Royal London says new business up 10 percent in 2006

Permalink: Royal London says new business up 10 percent in 2006 by Elaine Frei

Royal London, the UK’s largest provider or mutual life and pensions coverage, said that it saw a 10 percent jump in new business in 2006. Single premium business was up to £491million from £469.1 million, while regular premium sales to individuals was lower, dropping from £186 million to £156 million last year. These results came in a year when demand has been strong generally.

Growth could have been higher, according to the company, but it is hesitant to pay high commissions for new business that it does not keep on the books long enough to turn a profit. It does not believe that new business that does not stay on the books for longer than four or five years is not a suitable business model because it is simply not profitable.

This is especially true, the company’s chief executive said, of the pensions market, which is very price-competitive. Because most pensions business is sold as a stakeholder product, if the buyer finds a better price and changes to a new plan with a new company, the company he or she is currently with must transfer the lump sum to the competitor without being able to deduct the cost of setting up and selling the pension. As it is, it can take 10 years or longer for a provider to replace the full cost of setting up a pension with the 1 percent management charge for Stakeholder Pensions.

ING Direct under fire for lagging rates

Permalink: ING Direct under fire for lagging rates by Elaine Frei

ING Direct has been the target of criticism recently for not passing on recent interest rate hikes from the Bank of England on to the 1.1 million holders of its savings accounts. When it launched its much-advertised savings main savings account in 2003, it said that it was determined to keep it as the best account available. However, it has now admitted that the current rate on the account, at 4.75 percent, is not the best rate available - Landsbanki’s Icesave account currently pays 5.7 percent - while saying that it will not change the rate on that account.

Instead, the savings provider has created another savings account, available only on the internet and called Web Saver, and that the rate on that account will go from 5.25 percent to 5.65 percent. This new account is touted as being for those who wish to manage their savings online and is only available to existing ING Direct customers.

ING blamed its delay in addressing the issue on it being “a big call” for them, and that changing rates is a big decision when it is dedicated to paying all customers a good rate. However, at least one analyst said that ING will likely continue to face criticism for its delay in introducing a higher-yielding account and in keeping the original account at the same rate, given their statements at launch.

New York markets gain on Fed decision, other markets see declines

Permalink: New York markets gain on Fed decision, other markets see declines by Elaine Frei

In Japan on Wednesday, the Nikkei 225 dropped 0.6 percent to 17,383.42, while the Topix index fell by the same percentage to 1,721.96 as some sectors were hit by profit-taking again. Shippers were also hurt by rising oil prices, while Nikko Cordial was hit by another setback connected to continuing accounting irregularities.

In Europe, the FTSE Eurofirst 300 was also lower, falling 0.5 percent to 1,514.65. Earnings and broker comments were key to the day. The steel sector was higher on consolidation hopes after the sale of Corus while Italian banks gained, also on merger news and broker comments.

London, too was lower on the session, with the FTSE 100 0.6 percent lower to 6,203.1 and the FTSE 250 down 0.3 percent to 11,100.3 as trade volumes picked up to more than 3.5 billion shares traded. Gainers on the day included miner Kazakhmys, on the possibility of stake building in the Eurasian National Resources Corporation. Corus also gained on the day on the news that it was being bought by Tata Steel.

New York markets bucked the trend and gained ground in mid-afternoon trade after the Federal Reserve decided to keep US interest rates at 5.25 percent for the time being. The Dow Jones Industrial Average was 0.7 percent higher to 12,607.67, while the Nasdaq Composite added 0.4 percent to 2,457.81 and the S&P 500 gained 0.4 percent to 1,435.04. The Dow was also helped by a better than anticipated quarterly report from Boeing. Time Warner and Eastman Kodak also issued positive reports.

In currency markets, the US dollar was lower versus the euro after the Fed’s decision, while sterling was also weaker. The Swiss franc made gains against both the greenback and the euro. The yen was also higher.

Oil prices rose early, fell right after the US Energy Information Administration issued its weekly inventories report, then were up again my mid-afternoon in New York. Crude oil and gasoline stockpiles were higher last week, but distillates were down on higher demand for heating oil as cold weather set in to the US Northeast and Midwest. Metals prices were also higher on the session.

UK civil servants strike over privatization, pay issues

Permalink: UK civil servants strike over privatization, pay issues by Elaine Frei

Civil servants and state employees in the UK remained away from their jobs on Wednesday over concerns about wages, job cuts, and privatization of government services. The Public and Commercial Services Union said that public services are being disrupted over the Treasury’s determination to cut 100,000 civil service and public sector jobs. Public sector employees are also upset that Chancellor Gordon Brown is insisting that pay raises for public sector positions be limited to the Bank of England’s inflation target of 2 percent. The strike, scheduled for 24 hours, could be followed by further actions if its concerns are not addressed, the PCS has said.

The current action has halted the processing of tax returns on the day that they are due and have reportedly prevented the delivery of at least one batch of returns to Revenue & Customs offices, possibly causing those taxpayers to be fined £100 for missing the deadline. Benefits offices were closed, and court proceedings - including the trial of six alleged terrorists - were put on hold. Picket lines set up by the union were also expected to close museums and galleries, including the British Library and the National Gallery. Union members were also expected to picket government departments.

The union’s demands include an end to the government’s efficiency drive, an end to the privatization of public services, and pay raises for workers that at least meet retail price inflation.

UK home repossession up in 2006, expected to rise again in 2007

Permalink: UK home repossession up in 2006, expected to rise again in 2007 by Elaine Frei

Home repossessions in the UK are expected to rise in both 2007 and 2008, a result of higher interest rates. This comes after repossessions rose by 65 percent in 2006 over their number in 2005. According to the Council of Mortgage Lenders, there were 17,000 repossessions in 2006, a smaller number than the 18,000 that had been anticipated in a December projection.

There were more repossessions in the second half of 2006 - 8,860 - than there were in the first half of the year, when 8,140 homes were repossessed. The Council believes that repossessions could rise to 19,000 this year and to 20,000 in 2008. Repossessions in the UK were at a low in 2004, at only 6,030, but the figure rose to 10,310 repossessions in 2005.

The new data spurred a call from Adam Sampson, the chief executive of Shelter, a homeless charity, for lenders to be more responsible for the loans they make. With the Bank of England raising interest rates three times since autumn, it has made it more difficult to pay their mortgages. Mr. Sampson said that rising interest rates, coupled with a shortage of housing in the UK, are causing more families to have to pay more than they can afford to become homeowners. This causes what he referred to as “thousands of hard working families” to face the possibility of becoming homeless.

Eurofirst, Wall Street, London markets see gains; Tokyo mixed

Permalink: Eurofirst, Wall Street, London markets see gains; Tokyo mixed by Elaine Frei

World equities markets were mixed but mostly higher on Tuesday. Europe, London and Wall Street all saw gains, but the Tokyo markets were mixed.

In Tokyo, the Nikkei 225 was 0.1 percent higher to 17,490.19. The Topix index, however, dropped 0.1 percent to 1,731.60 and the Mothers market of small and mid-caps fell 3.5 percent to 1,181.13 on profit-taking. Steel was mostly lower on disappointment with outlooks, while consumer finance dropped on losses. Export sectors were mixed on profit-taking, but the securities sector saw gains on quarterly results which were down from last year but better than the previous quarter.

The FTSE Eurofirst 300 added 0.4 percent to 1,522.33. Airlines were higher on recent lower oil prices and on mergers & acquisitions news. Machinery manufacturing was also higher, but the telecommunications sector was mixed and pharma dropped on bids rumors.

In London, the FTSE 100 added 0.03 percetn to 6,242 and the FTSE 250 gained 0.2 percetn to 11,131. Miners were higher, and in the supermarkets sector J Sainsbury gained after rumors that it is a target of a private equity house. The energy sector was mixed, with British Energy lower on rumors of problems at some of its nuclear power stations as well as on falling wholesale prices for power.

In mid-afternoon trade in New York, equities markets were up ahead of a decision from the Federal Reserve on interest rates, due Wednesday. The Dow Jones Industrial Average was 0.2 percent higher to 12,426.95, while the Nasdaq Composite was also up 0.2 percent, to 2,446. The S&P 500 added 0.45 percent to 1,426.95. At the height of the earnings season, reports were mixed. Airlines were down after gains earlier in the day. The pharmaceuticals sector and stock exchange operators also saw losses.

In the currency markets, the yen was flat versus the US dollar and the euro, while sterling was stronger versus the greenback and the shared currency even though house price growth slowed in January. The US dollar remained range bound, while the Swedish krona gained on higher retail sales in December.

Crude oil prices were higher on a report in the Wall Street Journal that Saudi Arabia will cut production again on February 1and forecasts of cold weather in the Northeast US through mid-February. In metals markets, gold was range bound while most base metals were lower with nickel dropping 4.4 percent. Copper was the main exception, with prices higher on lower inventories.

Prudential sells Egg to Citigroup

Permalink: Prudential sells Egg to Citigroup by Elaine Frei

UK insurer Prudential has sold internet bank Egg to Citigroup for £575 million, £375 million less than the value assigned it by Prudential when it bought out minority shareholders a year ago. Prudential decided to sell due to growing losses for Egg. The bank lost £145 million last year, higher than previous estimates.

Citigroup purchased the internet bank for 40 percent less than the business had been valued a year ago. Prudential has defended the low selling price by citing losses due to growing bad debts on personal loans. The sale is part of a review of Prudential’s business which has been interpreted by some analysts as ripe for break-up.

Analysts said that Prudential’s decision to sell now, and at this price, was a good one and that the insurer could not have gotten a better price. They argue that waiting for a better price would have required an additional infusion of capital that might not have gone over well with shareholders.

In announcing the purchase, Citigroup says it plans to retain the bank’s name and will offer a wider range of services to UK customers than Prudential had provided. Citigroup also says that it expects to make Egg profitable in short order, using its experience in lending to consumers with less than ideal credit histories.

As part of the sale, Prudential will continue to provide Egg customers with pensions and life assurance products for five years and Citigroup will distribute Prudential life assurance products in parts of Asia.

House price inflation cool at 0.3%

Permalink: House price inflation cool at 0.3% by Administrator

The Nationwide has reported that property inflation for January was a cool 0.3%.

This represents the lowest growth in property prices for 8 months, and cuts the previous 12 month inflation to 9.3%, down from December’s figure of 10.5%.

On a three-monthly indicator, prices were running at a growth of 3.3%.

The Nationwide attributed recent interest rate rises as a key factor in the cooling, and figures from the Bank of England indicate that there was a significant drop in house sales through December.

Despite the latest figures, general expectations are that short supply of housing will keep the UK property market relatively bouyant through 2007, with a general slowdown rpedicted for 2008 onwards.

However, the housing market so far has proved difficult to predict, with most analysts predicting a slowdown in 2006 when in fact the market accelerated.

It remains to be seen what impact the surprise rise in interest rates to 5.25% in January may have on the general property market through the year, especially as further rate rises remain a possibility.

FSA fines GE Capital over PPI

Permalink: FSA fines GE Capital over PPI by Administrator

In an ongoing investigation by the Financial Services Authority (FSA) over Payment Protection Insurance (PPI), and the possible mis-sale of policies, GE Capital Bank Ltd (GECB) has been fined £610,000.

GE Capital mainly provides finance via branded store cards, credit cards and sales finance - including PPI.

However, the FSA ruled that GE Capital had failed to “have adequate systems and controls for selling insurance” and for failing to “treat its customers fairly”.

A particular complaint was that even when branded store cards were used, customers would receive sales calls from GE Capital even after they had declined PPI at the store.

In 2005 alone, over 850,000 policies which included PPI were sold on its behalf by an estimated 300,000 retail staff.

The FSA is currently in the middle of a two-year investigation into the selling of PPI policies, and is reviewing the procedures of over 200 companies supplying PPI policies.

GE Capital received a 30% discount on its fine by settling early and applying corrective procedures in place.

US banks mixed on merger news, rumors

Permalink: US banks mixed on merger news, rumors by Elaine Frei

New York equities markets were slightly higher on Monday. By midday, the Dow Jones Industrial Average was up 0.1 percent to 12,504.88, while the Nasdaq Composite had gained 0.15 percent to 2,439.12 and the S&P 500 added 0.04 percent to 1,422.71.

The banking sector was mixed on mergers news and rumors. First Republic Bank added 40.2 percent to $53.69 after Merrill Lynch announced that it would buy the bank. Merrill Lynch dropped 1.5 percent to $93.15. Bank of America dropped 1 percent to $51.50 and Countrywide Financial added 4.3 percent to $43.80 on investor reaction to a Friday report that the two were in talks about a merger. Meanwhile, Citigroup was 1.1 percent lower to $54.07 on the announcement that it will purchase Egg Banking from Prudential in the UK.

In the semiconductors sector, Intel gained 2.1 percent to $20.96 after it said it has had success in making, smaller, more powerful microchips.

Pharmaceutical company Bristol-Myers Squibb added 5.9 percent to $27.75 on rumors of a buyout.

Tyson Foods was 3.8 percent higher to $17.33 after it said that profits were up 46 percent in its fiscal first quarter. Earnings were 16 cents per share, well above predictions of 6 cents per share.

British Airways gains 2.7 percent as strike is averted

Permalink: British Airways gains 2.7 percent as strike is averted by Elaine Frei

The London equities markets were mixed on Monday as only 2.5 billion shares traded hands on the session. The FTSE 100 added 0.2 percent to 6,239.9, but the FTSE 250 dropped 0.1 percent to 11,104.

In the airlines sector, British Airways added 2.7 percent to 542p as investors were relieved that a threatened 2-day strike by cabin crew members had been avoided.

Tobacco did well ahead of results due later in the week from British American Tobacco. Citigroup said that BAT could return an estimated £1.5 billion to shareholders without harm to its credit rating. The figure was much higher than the £500 million it currently returns each year. BAT gained 2.8 percent to a record high share price of £15.60. Imperial Tobacco was 0.8 percent higher, to £21.24.

Publisher Yell Group gained 1.5 percent to 608p on positive comments from Merrill Lynch.

Pubs operator Mitchells & Butlers was 1 percent higher to 686½p on reaction to the news that financier Robert Tchenguiz has increased his holding in the company to almost 15 percent.

Brewer SABMiller dropped 1.1 percent to £11.70 as Goldman Sachs took it off it’s “buy” list on valuation concerns.

J. Sainsbury also fell 1.1 percent, to 432½p, as one shareholider placed 12 million shares with Morgan Stanley. The shares were priced at 432p each.

European telecoms decline on Deutsche Telekom profits warning

Permalink: European telecoms decline on Deutsche Telekom profits warning by Elaine Frei

In Europe on Monday the FTSE Eurofirst 300 added 0.3 percent to 1,517.07 on Monday despite declines in the telecommunications sector.

Telecoms were lower after Deutsche Telekom issued its second profits warning in six months, citing competition and currency issues. Citigroup lowered its recommendation on the German telecom from “hold” to “sell” and Deutsche Telekon dropped 4 percent to €13.60. Elsewhere in the sector, France Telecom fell 0.9 percent to €21.18, while Telecom Italia and Swisscom were each 1.5 percent lower, to €2.27 and SFr471.50 respectively.

Car and truck manufacturers was gains on the session. On rumors that it could be a target for Volvo, MAN added 2.6 percent to €78.86. Volvo was 1 percent higher on the talk, to SKr502, while Scania, the recent target of MAN’s failed hostile bid, was up 3.5 percent to SKr485. Fiat gained 2.8 percent to €16.67 on a target share price hike from JP Morgan.

The airline sector was up on merger hopes and on upgrades from UBS, which raised its recommendation on Lufthansa and Iberia from “neutral” to “buy” and hiked target share prices for both Ryanair and Air France-KLM. Lufthansa was up 1.1 percent to €21.38, Ryanair gained 1.3 percent to €11.04, Air France was 1.5 percent higher to €32.67, and Iberia gained 3.3 percent to €3.10. Meanwhile, Alitalia added 1.9 percent to €1.10.

Nikkei, Topix each add 0.3 percent

Permalink: Nikkei, Topix each add 0.3 percent by Elaine Frei

In Tokyo on Monday the Nikkei 225 and the Topix index each added 0.3 percent on the session, to close at 17,470.46 and 1,733.59 respectively.

Export-focused sectors benefited as the yen weakened versus the US dollar. The machinery sector gained 1.4 percent as a whole, with Komatsu ending 3.4 percent higher to ¥2,560.

The steel sector gained on the news that JFE is in talks with South Korea’s Hyundai Steel. Nippon Steel added 1 percent to ¥711, while JFE was 1.6 percent higher to ¥6,800.

Word of a bird flu outbreak in Japan translated to gains for Chugai Pharmaceutical, the manufacturer of Tamiflu, which is believed to be effective against the disease in humans. Chugai added 1.8 percent to ¥2,780 on the session.

Internet and telecommunications company Softbank added 5.6 percent to ¥2,735 on an upgrade from Credit Suisse. The broker upped its recommendation from “under perform” to “outperform” and raised its target share price from ¥1,340 to ¥3,110.

In the retail sector, news that Wal-Mart could be looking for acquisitions in Japan sent its Japanese division, Seiyu, 13.1 percent higher to ¥190 on merger hopes.

US internet sector gains on week

Permalink: US internet sector gains on week by Elaine Frei

The New York equities markets were lower at midday on Friday and seemed determined to close out the week with losses as well. The Dow Jones Industrial Average was down 0.3 percent at mid-session to 12,468.11, down 0.8 percent on the week and even on the year. The Nasdaq Composite dropped 0.2 percent on the day so far, to 2,437.99, leaving it 0.5 percent lower for the week. Meanwhile, the S&P 500 was 0.1 percent lower to 1,421.85, a drop of 0.6 percent for the full week.

Technology stocks were mixed during the week, with most showing either big gains or big losses. Among gainers were Sun Microsystems and Texas Instruments. Texas Instruments gained 8.7 percent to $30.86 on a glowing quarterly report, while Sun was 9.5 percent higher to $6.32. Decliners included biotech company Amgen, down 3.8 to $71.41 on a report that did not meet expectations., and Advanced Micro Devices, which fell 8.9 percent to $16.15, again on unmet expectations.

In the internet sector, Yahoo added 2.7 percent over the week to $28.38, a gain of 11 percent since the beginning of the month. Meanwhile, eBay did better than expected in earnings and upped its guidance for this year. The online auctioneer added 8.2 percent this week to $32.09.

Automobile manufacturers were mixed. General Motors added 4.1 percent during the week, to $32.84 even though it dropped from its peak of $33.30 after it said it would delay its fourth quarter report even though it expected that the report would show a profit. On the other hand, Ford dropped 0.5 percent to $8.26 after it said it had taken a loss of $12.7 billion in 2006, the biggest yearly loss in the company’s history.

FTSE 100, 250 both lose on day, gain over week

Permalink: FTSE 100, 250 both lose on day, gain over week by Elaine Frei

In London on Friday, the FTSE 100 dropped 0.7 percent to 6,228. This translated to a gain of 0.1 percent for the week. Meanwhile the FTSE 250 was down 0.5 percent on the day to 11,118.6, 0.4 percent higher over the week as a whole.

The tobacco sector was higher. BAT added 1.2 percent to £15.17, while Imperial Tobacco ended 2.6 percent higher to £21.06 as Citigroup said that BAT will likely get more return to shareholders both this year and next.

In the food and beverages sector, Cadbury Schweppes added 0.7 percent to 564p on new bids rumors that had private equity interested. US chocolate maker Hershey’s was also seen as a possible merger partner after its less-than-spectacular report earlier in the week.

The leisure sector was also hit by merger talk surrounding Rank Group, which gained 1.6 percent to 226½p.

Miners were lower on the day, with Xstrata the biggest loser among blue-chip stocks as it dropped 3.2 percent to £23.47. The pharmaceuticals sector was also down, with Shire falling 1.6 percent to £10.81 on a downgrade from Citigroup.

Among banks, Lloyds TSB was 0.3 percent lower to 583½p even though HSBC issued an increased recommendation, from “neutral” to “overweight”, and set a target share price of 630p.

Nokia adds 7.4 percent on week

Permalink: Nokia adds 7.4 percent on week by Elaine Frei

The FTSE Eurofirst 300 ended the week 0.5 percent lower than it began, closing at 1,512.70 on Friday. The declines came after posting a six-year closing high on Wednesday.

This is not to say that there were not individual gains on the week. Mobile phone manufacturer Nokia added 7.4 percent on the week to €16.65 on a significant rise in operating profits in 2006. Deutsche Bank upgraded the company to “buy” and raised its target share price to €18.50.

L’Oreal was 7 percent higher to €80.60 after sales were higher than had been expected in the fourth quarter.

Pernod-Ricard gained 7.7 percent during the week to €158 even though broker comments were mixed. Credit Suisse upgraded the drinks company from “under perform” to “neutral” and raised its revenue growth guidance and target share price. UBS, Morgan Stanley, and ING also upped Pernod’s target share price, but ING also reduced its recommendation from “buy” to “hold”, citing valuation concerns.

Among the losers this week was software company SAP, which dropped 5.8 percent to €35.62. Alcatel-Lucent was 10.8 percent lower to €9.99. Airlines also saw losses, with Lufthansa down 6.9 percent to €21.16 and Air France-KLM 7 percent lower to €32.19.

Existing home sales down 0.8 percent in December

Permalink: Existing home sales down 0.8 percent in December by Elaine Frei

Even though more corporations issued positive quarterly reports, Wall Street was lower at midday on Thursday. The Dow Jones Industrial Average was 0.4 percent lower to 12,570.66, while the Nasdaq Composite was down 0.7 percent to 2,449.10 and the S&P 500 had dropped 0.57 percent to 1,431.92. The Russell 2000 index of small-caps dropped 0.82 percent to 787.55.

Investor sentiment was not helped by a new report from the National Assoication of Realtors that existing homes sales dropped by 0.8 percent in December. The inventory of existing homes for sale also fell, however, by 7.9 percent to 3.51 million. In addition, the Labor Department said that new jobless claims grew last week at their highest rate in 16 months.

Quarterly reports were released by companies in a number of sectors. Online auctioneer Ebay added $2.88 to $32.88 after it said its profits were up by 24 percent and sales grew by 29 percent in its most recent quarter. Nokia reported that profits were up by 19 percent, gaining 79 cents to $21 on the session so far. AT&T gained 26 cents to $36.89 on profits that were up 17 percent on more wireless subscribers.

Even though Ford Motor said it withstood its largest annual loss ever amid declining sales, the carmaker added 10 cents to $8.30 as investors were relieved that the news wasn’t worse.

Lockheed Martin added 81 cents to $91.95 on a quarterly report that showed earnings up by 28 percent on growth in its military hardware division. The defense contractor raised its full-year forecast on the basis on the new figures.

UK real estate sector up on broker comments

Permalink: UK real estate sector up on broker comments by Elaine Frei

The FTSE 100 dropped 0.6 percent to 6,269.3 in London on Thursday, while the FTSE 250 was 0.2 percent lower to 11,171.1. The 100 briefly reached a six-year high, at 6,335.1, early in the session but dropped later on the slow start in the New York markets.

Real estate was higher on the session after JP Morgan reminded that the UK sector is currently a better bargain than its European rivals. Hammerson added 0.2 percent to £15.03, while British Land was 0.6 percent higher to £16.21.

Publisher Pearson added 0.9 percent to 817½p on bids rumors and after Citigroup upped its target share price to 900p.

The pharmaceuticals sector declined after Credit Suisse said that the sector would extend its underperformance into this year after a sector-wide decline of 5.2 percent last year, mentioning the trouble companies were having bringing new drugs to market and keeping them there once introduced. Shire dropped 1 percent to £10.99, while AstraZeneca fell 1.3 percent to £28.44 and GlaxoSmithKline was 1.4 percent lower to £13.93.

In a related news, medical devices manufacturer Smith & Nephew was 1.4 percent lower to 570½p after it was suggested that its next report might not show as much of an improvement in margins as is hoped.

Semiconductors gain in Europe

Permalink: Semiconductors gain in Europe by Elaine Frei

The FTSE Eurofirst 300, higher early in the session, ended 0.3 percent lower to 1,522.87. The Eurofirst was hurt late by a slow start to the New York trading day.

The semiconductors sector saw gains in the day. Infineon added 2.4 percent to €11, while STMicroelectronics gained 2.5 percent to €14.38. STM was helped by positive comments from brokers that took the focus off the chipmaker’s disappointing quarterly results, announced on Wednesday. WestLB said that the new figures should be looked at in a wider context and hiked STM’s target share price from €16 to €18.

Nokia added 5 percent to €16.26 after reporting record mobile phone sales in the fourth quarter and amid mixed broker sentiment. While Merrill Lynch is advising its customers to buy the cell phone maker, Dresdner Kleinwort is recommending that its clients sell the stock.

Automobile manufacturers declined on new of losses by Ford Motor. BMW fell 1.4 percent to €45.99. DaimlerChrysler and Porsche were each 2.3 percent lower, to €48.64 and €1,010 respectively, with Credit Suisse lowering Porsche’s rating from “outperform” to “neutral” and suggesting that investors take profits. Peugot was down 3.3 percent to €52.

Airlines also saw losses. Iberia fell 1 percent to €3.01, while Air France-KLM dropped 3.9 percent to €32 and Lufthansa was 5.6 percent lower to €20.76 after it said that passenger yields would not grow significantly this year.

Nikkei 225 drops 0.3 percent on stronger yen

Permalink: Nikkei 225 drops 0.3 percent on stronger yen by Elaine Frei

In Tokyo on Thursday, the Nikkei 225 dropped 0.3 percent to close at 17,485.30 as the yen strengthened after recent weakness. The decline came after the index achieved another six-year high early in the session. Despite this, many analysts believe that advances will be limited this year due to shares that they believe are too highly valued at present.

Some export-focused stocks were hurt by the currency’s gains. Printer and copier maker Canon fell 1.2 percent to ¥6,530. But not all exporters declined on the session. Helped by good results in tech stocks in the US, Sony added 1.6 percent to ¥5,720.

There were gains in the pharmaceuticals sector. Chugai Pharmaceutical added 6.5 percent to ¥2,715 after it announced, along with partner Roche, that studies for its new rheumatoid arthritis drug were proceeding well.

Shipper were higher after positive comments from Mizuho Securities. Mitsui OSK Lines was 1.1 percent higher to ¥1,264, while Kawasaki Kisen gained 1.15 percent to ¥1,053.

Yahoo Japan, up 1.05 percent to ¥48,250, reported that its quarterly profits were up by 20 percent.

The real estate sector, which has added more than 40 percent since last July, continued to rise even though some analysts believe that stocks are currently overvalued. Mitsui Fudosan added 1.6 percent on the session to ¥3,100.