BAY gains on news of merger talks

Most European equities markets saw gains Tuesday after US consumer confidence was reported higher in July and as oil prices resumed their declines.

In London, the FTSE 100 added 0.12 percent to 5,319.2 while the FTSE 250 gained 0.17 percent to 8,731.4 as gains by miners outweighed continuing concerns about the banking sector.

Banks were mixed in London, with some declines coming after Merrill Lynch (NYSE: MER; TYO: 8675) announced more write downs and said it will liquidate some credit assets, while airlines were higher, led by British Airways (LSE: BAY; NYSE: BAB) with a gain of almost 6 percent on falling oil prices and on the announcement that BA is in merger talks with Spanish airline Iberia (BMAD: IBLA).

The oil sector was mixed, with giants BP (LSE: BP; NYSE: BP; TYO: 5051) and Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS.A, RDS.B) lower, while the retail and real estate sectors were mixed and the pharmaceuticals sector saw some gains.

In the rest of Europe, the FTSE Eurofirst 300 was up 0.38 percent to 1,163.24 while the Dax recovered from early declines to add 0.75 percent to 6,398.8 and the IBEX jumped 1.73 percent to 11,683.8 but the CAC-40 dropped 0.09 percent to 4,320 in Paris.

The steel sector saw gains, as did airlines, the software and aerospace sectors and cosmetics makers, but banks, carmakers, the semiconductors sector, and some retailers declined.

Asia-Pacific region equities markets saw declines Tuesday on poor forecasts out of Japan which looked to investors a lot like signs that slowing economies around the globe are hurting earnings.

In Tokyo, the Nikkei 225 was down 1.46 percent to 13,159.45 while the Topix index fell 1.47 percent to 1,281.64 and the Mothers market dropped 1.21 percent to 527.1.

Carmaker Toyota (TYO: 7203.T; NYSE: TM; LSE: TYT) cut its sales forecast for this year b y 350,000 vehicles, while in the utilities sector Tokyo Electric Power (TYO: 9501) predicted that it will lose ¥280 billion in the year ending 31 March.

Other sectors also seeing declines included auto parts makers, brokers, shippers, and electronics, with stocks also pushed lower by new data showing that Japan’s unemployment rate grew to 4.1 percent in June while household spending dropped by 1.8 percent.

The forecasts from Toyota and Tokyo Electric Power helped push markets lower in the rest of the region, while banks declined on the announcement of more write downs by Merrill Lynch and on a statement from the International Monetary Fund that the US housing slump shows no signs of ending.

Meanwhile, shippers declined as shipping rates for commodities fell lower.

The Straits Times Index was down 0.82 percent to 2,886.56 while in Australia the Sydney Ordinaries fell 1.33 percent to 4,923.3 and the S&P/ASX200 dropped 1.52 percent to 4,847.4.

The Shanghai Composite was 1.82 percent lower to 2,850.31, the Hang Seng was down 1.89 percent to 22,258, the Kospi fell 1.95 percent to 1,567.2, Taiwan’s Taiex was 3.03 percent lower to 7,014.47, and the Sensex dropped 3.89 percent to 13,791.55 in India.

At around 1 p.m. in New York, Wall Street was higher as the Dow Jones Industrial Average had added 1.57 percent to 11,305.64, the Nasdaq Composite was up 1.97 percent to 2,308.79, and the S&P 500 had gained 1.45 percent to 1,252.24.

The gains came on increased consumer confidence, lower oil prices, and a quarterly report from US Steel (NYSE: X) which showed per-share profits for the quarter at $5.67, much above estimates.

Most insurers saw gains after the second quarter report from Safeco, (NYSE: SAF), in process of being acquired by Liberty Mutual, showed profits down 20 percent, but better than expected, while investment banks were generally higher despite the news of more write downs from Merrill Lynch.

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