15/10/07

In economic news, retail sales jumped 0.6 percent in September, double what they rose in the previous month and above forecasts. Sales, excluding autos, rose 0.4 percent, after falling 0.4 percent in the previous month. Economists expected sales would rise 0.3 percent.

The Producer Price Index rose 1.1 percent in September, after falling 1.4 percent in the previous month, topping estimates. The so called PPI rose 0.1 percent, short of forecasts. Core PPI rose 0.2 percent last month. The University of Michigan's consumer sentiment index fell to 82 in early October from 83.4 at the end of September. Economists thought it would rise to 84. Inventories rose 0.1 percent in August after rising 0.5 percent in July. Economists thought inventories would rise 0.3 percent.

In corporate news, Oracle made a $6.7bn bid for software maker BEA Systems. The all cash offer would represent a 25 percent premium over BEA's closing price Thursday. However, BEA said in the afternoon that it had rejected the offer, which it says undervalues the company, a move that could set up a bidding war between Oracle and rival SAP. Oracle shares were unchanged, while BEA jumped 38 percent.

General Electric reported higher quarterly earnings that met estimates. However, investors took a sell the news approach and sent shares of the company lower.

General Motors rose after the company reported strong third quarter sales in Latin America and other international regions. The company also continued to benefit from news Wednesday that its union has ratified a new four year labor contract. On that same day, the union extended a strike against Chrysler and there is optimism about how Ford Motor will fare when it talks with the union next week. Ford shares jumped 5 percent.

McDonalds said third quarter earnings will top earlier forecasts, thanks to strong global sales. The company also reported a 5.9 percent rise in September sales.

Treasury prices slumped, raising the yield on the 10 year note to 4.68 percent from 4.63 percent.

COMEX gold for December delivery fell $2.90 to $753.80 an ounce.

The Nikkei closed 27 points higher today at 17358.2 as Tokyo Electron rose on a brokerage report, helping other chip related stocks gain, but TDK Corp declined after JP Morgan downgraded the stock. Mitsubishi UFJ Financial Group and other bank shares fell ahead of earnings from US financial institutions, weighing on the broader TOPIX index. Nintendo Co hit a lifetime high and surpassed Y10trn in market value, flying high on expectations that its DS and Wii game machines will beat rival game gear in the year end shopping season. Investors held back ahead of a series of earnings from US firms including banks such as Citigroup and JP Morgan Chase and technology firms such as Intel Corp and IBM. Tokyo Electron rose 2.9 percent to Y7,510 after JP Morgan Securities kept its overweight rating and a Y15,000 price target for the company, even though the company missed its orders outlook in July-September.

Other chip related stocks also rose with Advantest Corp jumping 6.4 percent to Y3,850 and NEC Electronics up 2.9 percent at Y3,500. Softbank Corp rose 3.5 percent to Y2,630, as the markets recent advances improved sentiment among individual investors. Mitsubishi UFJ Financial fell 3.7 percent to Y1,127 and its rival Mizuho Financial Group lost 1.8 percent to Y655,000.

UK stocks closed at their highest level on Friday to reverse earlier losses as Northern Rock dipped in and out of negative territory and oil companies lent support. The index closed 6.2 points higher at 6730.7, as US markets rose after data showed better than expected September retail sales. Northern Rock added 5.9 percent after Richard Bransons Virgin Group led a consortium to take over the bank. The consortium submitted a rescue plan that will rename and rebrand Northern Rock to Virgin Money with a substantial cash sum injected into the company for new equity to be issued at a discount to the current share prices.

Oil stocks were strong as US crude held at around $83 a barrel on supply concerns over mounting tensions between Turkey and northern Iraq. M&A activity in the sector also provided a boost. BG Group gained 1.5 percent as traders cited talk that Royal Dutch Shell and Gazprom may bid for the company. The rise followed a report in the FT that Shell or Petrobras may be looking at the firm.

BP rose 4.3 percent, adding to a 2.3 percent gain in the previous session after the company outlined a plan to address industry lagging profitability by slashing management layers, adopting consistent procedures for developing oil and gas fields and reducing unacceptably high costs, traders said. An upgrade to buy from add from Evolution Securities also lifted BP shares.

Resolution added 2.4 percent and Friends Provident gained 0.6 percent after media reports that Swiss Re is conducting due diligence on takeover target Resolution. The FT also reported that Standard Life is looking for a partner to support it in a possible bid for Resolution Life.

Economics
UK DCLG house prices( Aug) 09.30 bst

The DCLG (formerly ODPM) House price index is the last of the house price indices to be released. Most of the housing indicators are looking decidedly weaker, but this index has remained upbeat. This is partially because it is lagging but also because it is a value weighted index and so places more weight on the London property market, which is outperforming the rest of the UK. A small tick down in the annual rate is expected

US Empire manufacturing (Oct) 13.30 bst

Last months' Empire Index fell to 14.7 from 25.1 with new orders slowing to 13.6 from 22.2 and shipments falling to 5.1 from 28.8. The Employment Index was healthy, rising to 18.2 from 11.6. This months Headline Index is expected to decelerate further to 11, which would be consistent with around 53 for ISM Manufacturing.

The details published in this e-mail are intended for information only and should not be construed as advice under the Financial Services and Markets Act 2000. Aventus Capital Management will not accept responsibility for any actions taken (or not taken) on the basis of information published in this e-mail.

Aventus Capital Management is a trading style, "Aventus" is a trade mark and the Aventus logo is a registered trade mark of Rickerbys Solicitors. Rickerbys is regulated by the Solicitors Regulation Authority. Authorised and regulated by the Financial Services Authority.