the future. ‘We forecast RSA to report FY11 EPS [fiscal 2011 earnings per share] of 14.0p, up 41% YoY [year-on-year]. We expect a pre-tax insurance result of £984m (+27% YoY) underpinned by strong gains in underwriting profit (via lower catastrophe losses). Investment income should also grow (£569m forecast) with expansion of float and strong harvested investment gains offsetting lower bond yields,’ Credit Suisse said.

‘On the positive side, we expect strong growth in [recent acquisition] GWP to continue (+9% forecast) while improvements in accident year results should underpin a sub-95% combined ratio. However, we expect the result will also demonstrate evidence of a gradual decline in investment yields (excluding gains) and a fading effect of reserve releases which have been at elevated levels in recent results,’ Credit Suisse said.

Pre-tax profit from British American Tobacco (BATs) for 2011 is set to burst through the five billion pounds barrier, with investment analysts forecasting a figure of £5.5bn on sales of £15.5bn. The full year dividend could be ramped up to 125.77p, the investment analyst community reckons.

Outsourcing giant Capita is forecast to declare revenue of £3.25bn and pre-tax profits of £413.8m. The full year dividend is predicted to rise to 24.1p from 20p the year before.

Charles Stanley’s Tony Shepard notes that the 14% gain in top line growth which the broker is forecasting will have been driven by acquisitions; underlying revenue is expected to decline by 7% ‘in line with the first half performance.’

‘Overall, the profit margin is expected to be similar to last year’s 14.4% which is held back by a combination of acquisitions such as Ventura, some group restructuring costs and investment in the new Polish facility,’ Shepard adds.

Utility Centrica, which trades under the British Gas brand, is expected to announce a decline in both turnover and pre-tax profits for 2011. Market consensus for the former is £21.85bn and for the latter is £2.17bn.

INTERIMS
Ashmore Group, Centaur Media, Go-Ahead Group, Kier Group, Oil & Gas Development Company Ltd. GDR (Reg S), Redrow, Sinclair Is Pharma

QUARTERLY PAYMENT DATE
Merchants Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Crude Oil Inventories (US) (15:30)
House Price Index (US) (15:00)
IFO Business Climate (GER) (09:00)
IFO Current Assessment (GER) (09:00)
IFO Expectations (GER) (09:00)
Initial Jobless Claims (US) (13:30)

Q4
Hellenic Telecom Industries SA ADS, Lancashire Holdings, Wentworth Resources Ltd

FINALS
Avocet Mining, British American Tobacco, Capita, Capital Shopping Centres Group, Centrica, Hellenic Telecom Industries SA ADS, Informa, Lancashire Holdings, Mondi, New World Resources A Shares, Royal Bank of Scotland Group, RSA Insurance Group, STV Group, Wentworth Resources Ltd

AGMS
Alternative Investment Strategies Ltd. Sterling Hedged Shares, Bankers Inv Trust, Datong, easyJet, Electra Private Equity

UK ECONOMIC ANNOUNCEMENTS
BBA Mortgage Lending Figures (09:30)
CBI Industrial Trends Surveys (11:00)
Monthly Industrial Trends Survey (11:00)

FINAL DIVIDEND PAYMENT DATE
Renew Holdings

jh

Dow Jones Industrial: -0.14%
Nasdaq Composite: -0.35%
S&P 500: -0.20%

The major US equity averages are still trading slightly lower, following a brief foray into positive territory by the Dow Jones Industrials earlier on. That on the back of continued doubts over Greece and what at first glance appeared to be weaker than expected existing home sales data out this afternoon. Nonetheless, economists at Barclays Capital think otherwise as regards the housing data.

Of possible interest as well however, some market commentary is calling attention to the recent drop in the Dow Jones Transportation Average as a potential harbinger of a correction to come in stocks.

In the meantime, news on the corporate front looks a tad mixed.

A particularly large drag on sentiment at the moment is coming from the sharp drop in shares of Dell after the PC manufacturer offered lower than expected sales guidance for the current quarter.

Clothes retailer TJX has announced a $1.3bn share repurchase program, along with an increase in its dividend policy. The company reported fourth-quarter earnings per share of 62 cents, a big jump from the 42 cents reported the year before, and bang in line with estimates.

Quarterly results out from Toll Brothers and Dollar Tree have come in lower than forecast by analysts.

Newspaper publisher Gannet on the other hand is surging after announcing that it will more than double its quarterly dividend to 20 cents a share, from 8 cents before.

Acting as a backdrop, President Obama is said to be preparing a reduction in the corporate tax rate to 28% from 35%, while removing tax breaks for companies to make up for lost revenue.

From a sector stand-point, the best performers now are: oil equipment (2.02%), oil services (1.56%) and gold mining (0.79%).

MACROECONOMY

Existing home sales rose to a 4.57m annualized rate in January (Consensus: 4.66m). The previous month´s reading has been revised down to a 4.38m rate, from a previous estimate of 4.61m). Barclays Capital however believes that it is an ‘up beat’ report, and highlights that ‘revisions to previous months were generally small and broadly offsetting.’

Comparable retail chain-store sales rose at a 3.0% week-on-week pace according to a survey from ICSC.

OTHER MARKETS

Front month West Texas crude futures are now falling 0.463% to the $106.25 mark in NYMEX trading.

10 year US Treasuries are rising by 10/32 dollars, with yields at 2.02%.

S&P 500 – Risers
Intuit Inc. (INTU) $61.76 +7.37%
Nabors Industries Ltd. (NBR) $21.72 +6.68%
Gannett Co. Inc. (GCI) $15.70 +4.81%
Mosaic Company (MOS) $59.07 +3.79%
Urban Outfitters Inc. (URBN) $29.56 +3.76%
Mylan Inc. (MYL) $23.53 +3.66%
Halliburton Co. (HAL) $38.17 +3.08%
Teradata Corp. (TDC) $64.10 +3.07%
National Oilwell Varco Inc. (NOV) $86.86 +2.70%
Sears Holdings Corp. (SHLD) $52.30 +2.67%

S&P 500 – Fallers
Newfield Exploration Co (NFX) $37.07 -12.26%
Netflix Inc. (NFLX) $109.38 -6.83%
Dell Inc. (DELL) $17.19 -5.60%
CONSOL Energy Inc. (CNX) $36.04 -3.61%
First Solar Inc. (FSLR) $40.88 -3.54%
SunTrust Banks Inc. (STI) $22.28 -3.17%
Genworth Financial Inc. (GNW) $9.24 -3.14%
Comerica Inc. (CMA) $29.80 -3.09%
Hartford Financial Services Group Inc. (HIG) $20.33 -3.01%
Lincoln National Corp. (LNC) $25.03 -2.95%

Dow Jones I.A – Risers
Caterpillar Inc. (CAT) $115.81 +0.70%
Boeing Co. (BA) $76.16 +0.58%
Pfizer Inc. (PFE) $21.32 +0.45%
Exxon Mobil Corp. (XOM) $86.92 +0.40%
3M Co. (MMM) $87.92 +0.37%
Procter & Gamble Co. (PG) $64.65 +0.36%
Coca-Cola Co. (KO) $69.00 +0.26%
United Technologies Corp. (UTX) $84.14 +0.21%
International Business Machines Corp. (IBM) $193.73 +0.17%
Alcoa Inc. (AA) $10.42 +0.08%

Dow Jones I.A – Fallers
Wal-Mart Stores Inc. (WMT) $58.70 -2.28%
Intel Corp. (INTC) $26.65 -1.88%
Kraft Foods Inc. (KFT) $38.00 -1.48%
Hewlett-Packard Co. (HPQ) $29.00 -1.19%
Bank of America Corp. (BAC) $8.02 -1.11%
Walt Disney Co. (DIS) $41.19 -0.91%
Cisco Systems Inc. (CSCO) $20.17 -0.91%
JP Morgan Chase & Co. (JPM) $38.13 -0.86%
Chevron Corp. (CVX) $107.60 -0.75%
Home Depot Inc. (HD) $46.61 -0.66%

Nasdaq 100 – Risers
Garmin Ltd. (GRMN) $48.51 +8.55%
Intuit Inc. (INTU) $61.76 +7.37%
Urban Outfitters Inc. (URBN) $29.56 +3.76%
Mylan Inc. (MYL) $23.53 +3.66%
Sears Holdings Corp. (SHLD) $52.30 +2.67%
Baidu Inc. (BIDU) $133.66 +2.31%
Ross Stores Inc. (ROST) $52.87 +1.58%
Maxim Integrated Products Inc. (MXIM) $28.12 +1.55%
Applied Materials Inc. (AMAT) $12.86 +1.18%
Infosys Technologies Ltd. (INFY) $60.19 +1.09%

Nasdaq 100 – Fallers
Dell Inc. (DELL) $17.19 -5.60%
First Solar Inc. (FSLR) $40.88 -3.54%
Logitech International S.A. (LOGI) $8.60 -3.48%
Virgin Media Inc. (VMED) $24.60 -2.65%
Intel Corp. (INTC) $26.65 -1.88%
Vodafone Group Plc ADS (VOD) $27.39 -1.62%
Nll Holdings Inc. (NIHD) $23.79 -1.61%
Yahoo! Inc. (YHOO) $14.52 -1.53%
eBay Inc. (EBAY) $34.67 -1.34%
News Corp. Class A (NWSA) $19.29 -1.28%

AB

Italy: 5.51% (+8bp)
Spain: 5.09% (-2bp)
France: 2.96% (-3bp)
Germany: 1.89% (-9bp)
UK: 2.11% (-1bp)
US: 2.01% (-5bp)

Italy saw its bonds come under mild pressure on Wednesday after a weak purchasing managers index showed lower than expected orders in both the manufacturing and service sectors in the Eurozone.

The closely watched index, compiled by Markit Economics, fell from a reading of 50.4 in January to 49.7 in February, below expectations.

One month’s reading will not cause the complete reversal of what has been a very good start to 2012 for Italian bonds. The survey does, however, underline the problem of growth. There is no escape from debt without growth. The rise in Italy’s 10 year bond yield today is merely an expression of that truth.

Italians only need to look at Greece to see the urgency of ‘kick starting’ the economy.

Fitch today cut Greece’s rating to its lowest possible level: ‘CCC’ in response to the terms of the bailout agreed on Monday.

In particular, the agency was concerned about the bond swap deal with private sector lenders, which it describes as constituting a ‘default’.

This won’t bother Greece at all, it will be years before the country dips its toes into the open market. The real meaning is that countries seen to be in a similar situation to Greece are now perceived as a bigger risk by the private sector. That bigger risk comes at a price.

BS

1615: LCH Clearnet cuts margin requirement for long positions in Irish bonds to 15% from 25%. FTSE 100 down 6 to 5,922.

1559: Rexam is leading gains on the FTSE 100 on Wednesday, as investors welcome the packaging maker’s plans to spin off its personal care business. A motley assortmemt of companies is following in its wake. These are outsourcing specialist Capita, engineering outfit Meggitt and BG Group. Commenting on the BoE minutes published this morning economists at Barclays are writing that ‘(…) whereas we and the consensus had thought any expressions of dissent would have been in favour of a lower amount, in fact Adam Posen and David Miles dissented in favour of a £75bn expansion (…) we do not view the minutes as challenging our policy forecast that there is likely to be no QE extension in May, and so more downside news will be needed to prompt a further increase. The dissent revealed in today’s minutes suggests that, in the absence of downside news, a split vote in May is likely (…).’ FTSE 100 is down 7 to 5,922.

1450: According to the blog of Sky News City editor Mark Kleinman, RBS is to give its investment banking staff £395m in bonuses for 2011. While this news will probably spark further outrage at the level of remuneration given in the sector, the amount is some 60 percent lower than the bonuses given to the unit last year. Shares in RBS are now down 3.3 per cent ahead of its full-year results due tomorrow morning. Lloyds, which is to publish its results on Friday, is down 1.1 per cent. FTSE 100 down 16 at 5,912.

1336: Vedanta is still the largest percentage faller on the top share index after RBC weighed in with a downgrade of the company to ‘sector perform’ from ‘outperform’. Also weighing on the benchmark index is a downgrade from Bank of America Merrill Lynch on Tesco, to underperform from neutral. Deutsche Bank has also lowered its view on Home Retail, an action which is also weighing on shares of Next and Marks&Spencer. FTSE 100 down 22 to 5,906.

1109: The Footsie is now trading at its worst levels of the day despite a strong performance by energy and oil stocks. Vedanta Resources is leading the decline, falling 5.3%, pulling back after yesterday’s 7% surge on the back of speculation that it is looking to merge its two Indian subsidiaries, Sterlite and Sesa Goa. Credit Suisse has said today that ‘any progress on restructuring or minority buy-outs would be a strong positive’ but any such move wouldn’t be easy. The broker highlighted Vedanta’s attempt in 2008 to restructure KCM and Sterlite which met ‘significant resistance’ and did not complete. Ex-dividend stocks Reckitt Benckiser, Barclays and Carnival are also weighing on the blue chip index. In other news, minutes of the MPC meeting are out and they show that while members voted unanimously to keep interest rates at 0.5%, two members (Posen and Miles) argued in favour of increasing its asset purchase programme by £75bn, as opposed to the £50bn finally approved. FTSE 100 down 23 at 5,905.

1024: Footsie remains in the red but is keeping its head above 5,900. FTSE 100 is down 19 at 5,908. Shell’s B shares are down slightly after the company announced its intention to bid just under a billion pounds for Cove Energy, as it seeks to get its hands on the AIM-listed company’s liquefied natural gas assets in Mozambique.

0905: Footsie has started on the back foot, despite a warm reception to results from packaging firm Rexam and a bit of buying interest in part-nationalised lenders Royal Bank of Scotland and Lloyds ahead of results this week. In contrast, Barclays is keeping company with the laggards. FTSE 100 is down 7 at 5,921.

1615: LCH Clearnet cuts margin requirement for long positions in Irish bonds to 15% from 25%. FTSE 100 down 6 to 5,922.

1559: Rexam is leading gains on the FTSE 100 on Wednesday, as investors welcome the packaging maker’s plans to spin off its personal care business. A motley assortmemt of companies is following in its wake. These are outsourcing specialist Capita, engineering outfit Meggitt and BG Group. Commenting on the BoE minutes published this morning economists at Barclays are writing that ‘(…) whereas we and the consensus had thought any expressions of dissent would have been in favour of a lower amount, in fact Adam Posen and David Miles dissented in favour of a £75bn expansion (…) we do not view the minutes as challenging our policy forecast that there is likely to be no QE extension in May, and so more downside news will be needed to prompt a further increase. The dissent revealed in today’s minutes suggests that, in the absence of downside news, a split vote in May is likely (…).’ FTSE 100 is down 7 to 5,922.

1450: According to the blog of Sky News City editor Mark Kleinman, RBS is to give its investment banking staff £395m in bonuses for 2011. While this news will probably spark further outrage at the level of remuneration given in the sector, the amount is some 60 percent lower than the bonuses given to the unit last year. Shares in RBS are now down 3.3 per cent ahead of its full-year results due tomorrow morning. Lloyds, which is to publish its results on Friday, is down 1.1 per cent. FTSE 100 down 16 at 5,912.

1336: Vedanta is still the largest percentage faller on the top share index after RBC weighed in with a downgrade of the company to ‘sector perform’ from ‘outperform’. Also weighing on the benchmark index is a downgrade from Bank of America Merrill Lynch on Tesco, to underperform from neutral. Deutsche Bank has also lowered its view on Home Retail, an action which is also weighing on shares of Next and Marks&Spencer. FTSE 100 down 22 to 5,906.

1109: The Footsie is now trading at its worst levels of the day despite a strong performance by energy and oil stocks. Vedanta Resources is leading the decline, falling 5.3%, pulling back after yesterday’s 7% surge on the back of speculation that it is looking to merge its two Indian subsidiaries, Sterlite and Sesa Goa. Credit Suisse has said today that ‘any progress on restructuring or minority buy-outs would be a strong positive’ but any such move wouldn’t be easy. The broker highlighted Vedanta’s attempt in 2008 to restructure KCM and Sterlite which met ‘significant resistance’ and did not complete. Ex-dividend stocks Reckitt Benckiser, Barclays and Carnival are also weighing on the blue chip index. In other news, minutes of the MPC meeting are out and they show that while members voted unanimously to keep interest rates at 0.5%, two members (Posen and Miles) argued in favour of increasing its asset purchase programme by £75bn, as opposed to the £50bn finally approved. FTSE 100 down 23 at 5,905.

1024: Footsie remains in the red but is keeping its head above 5,900. FTSE 100 is down 19 at 5,908. Shell’s B shares are down slightly after the company announced its intention to bid just under a billion pounds for Cove Energy, as it seeks to get its hands on the AIM-listed company’s liquefied natural gas assets in Mozambique.

0905: Footsie has started on the back foot, despite a warm reception to results from packaging firm Rexam and a bit of buying interest in part-nationalised lenders Royal Bank of Scotland and Lloyds ahead of results this week. In contrast, Barclays is keeping company with the laggards. FTSE 100 is down 7 at 5,921.

Stocks rallied in afternoon trade in London, recovering from the slump experienced in mid-morning. However, the Footsie still closed in the red on the back of global economic worries: Fitch moved to downgrade its rating for Greece just two days after the nation received a crucial bailout; while gloomy economic data from the Eurozone fuelled concerns that economic activity in the region may remain subdued for some time.

Eurozone finance minsters granted Greece its next EUR130bn in aid on Monday evening, a move that was crucial to help the heavily-indebted nation avoid a near-term disorderly default. However, the market reaction to the long-awaited deal was rather muted though – the Footsie fell 0.29% yesterday – with doubts still remaining over the nation’s longer-term outlook.

Fitch Ratings has today downgraded Greece’s long-term foreign and local currency issuer default ratings (IDRs) from ‘CCC’ to ‘C’ following yesterday’s bailout deal. ‘Fitch considers that the proposal to reduce Greece’s public debt burden via a debt exchange with private creditors will, if completed, constitute a rating default, and result in the country’s IDR being lowered to ‘Restricted Default’ (‘RD’) upon completion.’

Meanwhile, the Eurozone’s Purchasing Manager Indices (PMIs) compiled by Markit Economics for February revealed that the European economy is still suffering from a weak economic environment, with an improvement in the manufacturing sector being offset by a slight decline in services. The Eurozone PMI Composite Output Index fell from 50.4 in January to 49.7 this month. ‘A retreat back below the 50.0 no-change level for the Eurozone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession,’ said Markit’s Chief Economist Chris Williamson.

Earlier in the day, the HSBC China PMI for January rose to 49.7 points, above the reading of 48.8 seen in the month before, according to preliminary data. However, the new export orders sub-index is said to have changed direction and begun to contract.

In domestic news, minutes of the Monetary Policy Committee (MPC) meeting are out and they show that while members voted unanimously to keep interest rates at 0.5%, two members (Posen and Miles) argued in favour of increasing its asset purchase programme by £75bn, as opposed to the £50bn finally approved. ‘We do not view the minutes as challenging our policy forecast that there is likely to be no QE extension in May, and so more downside news will be needed to prompt a further increase,’ said analysts at Barclays Capital.

REXAM JUMPS 7%, WHILE VEDANTA DROPS 5%

Consumer packaging company Rexam was the high riser of the day, gaining over 7% after it saw underlying profits race ahead of sluggish sales on the back of a better than expected performance in its Beverage Cans business, primarily in Europe. Meanwhile, investors were welcoming the company’s plans to spin off its personal case business.

Vedanta Resources was the worst performer, falling 5%, pulling back after yesterday’s 7% surge on the back of speculation that it is looking to merge its two Indian subsidiaries, Sterlite and Sesa Goa. Credit Suisse has said today that ‘any progress on restructuring or minority buy-outs would be a strong positive ‘but any such move wouldn’t be easy. The broker highlighted Vedanta’s attempt in 2008 to restructure KCM and Sterlite which met ‘significant resistance’ and did not complete.

Big news today was that Anglo-Dutch integrated oil company Royal Dutch Shell launched a bid for AIM-listed Cove Energy of 195p per share. Shares in Cove jumped over 25% while Shell’s was trading broadly flat. The deal values the east Africa-focused company at £992.4m, a 73.3% premium to the closing price of 112.5p on January 4th (the last day before Cove put itself up for sale). Merchant Securities says that the bid has a strong read-across for companies with assets in similar geographies to Cove, such as Rockhopper Exploration and Ophir Energy, both of which were rising strongly today.

Supermarket giant Tesco was among the fallers after Bank of America Merrill Lynch downgraded the stock from neutral to underperform. Meanwhile, in a separate research note, downbeat comments by the US investment bank on the outlook for the UK grocers may have been weighing on the wider sector with Marks & Spencer and Sainsbury in the red. In other broker news, Vodafone was being weighed down by comments by Credit Suisse which lowered its earnings forecasts and target price ‘to reflect partly a more downbeat view of Vodafone UK.’

British Airways owner International Consolidated Airlines was a heavy faller after a strike at Frankfurt Airport forced many flights to be cancelled. According to the Wall Street Journal, the GdF labour union says that workers at the country’s largest airport will resume their duties later on this evening.

FTSE 250: GALLIFORD TRY, HAYS, LOGICA RISE STRONGLY

Housebuilding and construction firm Galliford Try doubled its interim dividend and delivered strong profit growth. Pre-tax profit rose to £32.2m for the half year ended 31 December 2011 from £17m the same time a year earlier. Group revenue climbed to £746.8m from £575.9m previously.

Recruitment firm Hays jumped despite paring its dividend to 0.83p from 1.85p per share the year before. Nevertheless, net fees in the second half of 2011 rose 15%, or 11% in a like-for-like (LFL) basis to £373.8m from £326.1m at the half-way stage in 2010.

After a couple of warnings last year about weakening revenues it was with some relief that Logica, a provider of computer programming contractors, said its 2011 results were in line with guidance it issued in mid-December.

BC

FTSE 100 – Risers
Rexam (REX) 413.00p +7.44%
Capita (CPI) 688.50p +6.50%
Meggitt (MGGT) 388.20p +1.97%
BG Group (BG.) 1,508.00p +1.86%
Smiths Group (SMIN) 1,066.00p +1.81%
Essar Energy (ESSR) 125.20p +1.79%
Petrofac Ltd. (PFC) 1,593.00p +1.72%
Randgold Resources Ltd. (RRS) 7,245.00p +1.54%
Fresnillo (FRES) 1,777.00p +1.54%
BAE Systems (BA.) 324.90p +1.34%

FTSE 100 – Fallers
Vedanta Resources (VED) 1,380.00p -5.02%
Evraz (EVR) 397.00p -3.80%
Barclays (BARC) 239.20p -3.45%
Hargreaves Lansdown (HL.) 465.00p -3.43%
Royal Bank of Scotland Group (RBS) 27.33p -3.12%
International Consolidated Airlines Group SA (IAG) 165.20p -2.77%
Man Group (EMG) 131.70p -2.30%
Tesco (TSCO) 315.40p -2.26%
Reckitt Benckiser Group (RB.) 3,500.00p -2.18%
Carnival (CCL) 1,903.00p -2.01%

FTSE 250 – Risers
Genus (GNS) 1,242.00p +10.20%
Devro (DVO) 312.00p +9.32%
Galliford Try (GFRD) 545.00p +8.78%
Hays (HAS) 87.40p +7.90%
Barratt Developments (BDEV) 139.80p +7.79%
Ophir Energy (OPHR) 392.00p +7.25%
Rank Group (RNK) 138.40p +6.54%
Logica (LOG) 86.65p +6.45%
Afren (AFR) 140.50p +5.88%
Travis Perkins (TPK) 1,059.00p +4.75%

FTSE 250 – Fallers
Kenmare Resources (KMR) 58.15p -5.45%
CSR (CSR) 251.00p -3.79%
Regus (RGU) 112.30p -3.52%
Domino’s Pizza UK & IRL (DOM) 460.00p -3.42%
Home Retail Group (HOME) 105.70p -3.03%
Cable & Wireless Worldwide (CW.) 26.29p -2.70%
Aquarius Platinum Ltd. (AQP) 142.70p -2.66%
Unite Group (UTG) 185.70p -2.62%
TUI Travel (TT.) 202.00p -2.56%
Restaurant Group (RTN) 292.00p -2.37%

FTSE-100: -0.08%
Dax-30: -0.71%
Cac-40: -0.33%
Ibex 35: -1.04%
SMI: -0.65%
FTSE Mibtel: -0.74%

European stock markets were mostly down at the close on Wednesday after a weak reading from a closely watched manufacturing and services purchasing managers index for Europe. The index, which is compiled by Markit Economics, fell from a reading of 50.4 in January to 49.7, below expectations.

Greece’s credit rating was cut by Fitch Ratings to the agency’s lowest level, ‘CCC’, in response to the bailout agreement agreed with other Eurozone countries on Monday.

The French car maker, Peugeot, climbed 12.4% after several sources confirmed the company was in talks with American giant General Motors. The exact nature of the deal isn’t clear although it’s thought cooperation on engine development and sharing common ‘platforms’ may be attractive to both management teams.

In a concerning development for the oil market, Iran denied United Nations nuclear inspectors access to a military facility. Heightened tension in the region over Iran has seen oil prices rise to highs not seen since the Spring of 2011. By 16:33pm in London Brent crude was at $122.78 per barrel, a gain of 0.92% since the fix.

EQUITIES

German travel giant TUI fell 7.5% on a Bloomberg report that BNP Paribas is managing the sale of 12.85 million shares in the firm at EUR6.05.

France Telecom has warned that it may cut its dividend payments by up to 14% in 2012.

Nexity, the French real estate service firm dropped 6.6% after saying 2012 would be a bad year for new home sales and commercial property.

The weakest sector on the Stoxx Europe 600 was Banks, which fell 2.3% while the strongest was Food and Beverages, gaining 0.08% just before the close.

MACROECONOMY

The German manufacturing sector purchasing managers’ index for February has come in at 50.1 (Consensus: 51.5), while a similar gauge for the services sector fell to 52.6 (Consensus: 53.9), from the previous month´s reading of 53.7.

The French manufacturing sector purchasing managers´ index for February has come in at 50.2 (Consensus: 49.0), while the services sector index fell to 50.3 (Consensus: 52.0), from the previous month´s reading of 52.3.

Eurozone industrial orders grew by 1.9% month-on-month in December (Consensus: 0.5%).

OTHER MARKETS

The Euro/dollar had gained 0.11% to hit $1.3248 by 5:59pm in Frankfurt.

Shares surged nearly 7% after underlying profits raced ahead of sluggish sales on the back of a better than expected performance in its Beverage Cans business, primarily in Europe.

Underlying profit before tax rose 15% in 2011 to £450m from £390m in 2010, ahead of market expectations of £443m. Sales edged up 2% to £4,734m from £4,619m in 2010; the median forecast from the range of analysts covering the stock was for sales of £4,716m.

Meanwhile, recycled packaging company DS Smith rose strongly on the FTSE 250 after completing a successful rights issue, raising the money it needs to pay for its purchase of Swedish firm SCA Packaging.

By the deadline at 11:00 yesterday it had received acceptances for 98.61% of the offered shares in the nine-for-eight cash raising exercise. Today its underwriters, J.P. Morgan, has managed to sell the outstanding 1.39% of the offer. The total cash raised will be around £466m, which, along with loans, will pay for the SCA transaction.

Meanwhile, the food and drug retailers were out of favour today, with supermarket giant Tesco weighing on the sector.

Supermarket giant Tesco fell 2.23% in afternoon trade after Bank of America Merrill Lynch downgraded the stock from neutral to underperform.

Meanwhile, in a separate note, downbeat comments by the US investment bank on the outlook for the UK grocers could be weighing on the wider sector with Ocado and Sainsbury in the red.

BC

Top performing sectors so far today
General Industrials 3,172.03 +3.42%
Forestry & Paper 6,182.76 +2.14%
Electronic & Electrical Equipment 3,397.89 +1.34%
Support Services 4,772.12 +1.31%
Aerospace and Defence 3,692.80 +1.24%

Bottom performing sectors so far today
Industrial Metals & Mining 4,468.96 -2.43%
Food & Drug Retailers 3,981.36 -1.12%
Industrial Transportation 2,436.70 -1.08%
Banks 4,045.84 -1.07%
Mobile Telecommunications 4,042.62 -0.79%

News agency Reuters cites central bank sources as suggesting that they are worried that banks will become too dependent on cheap ECB funds. A total of EUR489bn was issued in 3-year loans in the first long-term financing operation.

The consensus of economists polled by Reuters expects another EUR492bn to be allotted in next week’s operation but some expect up to EUR1 trillion. The fact is that the 1% financing rate is seen as too attractive to turn down. Only 15 of 63 analysts polled by Reuters say that banks attending the second LTRO would actually need the funds.

ECB officials have said they want to help the financial sector but they also want to make it clear that the long-term operations will not be a constant source. Bundesbank president Jens Weidmann warned that a ‘too generous’ supply of liquidity could create risky incentives for bank and boost future inflation risks.

‘If you are flooding the market with cheap refinancing then there comes a point when you are preventing the market from working because nobody is going to borrow from another bank at X percent if they can borrow from the ECB at Y percent,’ Reuters cited a senior banker as saying.

JM