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August 11, 2010    

Micro Focus International drops 28 percent on revenues, downgrade

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by Elaine Frei
Micro Focus International drops 28 percent on revenues, downgrade

European equities markets were lower Wednesday, a day after the US Federal Reserve said that economic recovery in the United States will proceed more slowly than previously predicted, and after the Bank of England also cut recovery projections.

The FTSE 100 was down 2.44 percent to 5,245.21 in London, while the FTSE 250 fell 2.24 percent to 9,854.49 after the Bank of England not only reduced its outlook on economic growth in the UK but also said that inflation will undershoot the Bank’s target in 2012.

Meanwhile, Nationwide Building Society said that UK consumer confidence dropped in July, the third consecutive month of declines.

The biggest decline in London came from business-software maker Micro Focus International (LSE: MCRO), which fell 28.4 percent on the 250 after it said revenues were flat in its fiscal first quarter and cut its sales outlook for the full year, while Evolution Securities Ltd cut its recommendation on the company from “neutral” to “sell”.

Banks were lower, with the biggest decline coming from Lloyds Banking Group (LSE: LLOY), which fell 6.78 percent for the biggest drop in the 100, followed by Barclays Bank (LSE: BARC), which was down 6.01 percent as it traded ex-dividend.

There were only two gainers in the mining sector, where Randgold Resources (LSE: RRS) added 0.46 percent and Centamin Egypt (LSE: CEY) was up 0.12 percent, while the biggest decline in the sector came from iron-ore miner Ferrexpo (LSE: FXPO), which fell 6.46 percent, followed by Kazakhmys (LSE: KAZ) with a decline of 5.88 percent.

There were no gainers in the energy sector as oil prices declined, with Heritage Oil (LSE: HOIL) seeing the biggest decline as it fell 21.36 percent, followed by a 6.67 percent drop for Melrose Resources (LSE: MRS).

Travel agents were lower, led by TUI Travel (LSE: TT), which was down 6.45 percent while Thomas Cook Group (LSE: TCG) was 1.63 percent lower after it reported a loss in the previous nine months, which it blamed on travel interruptions caused by the cloud of volcanic ash that hovered over Europe earlier in the year.

Facilities manager Connaught (LSE: CNT) led gains in London for the second session in a row as it added 16.49 percent on the 250, while specialty engineers Smiths Group (LSE: SMIN) gained 3.92 percent to lead gains on the 100.

The FTSE Eurofirst 300 was down 1.95 percent to 1,041.71 while the Dax fell 2.1 percent to 6,154.07, the CAC-40 was 2.74 percent lower to 3,628.29 and the IBEX dropped 3.21 percent to 10,374.8.

Markets in the Asia-Pacific region were lower on concerns that a slowdown in China’s economy will spread to other countries in the region.

The main exception was China’s Shanghai Composite, which added 0.47 percent to 2,607.5 despite declines in banks on the chance that new data showing that growth in the manufacturing sector is slowing will prompt the government to relax monetary policy there.

Banks declined in China after the government told them the must transfer off-balance-sheet loan packages which had been sold as securities back onto the books by the end of next year, and that they must make provisions in case the borrowers default on the loans.

The bank had made the off-the-books arrangements in order to reduce the amount of capital they were required to keep on reserve.

The Nikkei 225 was down 2.7 percent to 9,292.85 in Tokyo, while the Topix index was 2.37 percent lower to 834.45 and the Mothers market dropped 1.6 percent to 377.71.

Only 5 stocks on the Nikkei gained on the session after a new report showed machinery orders in Japan up just 1.6 percent in June, against an expected gain of 5.4 percent.

Industrial robot maker Fanuc (TYO: 6954) was down 4.4 percent, hurt along with other exporters by a stronger yen versus both the US dollar and the euro.

Consumer electronics giant Sony (TYO: 6758) fell 2.8 percent and camera and copier maker Canon (TYO: 7751) was down 3.3 percent.

Carmakers Toyota Motor (TYO: 7203) and Honda Motor (TYO: 7267) dropped 1.8 percent and 3.3 percent respectively.

Drug store operator Matsumotokiyoshi Holdings (TYO: 3088) fell 11.4 percent after it reported a quarterly net loss.

Elsewhere in the region, the Sensex fell 0.82 percent to 18,070.19 in India, Hong Kong’s Hang Seng was down 0.83 percent to 21,294.54, the Taiex dropped 1.02 percent to 7,895.03 in Taiwan, Singapore’s Straits Times Index was 1.17 percent lower to 2,949.26 and the Kospi fell 1.29 percent to 1,758.19 in South Korea.

The Sydney Ordinaries dropped 1.83 percent to 4,479.7 in Australia, while the S&P/ASX200 was 1.88 percent lower to 4,455.5.

New York markets were lower in midday trade as investors worried about economic growth.

At just before 1 p.m. local time, the Dow Jones Industrial Average was 2.31 percent lower to 10,398.59 while the S&P 500 had dropped 2.75 percent to 1,090.18 and the Nasdaq Composite was down 3.14 percent to 2,205.73.

Oil prices were lower again, with West Texas Intermediate down more than $2 per barrel at midday, while metals prices were also lower.

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