DRX, SSE, IPR all decline on broker downgrades

European equities markets were lower Thursday as investors worried that recent efforts by governments to rescue banking systems will not be enough to avert a global recession.

In London, the FTSE 100 closed down 1.21 percent to 4,313.8 after earlier gains, while the FTSE 250 dropped 0.3 percent to 7,179.43.

Power generators were lower after broker downgrades as Drax Group (LSE: DRX) fell 5 percent and Scottish and Southern Energy (LSE: SSE) fell 6.8 percent on a downgrade from “hold” to “sell” and International Power (LSE: IPR; NYSE: IPR) dropped 6.91 percent as it was downgraded from “buy” to “reduce”.

Miners and insurers were mostly higher while the oil and retail sectors were mixed.

The FTSE Eurofirst 300 was down 2.05 percent to 921.46 as the CAC-40 fell 1.55 percent to 3,442.7, the Dax was 2.53 percent lower to 4,887 and the IBEX dropped 3.83 percent to 9,902.9.

The steel sector saw gains and banks were higher but the semiconductors sector was mixed.

The best performance on the CAC-40 came from steel producer ArcelorMittal (Euronext: MT: NYSE: MT; BMAD: MTS; LuxSE: MT) with a gain of 9.11 percent while Commerzbank (FWB: CBK) had the best day on the Dax as it added 6.73 percent.

Equities markets in the Asia-Pacific region were mixed Thursday, with some markets seeing gains after South Korea, Hong Kong, Taiwan and China cut interest rates, following the example of several Western central banks which cut rates yesterday in an effort to control damage from the financial crisis.

South Korea and Taiwan each cut rates by a quarter of a percentage point today and Hong Kong cut its rate to 2 percent after China lowered its interest rate to 6.93 percent yesterday.

The Bank of Japan did not cut interest rates, but it did put $20 billion into its financial system.

In Tokyo, the Nikkei 225 dropped 0.5 percent to 9,157.49 but the Topix index added 0.68 percent to 905.11 and the Mothers market gained 6.05 percent to 288.13.

Banks were higher, with Mitsubishi UFJ (TYO: 8306; NYSE: MTU) up 1.7 percent while Sumitomo Mitsui (TYO: 8316) gained 7.5 percent.

There were also gains in the electronics sector as Sony (TYO: 6758; NYSE: SNE) was up 5.7 percent and game-maker Nintendo (TYO: 7974; NAS: NTDOY; FWB: NTO) jumped by its daily limit of 13 percent, but retailers were lower after Seven & I (TYO: 3382) fell 8.4 percent and Aeon (TYO: 8267) dropped 11 percent on a decline in operating profit.

Other gainers in the region included South Korea’s Kospi with a gain of 0.64 percent to 11,294.89 while the Hang Seng was up 3.31 percent to 15,943.24 and the Straits Times Index was 3.4 percent higher to 2,102.71.

Markets seeing declines included the Shanghai Composite, which was down 0.84 percent to 2,074.58 while the Taiex fell 1.45 percent to 5,130.71 and in Australia the S&P/ASX200 was 1.53 percent lower to 4,320.9 and the Sydney Ordinaries dropped 1.8 percent to 4,291.3.

Banks were generally higher in the region but saw declines in Australia, while miners were up on the session.

India’s Sensex was closed for a holiday and Indonesia’s markets remained closed after a decline of 10 percent led to a halt in trading yesterday.
In early afternoon trade in New York, the Dow Jones Industrial Average was down 0.82 percent to 9,181.96 and the S&P 500 had dropped 0.97 percent to 975.37 but the Nasdaq Composite was 0.22 percent higher to 1,744.11.

The Nasdaq was helped by a better than anticipated earnings report from IBM (NYSE: IBM), which was up 1.67 percent in afternoon trade.

Carmakers were lower on speculation that $25 billion in government loan guarantees for Ford (NYSE: F) and General Motors (NYSE: GM) might not arrive in time to help them.

Ford was down 10.34 percent while GM dropped 14.62 percent on declines in its sales in Europe and was down 21.6 percent earlier in the session to its lowest level in 58 years.

The oil sector was mixed on further declines in the price of crude oil.

In afternoon trade Marathon Oil (NYSE: MRO) was up 3.52 percent but ExxonMobil (NYSE: XOM) was down 4.16 percent and Chevron (NYSE: CVX) had dropped 4.9 percent.

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