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June 23, 2011    

International Consolidated Airlines Group best on 100, adds just 0.78 percent

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by Elaine Frei
International Consolidated Airlines Group best on 100, adds just 0.78 percent

European equities markets were lower Thursday, with declines coming after comments from US Federal Reserve Chairman Ben Bernanke, who said that interest rates will remain near zero for the foreseeable futures as the Fed held rates steady again, but that bond purchases by the Fed will end this month as scheduled.

Bernanke also said that economic recovery in the US is going “more slowly” than expected as the Fed lowered its growth forecast for the US economy this year, saying that it will expand by between 2.7 percent and 2.9 percent in 2011.

A drop in US new home sales in May and more new US jobless claims last week were also factors in declining markets.

The FTSE 100 was down 1.71 percent to 5,674.38 in London, while the FTSE 250 dropped 1.57 percent to 11,453.7 as banks, the energy sector, insurers, homebuilders and the utilities sector saw no gains at all on the session, while miners, the chemicals sector, food and beverage makers, the media sector retailers and the technology sector did not do much better, with just one gainer in each of those sectors.

International Consolidated Airlines Group (LSE: IAG) was the best performer on the 100 but it added just 0.78 percent, while packaging and office products wholesaler DS Smith (LSE: SMDS) had the best day on the 250, adding 14.7 percent as annual pretax profits were up by 86 percent.

Vedanta Resources (LSE: VED) led declines in the mining sector and on the 250 as it dropped 6.86 percent, while Imagination Technologies Group (LSE: IMG) was down 15.66 percent for the worst performance on the 250.

The FTSE Eurofirst 300 was down 1.49 percent to 1,075.21 while the Dax fell 1.77 percent to 7,149.44 and saw just two gains, the CAC-40 was 2.16 percent lower to 3,787.79 with just one winner, and the IBEX dropped 2.77 percent to 9,942.6.

Most markets in the Asia-Pacific region were lower after the US Federal Reserve cut its forecast for US economic growth next year from earlier projections, although the Straits Times Index was up 0.06 percent to 3,044.72 in Singapore, India’s Sensex added 1.01 percent to 17.727.5 and the Shanghai Composite gained 1.47 percent to 2,688.25.

Tokyo’s markets declined as the Nikkei 225 dropped 0.34 percent to 9,596.74 while the Topix index was down 0.42 percent to 825.51 and the Mothers market was 1.44 percent lower to 446.27 although carmakers were higher on projections that net income and sales will be up this fiscal year, with Nissan Motors (TYO: 7201) adding 1.3 percent while Suzuki Motor (TYO: 7269) was up 3.1 percent and Isuzu Motor (TYO: 7202) gained 3.4 percent.

Nippon Steel (TYO: 5401) was up 1.7 percent on media reports that it raised prices for the April through September period for deliveries to Japanese electronics manufacturers, but Nippon Electric Glass (TYO: 5214) was down 5.1 percent after Macquaarie Group cut its recommendation on the maker of glass for liquid-crystal displays from “outperform” to “underperform”, citing the possibility that it could lose market share.

Other markets seeing declines in the region included South Korea’s Kospi, which was down 0.39 percent to 2,055.86, while the Hang Seng fell 0.46 percent to 21,759.1 in Hong Kong, the Taiex was 0.62 percent lower to 8,567.28 in Taiwan and Australia’s markets were lower as the Sydney Ordinaries dropped 0.64 percent to 4,561.4 and the S&P/ASX200 was down 0.71 percent to 4,500.5.

New York equities markets were also lower, with the Dow Jones Industrial Average down 1.35 percent to 11,946.4 shortly before 1 p.m. local time, while the S&P 500 had dropped 1.21 percent to 1,271.51 and the Nasdaq Composite was 0.49 percent lower to 2,656.08.

Crude oil prices were substantially lower after the International Energy Agency said it will release 60 million barrels of its reserves onto world markets over the next month, with half of that amount coming from the US Strategic Petroleum Reserve, the third time the IEA has ever released supplies.

The release is an effort to replace lost production from Libya since political turmoil began there earlier this year, but will not completely cover lost Libyan production, which the IEA estimates was at 132 million barrels at the end of May.

At just past 12:30 p.m. in New York, West Texas Intermediate crude was down $4.16, or more than 4 percent, to $91.25 per barrel, while Brent crude was last reported down $6.33, or 5.5 percent, to $107.88 per barrel.

Metals prices were also lower, with gold down $33.50 to $1,519.90 per troy ounce in midday trade in New York, while silver had dropped $1.71 to $35.04 per troy ounce and copper was down 5 cents to $4.06 per pound.

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