US & World News

Oil prices have come down sharply on Tuesday on the New York market, signing their second straight session of declines and displaying the entire month of August, their first monthly decline since May.

The October contract on the U.S. light crude ended down $ 2.78, or 3.72%, to $ 71.92 a barrel on the New York Mercantile Exchange.

At the time of closing in New York, a barrel of Brent crude fell by $ 2.11, or 2.75%, to 74.49 dollars.

Throughout the month, a barrel of crude oil shows a decline of 7.03 dollars, or 8.9%, the largest decline in percentage terms since May

Oil prices are hurt by concerns about slowing growth, weak demand and rising inventories.

"The volatility associated with the end of the month has lowered future today," said Mark Waggoner of Excel Futures.

Traders now await the figures of the American Institute of Petroleum on a weekly inventory in the U.S. that must be disclosed in the evening.

Spanish airline Iberia has reported an operating loss Friday in weaker than expected due to higher demand for passenger transport and air freight to offset the negative impact of the ash cloud of April.

Iberia, which plans to merge with British Airways by the end of the year, said he had lost 72 million euros in the first half, against a consensus at 88 million euros.

"Aside from the expected recovery in air traffic, which has really supported these positive results was the significant improvement in yields," commented Elena Fernandez, an analyst at Ahorro Corporacion Spanish broker.

Yields of Iberia, ie the revenue generated per passenger on each mile flown, grew 7.8% in the first half.

Iberia estimated 20 million losses generated by the interruption of traffic caused by the ash cloud of April.But analysts say the real impact is not necessarily so bad.

"They could also sell tickets more expensive during this period," said Elena Fernandez.

In the second quarter alone, Iberia posted a net profit, ending six consecutive quarters of losses.

British Airways, Air France and Lufthansa said they expect to return to equilibrium at the operational level in 2010.

Title Iberia, which took 35% since the beginning of the year in the hope of a successful merger with BA, was down 0.82%) 2.550 Euros while the Spanish stock market index lost 0 27%.

The turnover of the company grew by 2.8% to 2.23 billion euros in the first six months of the year, supported by a rebound in demand for business class and air cargo, while that net losses were reduced to 21 million euros, the company continues to apply stringent cost controls.

The prediction of analysts polled by Reuters gave a turnover of 2.196 billion euros and a net loss of 41 million.

The Indian division of Renault will launch five models from mid-2011 and mid-2013 to meet growing demand in this rapidly growing market, said Thursday the French carmaker's CEO for India, Marc Nassif .

The small vehicles, built on the platform of its Japanese partner Nissan, launched in 2012, he said on the sidelines of a conference on the automobile.

He said that the cars in question are sold under the Renault brand at a competitive price.

The Renault-Nissan is also working with the specialist Indian two-wheeler Bajaj Auto to build a low-cost car to be launched by end 2012.

Marc Nassif has also said he set the objective of selling 75.000 vehicles in India in 2013.

The economic recovery in the euro area slowed slightly in August but companies are more optimistic for the months to come despite differences between countries in the region, show the first results of Monday's monthly survey Markit.

The PMI services, calculated on the basis of responses from purchasing managers of nearly 2,000 firms in the euro area fell slightly to 55.6 against 55.8 last month, but it is slightly better that 'expected as economists polled by Reuters had expected the average to 55.5.

It is over for the twelfth consecutive month the 50 between expansion and contraction of activity.

If growth slows, firms in the services sector, dominant in the 16 countries using the euro as their currency, appear rather more optimistic about the future, the business expectations index falling up to 68 1 after 66.5 in July.

"The recovery still has some momentum but we will witness a slowdown from the exceptional figures observed in the second quarter," warns Rob Dobson of Markit.

France and Germany, the two largest economies in the euro area, strongly rebounded in the second quarter, but this trend was not found in Spain and Italy.

"THE TAKEOVER COULD BEGIN TO SLOW DOWN"

Activity in the industrial sector has also slowed.The PMI manufacturing index is indeed stood at 55.0 in the first estimate in August against 56.7 in July, while economists polled by Reuters had expected 56.2.

The sub-index of production rose from 58.7 in July to 57.2 in August.

The composite index combines the two sectors, fell to 56.1 against 56.4 expected and 56.7 in July.

"The PMI decline in August in the euro area is a sign that the recovery could begin to slow," said Jennifer McKeown of Capital Economics.

"The decline was mainly driven by declines in the index of the manufacturing sector, particularly in Germany, suggesting that the weakening global demand could affect the resumption of exports, as was feared."

If companies continue to recruit, the pace of hiring slowed slightly from July, as the index of employment in manufacturing rose from 51.1 last month to 51.0 in August.

Economic growth in the euro zone came out at 1.0% in the second quarter, more than expected, but it should slow to 0.4% for the period July to September and 0.3% for the three months year.

ADDICTION TO GERMANY AND FRANCE

Especially, the growth differences between countries in the region have increased compared to previous periods.

"We note that (growth) is highly concentrated in the major nations, it has not extended to other peripheral nations and, in many respects, this gap is widening," said Rob Dobson.

"It's the same as in the second quarter, which saw a solid growth, particularly in Germany and to a lesser extent in France, marking a certain imbalance in relation to performance rather mixed for the Spain, Italy and Greece.So, apart from the two main countries, the situation is average. "

The PMI flash Germany show an acceleration of activity in services and a slowdown in the manufacturing sector, quite contrary to that exhibited by France.

In the euro area, the sub-index of producer prices reached its highest level since October 2008, at 50.3 against 49.4 in July. It is only the second time since October 2008 this indicator appears above 50.

This suggests that companies are now able to pass some of their higher costs to their customers.

Veolia Environnement publishes interim results up, thanks to the rising prices of raw materials recycled, but expressed caution about prospects for recovery of the waste market in the second half.

The world leader in environmental services has estimated that an operational perspective, the second half might look like in the second quarter, during which the situation has improved for his work "clean".

"The economic recovery is still extremely fragile, it is difficult to decide on the level of commodity prices (…), nor even on the level of volumes we observe in the final months of year.That is why we prefer to be cautious, however, said its chief financial officer, Pierre-François Riolacci, during a conference call.

"In activity cleanliness, it is true that we have observed a reversal between the first and second quarters," he said, mentioning in particular "a tremor on the books" in France and the United States.

"We tend to say that the second half might look like in the second quarter, in which case that we would generally quite favorable."

Veolia has reiterated that it was on the full year free cash flow positive after dividends and an increase in its recurring operating income.

The group also confirmed that it was three billion euros in sales over the period 2009-2011 – from 1.3 billion achieved in 2009 and 766 million in the first half of 2010 – and was continuing the implementation of a savings program overall 250 million for 2010.

VEOLIA-TRANSDEV COULD ENTER STOCK MARKET TO 2ND HALF 2011

Pierre-Francois Riolacci said the group would "do everything to exceed" its savings target and that the transfers could exceed one billion euros this year.

In the first six months of the year, the savings program has contributed to the growth of cash flow (CFO) operational Veolia up to 132 million euros.

The Chief Financial Officer also considered that the proposed merger with Transdev in the passenger could be completed by year end or early 2011.

"The most likely scenario (from the IPO of the new entity) is the second half of 2011.This is our central scenario, "he said.

Veolia in the first half net profit group share of 374 million euros (+69.9%), an operational CFO 1,885,000 (+0.2% at constant exchange rates), operating profit of 1.125 million ( +7.9% at constant exchange rates) and a turnover of 17.177 million (-3.3% at constant exchange rates).

According to the consensus reached by the editor of Reuters, analysts on average expected a net profit of 346 million euros, an operating cash flow of 1.908 million and a turnover of 16.924 million.

Recurring operating income of Veolia appears in turn to 1.078 million euros at 30 June, an increase of 6.6%.

At 9:30, the track was down 1.84% at 21.30 euros while the CAC 40 gained 0.69%. Analysts based in London, "the weak economy continue to weigh on the figures in the second half."

The group's net financial debt stood at 16.027 million euros at June 30th against 15.127 million in late 2009, largely because of an unfavorable effect of foreign exchange of 674 million.

Schneider Electric has raised its margin target for 2010 after the publication of a double-digit growth in sales in the second quarter thanks to the performance of emerging countries which still support the group in the second half.

In this context, the company says it should achieve in the second half of the year an increase in organic revenue "broadly comparable to that of the first half.

Schneider Electric is now an EBITA margin of around 15.5% before restructuring costs and impact of consolidation of Areva Distribution.

So far, the group anticipated an improvement in EBITA margin of approximately 14% before restructuring costs and impact of integration Areva Distribution, against 12.9% in 2009 and 16% in 2008.

Schneider, the world leader in low voltage electrical equipment and number two for medium voltage, has reported an EBITA before restructuring and integration charges of Areva Distribution of 1.301 million euros in the first half, up 44%.

Its margin is increased 3.6 points to 15.2%.

The net result has been doubled to 735 million euros.

Turnover increased by 10.5% in the first semester of € 8.571 million (6.4% organic), including 4.661 million in the second quarter, organic growth of 10.2%.

Jean-Pascal Tricoire, chief executive of the group, said he has received "the diversification of (its) end markets, industrial markets and data centers were the first to rebound."

He added in a statement that "the new dynamic economies continue their solid with double digit growth.

Schneider Action closed Thursday at 86.4 euros, giving a market capitalization of around 23 billion euros. Since the beginning of the year, the stock has gained about 5.7% after being awarded more than 54% throughout 2009.

So few banks have failed this test of strength by 91 European institutions passed that investors should focus on groups which narrowly passed the test when markets open Monday.

Only seven European banks have failed these tests, including five Spanish settlements, and may need to raise 3.5 billion euros of capital, significantly less than expected.

However, quality testing, to assess the resilience of banks to a new recession over the next two years, has been criticized, including some judging too easy.

The results of these tests has also been somewhat overshadowed by a plethora of data on European economies suggesting that banks may face less severe economic pressures and defects on smaller loans previously imagined.

Accordingly, investors should make their own judgments on a case by case, largely due to additional data from tests such as those for the portfolios of sovereign debt, to determine what could be the next sector weaknesses.

QUESTIONS ON THE SEVERITY OF SELECTED SCENARIOS

"With so few banks have failed, investors will question whether the economic scenarios have been sufficiently severe," said Jon Peace, an analyst at Nomura.

"It is natural for investors to consider the margin with which banks have gone," he adds, citing the large margin of success of Scandinavian and British institutions, while banks Greek, Spanish and Italian 's have come out with more difficulty.

Then he was asked banks to manage to maintain a solvency ratio of less than 6% to pass the test, Sept. 10 institutions reported a Tier 1 ratio between only 6 and 7%.

Among these facilities include Deutsche Postbank, Piraeus Bank, Allied Irish Banks, Monte dei Paschi di Siena, Banca UBI, Bankinter and eight small Spanish settlements.

If an objective test was to facilitate the financing contracts with banks recently met with difficulties in this area, schools still considered too risky could nevertheless continue to have problems, except to raise more capital.

"History is not necessarily complete, and if financing costs do not improve for some banks, then we would not be surprised to see additional resistance tests (carried out) by some central banks to future, "warns Jon Peace of Nomura.

As investors take position on the results of resistance testing Monday at the opening of markets, central bank governors and heads of Supervisors will meet in Switzerland to discuss the reform proposals on the strengthening of the capital own banks.

But after their success in tests of strength, European banks may find it difficult to argue that they can apply a stricter financial regulation.

"Banks are ready to begin implementing the new rules are necessary to strengthen the capital reserves and liquidity management of banks," also told Reuters Insider, after the publication of results of resistance testing, Vitor Constancio, Vice-President of the ECB.

The Dutch chemical group Akzo Nobel announced that it will continue to monitor its costs despite having already reached its 2011 margin target and announced quarterly results exceeded expectations.

Around 7:15 GMT, Akzo Nobel has risen by 3.33% to 45.765 euros, while the index grouping the European chemical values yielded 0.34%.

The first painting company in the world said it had reached its goal in the second quarter EBITDA margin for 2011, set at 14%.

Its earnings before interest, taxes, depreciation and amortization (EBITDA), excluding items, rose to 614 million euros, thanks to rising demand and cost reduction.

The nine analysts polled by Reuters had expected a net profit of 576 million euros. During the same period the previous year, the group had reported an EBITDA of 506 million euros.

"The developed markets remain difficult. The pressures on prices of basic materials and shortages are expected to continue in the third quarter.We will keep a watchful eye on the market environment and the costs will continue to be managed aggressively, "said Chief Executive Hans Weijers, in a statement.

The chief financial officer Keith Nichols said it expected an increase in material prices between 4% and 5% this year but it believes that the situation should start to improve from the end of the third quarter, which should not threaten margins.

Akzo Nobel said it would inform investors of his future ambitions September 28 in London.

In the second quarter, its revenue increased 13% to 3.9 billion euros, exceeding analysts' expectations which projected sales of between 3.58 and 3.8 billion euros.

U.S. rivals PPG and Sherwin-Williams also beat the consensus in the second quarter but they were cautious for the remainder of the year.

His rivals in the Benelux, DSM and Solvay, must publish their quarterly Thursday and Aug. 3, respectively.

Crude prices have come down on Wednesday after the announcement of an unexpected rise in crude inventories in the U.S. and very cautious statements of the President of the U.S. Federal Reserve on the economic situation.

On the New York Mercantile Exchange, crude for delivery in September ended a decline of $ 1.02, or 1.31%, to 76.56 dollars a barrel.

U.S. crude reserves rose 400,000 barrels last week, when economists expected a drop instead of 1.4 million barrels.

In addition, the chairman of the Fed Ben Bernanke said Wednesday that the Fed was ready to take additional measures as necessary to sustain growth given the high level of uncertainty.

ZenithOptimedia noted for his third consecutive growth forecast for global advertising market this year after surprisingly strong spending by advertisers in the U.S. and Europe in the first half.

The agency purchases of space, a subsidiary of Publicis, now expects growth of 3.5% in 2010 against 2.2% previously, considering that all regions should show some growth, even Europe West.

For France, ZenithOptimedia has raised its forecast to 1.7% in 2010 against 1.1% previously, largely thanks to television which has greatly benefited from the opening to competition of Paris and gambling Online.

"The bulk of the upward revision is in North America and Western Europe (…), But these regions grow more slowly than most emerging countries, "ZenithOptimedia said in a statement, adding that emerging countries should support the growth of the global advertising market in the coming years.

The agency expects growth of 2.4% in 2011 and 2.9% in 2012 in industrialized countries, compared to respective rates of 9.1% and 9.8% expected in emerging markets, with support from Asia-Pacific and Latin America.

For the global market, ZenithOptimedia has raised its growth forecast from 4.1% to 4.5% this year and confirmed its expectations of a 5.3% rise in 2012, after a fall of 10.3% in 2009.

ZenithOptimedia now expects a solid growth of 2.2% in Western Europe this year, despite concerns about the debt of countries in the euro area, against 0.4% previously.It anticipates a gradual increase in advertising spending in 2011 and 2012, according to the request after the entry into force of austerity plans.

HEXAGON A CONTRARIO IN 2011

In France, where business confidence is wavering, the agency expects a slowdown in market growth in 2011 and 2012, unlike the global trend.

The strongest contrast in the forecast from ZenithOptimedia North America, where the agency now expects growth of 1.3% instead of down 1.5%, benefiting from a strong recovery in demand and consumer confidence.

Television has gone through the crisis relatively well advertising, consumers tend to spend more time at home with the development of new technologies such as HDD recorders. Even more dominant in emerging markets, the television should represent 40.8% of the global advertising market in 2012 against 39.2% in 2009.

Internet advertising spending, third medium after television and press, expected to reach 17.1% in 2012 against 12.7% in 2009 to promote the growth of mobile internet and social networks.