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August 19, 2010    

United Utilities drops on JPMorgan downgrade

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by Elaine Frei
United Utilities drops on JPMorgan downgrade

European equities markets were lower Thursday on data from the US, although news from Europe itself was better, including UK retail sales that were much higher in July than had been predicted, and a new forecast that Germany’s economy will expand by 3 percent this year rather than the previously-predicted 1.9 percent.

The declines came after the US Labor Department reported that first-time unemployment claims jumped 12,000 last week to 500,000 rather than falling by 10,000 to 478,000, as had been anticipated, and on a report from the Philadelphia Federal Reserve that its general economic index is down to -7.7 in August instead of rising to 7 as predicted.

The FTSE 100 was down 1.73 percent to 5,211.29 in London, while the FTSE 250 dropped 0.52 percent to 9,835.08.

Water utilities were lower , with United Utilities (LSE: UU) falling 2.97 percent after JPMorgan Chase cut its recommendation on the water group from “overweight” to “neutral”, while Northumbrian Water Group (LSE: NWG) was down 2 percent and Severn Trent (LSE: SVT) dropped 1.59 percent.

There were only four gainers in the mining sector, led by iron-ore miner Ferrexpo (LSE: FXPO) with a gain of 2.63 percent, while decliners in the sector were led by Vedanta Resources (LSE: VED), which fell 4.78 percent while Petropavlovsk (LSE: POG) dropped 4.72 percent for the worst performance in the sector.

The energy sector was also mostly lower as wind turbine gearbox manufacturer Hansen Transmissions International (LSE: HSN) dropped 10.46 percent for the worst performance in the sector and in London, while Wellstream Holdings (LSE: WSM), which makes pipeline systems for the oil and gas industry did the best in the sector with a gain of 7.5 percent for the best result in London.

Over on the 100, business services provider Serco Group (LSE: SRP) added 2.74 percent for the best performance on the index, while satellite telecommunications group Inmarsat (LSE: ISAT) dropped 5.1 percent after a UBS downgrade from “buy” to “neutral”.

Supermarket chain Morrisons (LSE: MRW) added 1.92 percent to lead gains in the retail sector, while JD Sports Fashion (LSE: JD) dropped 4.88 percent for the worst result in the sector.

Recruiters did well on upgrades from Goldman Sachs as Hays plc (LSE: HAS) added 2 percent on an upgrade from “neutral” to “buy”, while Michael Page International (LSE: MPI) was up 5.83 percent after an upgrade from “sell” to “buy”.

Broadcaster ITV (LSE: ITV) added 7.44 percent on a media report that NBC Universal, which is majority-owned by General Electric (NYSE: GE), could make a bid.

The FTSE Eurofirst 300 was down 1.4 percent to 1,037.71 while the IBEX fell 1.47 percent to 10,238, the Dax was 1.8 percent lower to 6,075.13 and the CAC-40 dropped 2.07 percent to 3,572.4.

Markets in the Asia-Pacific region were higher on the session, led by Tokyo’s markets after reports that the Bank of Japan is thinking about easing monetary policy in order to halt the strengthening of the yen, which has been hurting exporters.

The Nikkei 225 added 1.32 percent to 9,362.68 in Tokyo, while the Topix index was up 1.05 percent to 843.98 and the Mothers market gained 1.94 percent to 379.04.

Toyota Motor (TYO: 7203) added 1.8 percent on the possibility that the Bank of Japan will take steps to weaken the yen, while Mazda Motor (TYO: 7261) was up 3.6 percent even though it is in the midst of recalling more than half a million cars around the world due to issues related to power steering systems.

In the real estate sector, Mitsubishi Estate (TYO: 8802) gained 3.4 percent on reports that low mortgage rates will continue.

The S&P/ASX200 added 0.09 percent to 4,479 in Australia, while the Sydney Ordinaries gained 0.13 percent to 4,509.6.

Taiwan’s Taiex was up 0.06 percent to 7,928.94, the Hang Seng added 0.24 percent to 21,072.46 in Hong Kong, the Shanghai Composite was 0.81 percent higher to 2,687.98, the Straits Times Index gained 0.94 percent to 2,946.77 in Singapore, South Korea’s Kospi was up 1 percent to 1,779.64 and the Sensex gained 1.08 percent to 18,454.94 in India.

New York markets were lower on the jump in first-time unemployment claims to their highest level in nine months, and on the reports showing a contraction in manufacturing in the Philadelphia region, with the Dow Jones Industrial Average down 1.67 percent to 10,241.7 percent in midday trade, while at the same time the S&P 500 fell 1.9 percent to 1,073.32 and the Nasdaq Composite was 1.81 percent lower to 2,175.49.

The Nasdaq decline even though security software manufacturer McAfee (NYSE: MFE) added over 50 percent on the news that chipmaker Intel Corp (NAS: INTC) made an offer.

Crude oil prices were down more than $1 per barrel in midday trade in New York, while metals prices were mixed, as gold traded higher at $1,234.20 per troy ounce at 12:45 p.m. local time but the Philadelphia Federal Reserve report on manufacturing hurt copper prices.

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