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22.02.2013 08:38

Stocks: Thursday’s review

Asian stocks plunged, with a gauge of Chinese companies in Hong Kong erasing the year’s gains, amid concern the Federal Reserve may scale back U.S. economic stimulus and as China ordered increased property curbs.

Nikkei 225 11,309.13 -159.15 -1.39%

Hang Seng 22,906.67 -400.74 -1.72%

S&P/ASX 200 4,980.09 -118.62 -2.33%

Shanghai Composite 2,325.95 -71.23 -2.97%

Guangzhou R&F Properties Co. lost 2.4 percent in Hong Kong, pacing declines among Chinese developers.

BHP Billiton Ltd., the world’s biggest mining company, dropped 3.8 percent, the most since May, on concern that global demand will decrease if policymakers reduce stimulus.

Origin Energy Ltd. slumped 8.5 percent to A$11.33 in Sydney after Australia’s biggest electricity retailer cut its profit forecast and reported a cost increase at its A$25 billion ($26 billion) gas project.

European stocks declined the most in more than two weeks as a measure of services and manufacturing output contracted, while concern mounted that the Federal Reserve will scale back its asset-purchase program.

Euro-area services and manufacturing shrank in February more than economists had forecast. A composite index of both industries in the 17-nation currency bloc fell to 47.3 from 48.6 in January, London-based Markit Economics said today. Economists had predicted a reading of 49, according to the median of 22 estimates in a survey. A reading below 50 means that activity contracted.

Several participants at the FOMC’s meeting “emphasized that the committee should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolves,” according to minutes released after the close of European markets yesterday.

National benchmark indexes fell in every western-European market except Iceland. France’s CAC 40 declined 2.3 percent, while the U.K.’s FTSE 100 slid 1.6 percent. Germany’s DAX dropped 1.9 percent.

Safran decreased 3.1 percent to 34 euros. Europe’s second- biggest maker of aircraft engines has begun exploratory discussions with Avio, Chief Executive Officer Jean-Paul Herteman said on a conference call.

Axa SA retreated 3.1 percent to 13.27 euros as net income unexpectedly fell to 4.15 billion euros ($5.5 billion) in 2012 from 4.19 billion euros in 2011. That missed the 4.47 billion- euro average analyst estimate in a survey.

Swiss Re Ltd. gained 2.5 percent to 75.65 francs, its highest price since June 2008. Investors will receive a special dividend of 4 francs a share, plus an ordinary dividend of 3.50 francs, the insurer said. That exceeded the average forecast of eight analysts for a total payout of 6.21 francs a share. Fourth-quarter net income of $795 million beat the average analyst estimate of $240.3 million.

Schneider Electric SA climbed 2.3 percent to 56.67 euros after the world’s biggest maker of low- and medium-voltage equipment said revenue will rebound in 2013. The company added that net income rose 3 percent to 1.84 billion euros in 2012. The average analyst estimate had called for profit of 1.83 billion euros.

BAE Systems Plc jumped 4.1 percent to 345.9 pence, its biggest rally in more than five months. Europe’s largest arms company said it will buy back as much as 1 billion pounds ($1.5 billion) of shares over three years after reporting full-year earnings that fell less than analysts had predicted.

U.S. stocks fell, extending yesterday's decline, to close at the lowest levels since February 4.

The reason for selling was submitted last minutes of the last meeting of the Open Market Committee of the Federal Reserve, in which information was seen as a signal that the Fed will, sooner rather than later schedule, will minimize the monetary measures to stimulate the economy. Investors fear that minimize incentives can have a very negative impact on the state of the U.S. economy.

Decrease in the indices failed to stop the data on existing home sales in the U.S. market, which in January was slightly better than expected (4.92 million units vs. 4.91 million). In parallel with the data on the housing market report was published by the Philadelphia Fed manufacturing index, the value of which in February unexpectedly fell to -12.5 points, expected growth rate to -5.8 points in January to 0.7 in February.

Stocks fell, while the U.S. dollar strengthened, amid comments from U.S. Federal Reserve about the possible future monetary policy. President of the Federal Reserve Bank of St. Louis, James Bullard said that the Fed could reduce the rate of monthly purchases of assets in the amount of $ 85 billion, not suddenly stop them if the economic situation will continue to improve this year. He noted that the interest rate rise could occur by June 2014, as the unemployment rate could fall below 6.5%. It is the threshold level set by the Fed.

Most of the components of the index DOW finished trading in the red (21 of 30). Lost more than 3% shares Bank of America Corporation (BAC, -3.22%) and The Home Depot, Inc. (HD, -3.10%). Leader was led Hewlett-Packard Company (HPQ, +2.40%).

All sectors of the S & P showed a negative trend. Maximum loss demonstrated financial sector (-1.2%).

Manufacturer of terminals for payment cards VeriFone Systems fell to 42.8% after the posted disappointing quarterly earnings forecasts due to the unfavorable economic situation in Europe.

Manufacturer of electric Tesla Motors dipped by 8.9 against the published quarterly report - company's losses were larger than expected on Wall Street, and excluding some items were 65 cents per share forecast at 57 cents.

At the close:

S & P 500 1,502.42 -9.53 -0.63%

NASDAQ 3,131.49 -32.92 -1.04%

Dow 13,880.62 -46.92 -0.34%

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