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Oct 23, 2013

Financial Times Asia Morning Headlines October 24, 2013:: US task force probes nine banks on mortgage-backed securities


 
Thursday October 24 2013
 
 
Asia homepage
 
US mortgages probe targets nine banks
 
The threat of potential action could spell more trouble for banks as they try to put the 2008 financial crisis and mounting legal bills behind them
 
 
 
Berlin claims US targeted Merkel phone
 
 
Pinterest value leaps 52% to $3.8bn
 
 
GSK China sales plummet 60% since scandal
 
 
Draghi’s blunt warning on bank stress tests
 
 
US Congress aims to tighten laundering laws
 
 
China and India agree border pact
 
 
Abe urged to review Tepco’s future
 
 
Spain emerges from two-year recession
 
 
Apple iPad shuts window on Microsoft
 
 
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NYT | ALERT FGC BOLSA - FGC FINANCIAL MARKETS OCTOBER 23, 2013: Import Prices Rose Slightly in September

The New York Times | MY ALERTS

FGC BOLSA- FGC FIN

Compiled: October 23, 2013 09:06:53 PM

Import Prices Rose Slightly in September
The September increase was in line with the expectations of economists.

DealBook P.M. Edition October 23, 2013: The Trade: A Moot Effort to Burnish the Reputation of Goldman Sachs


Wednesday, October 23, 2013
TOP STORY
Lloyd Blankfein, the chief of Goldman Sachs.
The Trade: A Moot Effort to Burnish the Reputation of Goldman Sachs Since the financial crisis, Lloyd C. Blankfein, the chief executive of Goldman Sachs, has striven to build his name back up, but Goldman's good name has collapsed, writes Jesse Eisinger.
  • DEALBOOK »
  •  
    DEALBOOK HIGHLIGHTS
    Deal Professor: Appeals Court Throws Out Confidential Arbitration in Delaware The state's Chancery Court had tried to offer cost-effective options for resolving business disputes, writes Steven M. Davidoff.
    Caterpillar's Stock Drops, and 2 Big Deals May Be to Blame
    Caterpillar's Stock Drops, and 2 Big Deals May Be to Blame Caterpillar's woes in part are related to its bet on the mining sector, a bet that it bolstered in a big way through deal-making.
    Rabobank Nears Settlement on Interest Rate Inquiry
    Rabobank Nears Settlement on Interest Rate Inquiry The Dutch lender Rabobank said that various authorities had almost completed their investigations of its role in setting two benchmark interbank rates, Libor and Euribor.
    A Walgreens store in Chicago.
    2 Commercial Property Giants to Combine in $7.2 Billion Deal The combination of American Realty Capital Properties and Cole Real Estate Investments would form one of the largest commercial landlords in the country.
    Reuters Breakingviews: 8 Questions for 3 Buffetts Warren Buffett, his son Howard Graham Buffett and grandson Howard Warren Buffett discuss the effects of inefficient markets, technology, tax policy and Berkshire Hathaway, writes Jeffrey Goldfarb.
    LOOKING AHEAD
    Amazon Amazon.com has been investing for the future for several years now, building warehouses to serve consumers and data centers to serve corporate clients. It is also moving aggressively into Hollywood, paying for entertainment to keep its tablets humming. None of this comes cheap, so the consensus is that Amazon will post another loss when it announces its third-quarter earnings on Thursday. With the stock trading at a record high, no one seems to mind.
    Microsoft Microsoft has been making news almost nonstop for months, with the announcement of a restructuring, a plan for its chief executive to retire and a $7.2 billion acquisition of Nokia's phone business. On Thursday, when it reports earnings, Microsoft is expected to offer more insight into some of the business challenges that have played a part in those events, particularly continued weakness in the PC market.
    Auto Earnings The comeback of the American auto industry will return to the spotlight on Thursday when the Ford Motor Company reports its third-quarter earnings. Ford, the nation's second-largest automaker, has been recording big profits from its robust North American operations; at the same time, it has been struggling in Europe and investing heavily in new factories in Asia.  
     

Wall Street at Close Report by MarketWatch October 23, 2013: U.S. Stocks Close Lower on Mixed Earnings.

By Kate Gibson and Wallace Witkowski, MarketWatch 

SAN FRANCISCO (MarketWatch) U.S. stocks closed lower on Wednesday, with the S&P 500 falling from a record, as investors assessed mixed results from U.S. corporations, including a disappointment from equipment-maker Caterpillar Inc.
 
The Dow Jones Industrial Average DJIA -0.35%  declined 54.33 points, or 0.4%, to close at 15,413.33, with 21 of its 30 components in negative terrain.

Caterpillar CAT +0.20%  paced blue-chip losses, off 6.1% after the heavy equipment lowered its earnings outlook. Boeing Co. BA -0.21%  shares led gains on the Dow, closing up 5.3%, after the plane manufacturer raised its 2013 forecast. 

“Earnings are about what you might expect in a slow-growth economy; some areas are doing well, and some are not doing well at all,” said Bruce Bittles, chief investment strategist at RW Baird & Co. 
 

Netflix drops after Icahn sells shares
Polya Lesova takes a look at which stocks traders will be watching during market action, including Netflix, Boeing, and Caterpillar. Photo: AP

“We’re at that point where the infamous ‘Wall of Worry’ becomes significant. Margins have peaked, so we have to live off revenue growth more than earlier in the cycle,” said Bruce McCain, chief investment strategist at Key Private Bank. 

The S&P 500 index SPX -0.47%  fell 8.29 points, or 0.5%, to close at 1,746.38, with energy the worst performing and consumer staples faring the best of the 10 major industry sectors. The S&P 500 closed at a new all-time high of 1,754.67 on Tuesday

The midweek swoon “feels like a normal pullback,” said Bittles, who notes that Wall Street has “rallied almost 100 S&P points since two weeks ago.” 

Broadcom Corp. BRCM +0.08%  fell 2.9% after the wireless-device chip maker projected fourth-quarter revenue below estimates and said it would cut up to 1,150 jobs. 

The Nasdaq Composite Index COMP -0.57%  fell 22.49 points, or 0.6%, to close at 3,907.07.
Declining stocks outnumbered advancers slightly on the New York Stock Exchange, where more than 708 million shares traded by the close. Composite volume surpassed 3.6 billion. Decliners outnumbered gainers by nearly two to one on the Nasdaq, where more than 463 million shares traded by the close. Composite volume for Nasdaq-listed stocks topped 1.9 billion shares. 

Investor sentiment was also hit by worries about possible monetary constrictions in China and softness among European banks. 

“There is continuing worry that they are extending bad loans and building things that aren’t needed,” said McCain of a Bloomberg News report that China’s largest banks had tripled the number of bad loans written off in the first half of the year to clear up their books before another round of defaults.
“A movement to tighten monetary conditions to slow growth in China is a modest threat to global economic growth that could spill over not only to the European stock market, but to U.S. stocks given the importance of China as a U.S. export market,” Fred Dickson, chief investment officer at Davidson Companies, noted in emailed commentary.

Boeing  Image
The dollar DXY +0.02% gained against global currencies such as the euro EURUSD -0.05% but not the yen USDJPY -0.76% . A day after its strongest rise in a month, the 10-year Treasury yield 10_YEAR -0.80% fell nearly 2 basis points to 2.50%. See: Dollar, yen get safety bid.
”Yields are coming down pretty quickly here, which suggests the rate of inflation is going to be soft going forward, and the economy with it,” said Bittles, who adds falling commodity prices also reflect a slowing economy.
But the scenario holds potential positives, given “the housing market had been threatened when yields went to 3% on the 10-year, and lower energy prices means lower gasoline prices, which means a tax cut for the consumer,” Bittles added. 

On the New York Mercantile Exchange, gold futures GCZ3 -0.71% lost $8.60, or 0.6%, to settle at $1,334 an ounce, and the cost of a barrel of oil CLZ3 -1.17% declined $1.44, or 1.5%, to settle at $96.86. Read more on oil.
 
Kate Gibson is a reporter for MarketWatch, based in New York. Follow her on Twitter @MWKateGibson. Wallace Witkowski is a MarketWatch news editor in San Francisco. Follow him on Twitter @wmwitkowski.
 

Wall Street at Close Report by CNBC October 23, 2013: Stocks Close Lower, S&P 500 Retreats From Record Run; Caterpillar Tumbles 6%.


Stocks finished lower Wednesday, with the S&P 500 snapping a four-day streak of record highs, following weakness in global equities and a mixed bag of earnings reports.
(Read more: Why bullish technical analyst is worried about 2014)
  Name Price   Change %Change
DJIA Dow Jones Industrial Average 15413.39
 
-54.27 -0.35%
S&P 500 S&P 500 Index 1746.38
 
-8.29 -0.47%
NASDAQ Nasdaq Composite Index 3907.07
 
-22.49 -0.57% 

The Dow Jones Industrial Average finished in the red, dragged sharply lower by Caterpillar.
The S&P 500 and the Nasdaq also ended in negative territory. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, climbed above 13.

Most S&P sectors were in the red, dragged by energy and materials, while defensive sectors such as utilities and consumer staples kept a limit on losses.


The S&P 500 set a record high for the fourth-straight session Tuesday, closing above 1,750 for the first time, after the tepid September jobs report gave further evidence to investors that the Federal Reserve will continue to support the economy at the current pace. Meanwhile, the Dow is within 1.5 percent of its all-time record set last month.

"Thanks to some overly enthusiastic economic projections that look more and more out of line with reality and a dysfunctional Congress that caused a very partial short-term government shutdown, the Federal Reserve appears likely to allow the current pace of quantitative easing to continue unabated," wrote Scott Wren, senior equity strategist at Wells Fargo Advisors. "When we add it up, the tapering phase of QE is unlikely to start until the first few months of 2014 at the earliest."

To read full report click:  www.cnbc.com/id/101136521

MoneyShow Investors Daily Alert October 23, 2013: The Best Dow DRIPs


INVESTORS DAILY ALERT
The Daily Guru
The Best Dow DRIPs, Charles Carlson
Jim Jubak on MoneyShow.com
TOP PROS' TOP PICKS
GURUS' VIEWS & STRATEGIES
IDEAS FROM AROUND THE WORLD

BIV Today's Business News October 23, 2013: BIV Reveals New Cohort of Forty Under 40 Winners.


Human Resources

BIV reveals new cohort of Forty under 40 winners

The latest crop of Business in Vancouver's Forty Under 40 winners for 2013/14 is unveiled today. The winners, in alphabetical order, are ... READ MORE

Economy and Finance

 

Bank of Canada announces overnight rate

The Bank of Canada announced October 23 that the overnight rate will ... READ MORE

Technology

 

Amazon to expand Vancouver presence with 100 new jobs and move to Telus Garden

Technology companies like Hootsuite, which is on a major job recruitment drive, may be getting some competition for skilled engineers from... READ MORE

Small Business

 

B.C. takes biggest drop in Canada in small business-friendly tax ranking: CFIB

British Columbia saw the biggest drop in Canada between 2009 and 2013 in the Canadian Federation of Independent Business' (CFIB) ranking of ... READ MORE

More News...

   

Investors pile back into gold stocks, Goldcorp up $2b in a week

BC Export Awards finalists unveiled, event registration opened

Increase in gold and copper production at New Gold’s New Afton mine

This Week's Issue

 

Northern Exposure, part 3: Service industry, not mega-projects, the key to Terrace's business ambitions

Those on the ground in northwest British Columbia spare no hyperbole when discussing the economic possibilities currently hovering over... READ MORE

CMI Gold & Silver | Spot Prices as of Close of Trading in New York October 23, 2013.

CMI Gold and Silver
Spot Prices as of close of trading in New York
Wednesday, October 23, 2013
Updated 10/23/2013 Today Change Week Ago Month Ago Year Ago
GOLD $1,335.05 -$8.20 $1,282.75 $1,328.05 $1,709.40
SILVER $22.62 -$0.18 $21.38 $21.86 $31.82
PLATINUM $1,442.80 -$10.50 $1,401.30 $1,428.80 $1,577.80
PALLADIUM $749.90 -$5.50 $716.80 $718.25 $598.10
GOLD/SILVER RATIO 59.02

ADVFN III Evening Euro Markets Bulletin October 23, 2013.


ADVFN III Evening Euro Markets Bulletin
Daily world financial news Wednesday, 23 October 2013

London Market Report
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FTSE 100EuronextDax perfCAC 40
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London close: Stocks pull back from five-month high
- Miners, banks weigh on Footsie
- Money-market rates spike in China
- RSA up on bid speculation

Market Movers
techMARK 2,624.47 -0.41%
FTSE 100 6,674.48 -0.32%
FTSE 250 15,494.97 -0.11%

The FTSE 100 finished in negative territory for the first time in 10 trading sessions on Wednesday as traders took profits after the index hit a five-month high on the previous day.

Concerns over the economic outlook in China and weakness in the heavyweight mining and banking sectors weighed on London’s benchmark index today, which finished down 21.18 points at 6,674.48. The FTSE 100 was pulling back after hitting its highest closing levels since May 28th on Tuesday.

The bullish mood was dampened today by concerns over the Chinese economy after the news that debt write-offs at China’s biggest lenders had tripled in the first half. Meanwhile, the People’s Bank of China refrained from adding liquidity to the market through new reverse repurchase operations which led to a sharp increase in the country’s benchmark money-market rate.

Chief Market Analyst Michael Hewson from CMC Markets said that the reports have prompted “concerns that a fiscal tightening could well see a slowdown in the recent recovery in the Chinese economy”.

However, he said: “In reality we have been due a pullback for some time now given the recent run up, and given the fact that a lot of this week’s earnings reports have shown some worrying signs of weakness.”

Miners and banks fall, while RSA jumps

Mining stocks including Antofagasta and Anglo American were out of favour on concerns over China in addition to gloomy results from US bellwether Caterpillar, which makes heavy machinery for the mining and ground-moving industries. The firm disappointed Wall Street forecasts with its full-year guidance owing to weak mining orders, saying that “significant risks and uncertainties” could temper global economic growth next year.

Banks all over Europe were lower after the European Central Bank said it would start to review the balance sheets of 130 institutions across the continent. RBS, Barclays, Lloyds, HSBC and Standard Chartered were all registering losses in London.

Insurance firm RSA was a high riser on speculation that the firm could be the target of a takeover bid. Reuters cited traders as touting Italian group Generali, Swiss firm Zurich Financial and UK peer Aviva as potential bidders.

Chip designer ARM Holdings fell for the second straight day as investors gave a cool reaction to its third-quarter results. JPMorgan Cazenove said this morning that it sees "no reason to be building positions at this time and would take profits in the short-term."

A number of stocks were also trading in the red after going ex-dividend, including Smiths Group, BAE System, Rolls-Royce, John Menzies, Senior, William Hill, Rank Group, Barratt Developments and JD Wetherspoon.

Banknote printer and ID services firm De La Rue was a big mover with shares sinking after the company warned that it would miss its full-year profit target by £10m owing to "challenging trading conditions".

Drugs group GlaxoSmithKline beat earnings growth expectations in the third quarter by cutting back office and drug research and development costs were amplified by a lower tax rate. However, shares fell after revenue growth of 1% to £6.51bn missed forecacts.




FTSE 100 - Risers
RSA Insurance Group (RSA) 127.00p +2.50%
Persimmon (PSN) 1,256.00p +2.36%
United Utilities Group (UU.) 716.50p +1.63%
International Consolidated Airlines Group SA (CDI) (IAG) 364.80p +1.62%
ITV (ITV) 195.00p +1.51%
Hargreaves Lansdown (HL.) 1,171.00p +1.47%
Legal & General Group (LGEN) 213.00p +1.43%
Babcock International Group (BAB) 1,260.00p +1.37%
Travis Perkins (TPK) 1,805.00p +1.29%
Shire Plc (SHP) 2,525.00p +1.28%

FTSE 100 - Fallers
ARM Holdings (ARM) 953.50p -5.03%
Antofagasta (ANTO) 865.50p -4.26%
Smiths Group (SMIN) 1,397.00p -3.99%
Anglo American (AAL) 1,495.00p -3.92%
Royal Bank of Scotland Group (RBS) 352.10p -2.73%
GlaxoSmithKline (GSK) 1,570.50p -1.91%
Sage Group (SGE) 327.00p -1.83%
CRH (CRH) 1,517.00p -1.81%
Barclays (BARC) 268.20p -1.61%
Standard Chartered (STAN) 1,500.00p -1.45%

FTSE 250 - Risers
Pace (PIC) 323.80p +11.66%
Laird (LRD) 243.90p +8.06%
IP Group (IPO) 149.00p +5.23%
Home Retail Group (HOME) 192.10p +4.23%
AL Noor Hospitals Group (ANH) 918.00p +3.73%
Supergroup (SGP) 1,186.00p +3.31%
Dixons Retail (DXNS) 48.20p +3.26%
BBA Aviation (BBA) 336.60p +2.97%
BTG (BTG) 407.90p +2.85%
Kenmare Resources (KMR) 22.39p +2.85%

FTSE 250 - Fallers
De La Rue (DLAR) 885.50p -9.73%
International Personal Finance (IPF) 623.00p -6.81%
Telecity Group (TCY) 779.50p -5.74%
Essar Energy (ESSR) 120.20p -5.43%
Ferrexpo (FXPO) 184.70p -4.74%
Evraz (EVR) 128.40p -4.32%
Kazakhmys (KAZ) 251.40p -4.05%
Centamin (DI) (CEY) 49.76p -4.03%
Premier Oil (PMO) 328.50p -3.38%
AZ Electronic Materials SA (DI) (AZEM) 286.90p -3.07%




Europe Market Report
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FTSE 100EuronextDax perfCAC 40
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Europe close: Chinese banking fears dampen market
- China banking sector concerns
- Berlusconi to stand trial over bribery claims
- ECB bank stress tests
- BoE meeting minutes rate hikes could come earlier
- Spain exits two-year recession

FTSE 100: -0.32%
DAX: -0.31%
CAC 40: -0.81%
FTSE MIB: -2.38%
IBEX 35: -1.84%
Stoxx 600: -0.62%

European stocks fell after a report showed debt write-offs at China’s biggest lenders tripled in the first half, reigniting fears over the banking sector in the world’s second largest economy.

Industrial & Commercial Bank of China and its four largest rivals wrote off 22.1bn yuan of debt that couldn’t be collected, compared to 7.65bn yuan a year earlier, the report revealed.

It raised concerns over China’s shadow banking system and whether the People’s Bank of China will need to raise interest rates in order to fix the problem.

“If we do see a tightening of monetary policy from the PBOC, it could choke off the recovery being seen in the world’s second largest economy, which in turn would impact growth globally,” according to Alpari UK Market Analyst, Craig Erlam.

Berlusconi to stand trial

Italy’s former Prime Minister Silvio Berlusconi has been ordered to stand trial for allegedly bribing a senator.

He is accused of paying left-wing senator Sergio De Gregorio €3m to defect to his party in 2006 and help bring down the government.

Berlusconi has been entangled in a number of trials including for tax evasion.

His latest trial is scheduled to start in February.

ECB stress tests, BoE meeting minutes

The European Central Bank has applied an 8% capital buffer to 124 banks as part of its upcoming stress tests.

The Eurozone’s top banks will undergo a comprehensive batch of tests next year in an effort to build confidence in the sector.

The ECB is looking for risks in banks’ balance sheets before taking over supervision of lenders from November 2014 as part of a European banking union.

In the UK, meeting minutes from the Bank of England (BoE) showed the Monetary Policy Committee voted unanimously last month to keep interest rates on hold and saw little need for more stimulus.

Committee members acknowledged a slightly faster-than-expected fall in unemployment as the recovery strengthened quicker than hoped. However, views diverged over how fast productivity and jobs would pick up.

"This faster-than-expected reduction in unemployment may result in the implied timing of the MPC’s first rate hike being brought forward from the second half of 2016,” according to Investec.

Also in the UK today, the British Bankers’ Association revealed loans for house purchases rose by 42,990 in September from 38,228 the prior month, beating the consensus estimate for a rise to 39,500 loans.

In Spain, gross domestic product expanded 0.1% in the third quarter, compared to the previous quarter when it shrank 0.1%, breaking away from a two-year recession.

Spain is exiting its second recession since 2008 thanks to growth in foreign investments of the nation’s bond and stock markets.

Orange, GSK

Orange declined after the French telecommunications company posted a 7.7% fall in third-quarter earnings due to drop in sales.

GlaxoSmithKline slumped after Sky News reported that the drugmaker will reveal a fall in sales in China when it reports its third-quarter results later today.

STMicroelectronics NV tumbled after the European semiconductor maker reported a $142m quarterly net loss.

International Consolidated Airlines rose after yesterday saying its Spanish carrier Iberia will return to profit next year.

Telecity Group declined after Bank of America reiterated an ‘underperform’ rating for the data-centre operator, saying the company has little opportunity to increase prices due to new competitors and a weak market.

Norsk Hydro advanced after the European aluminium producer posted third quarter earnings that beat analysts' expectations.

Brent crude slips

Brent crude futures fell $1.317 to $108.540 per barrel on the ICE.

The euro rose slightly by 0.04% to $1.3787.




US Market Report
US open: Investors take profits after mixed corporate earnings
- S&P 500 pulls back from record high
- Caterpillar drops as guidance disappoints
- Boeing beat forecasts for eighth straight quarter

Dow Jones: -0.48%
Nasdaq: -0.88%
S&P 500: -0.61%

US markets slipped on Wednesday as a raft of mixed corporate earnings gave investors an excuse to take profits following a strong run in recent sessions.

The S&P 500 was registering small losses in morning trading, pulling back after hitting another record close of 1,754.67 the night before following five consecutive days of gains. Stocks have risen sharply over the past week as hopes over a continuation of Federal Reserve monetary stimulus were sparked yesterday after a disappointing September jobs report.

According to data compiled by Bloomberg, the recent run in stock markets has pushed the average price-to-earnings multiple of the S&P 500 to 15.9, the highest since late-2009.

The bullish mood was dampened today by concerns over the Chinese economy after a report said that debt write-offs at China’s biggest lenders had tripled in the first half. Meanwhile, the People’s Bank of China refrained from adding liquidity to the market through new reverse repurchase operations which led to a sharp increase in the country’s benchmark money market rate.

Market Analyst Craig Erlam from Alpari said it has reignited fears that the People’s Bank of China could be looking to raise interest rates which could “choke off the recovery”. He said: “Given that the global recovery is still fragile, with the US repeatedly shooting itself in the foot and the Eurozone constantly on the verge of another crisis, investors are very concerned about what kind of an impact this latest Chinese issue could have."

Economic data comes in mixed

US mortgage applications fell 0.6% in the week to October 18th, compared to a rise of 0.3% the previous week, according to data from the Mortgage Bankers Association.

Import prices increased by 0.2% month-on-month in September, following a 0.2% gain the month before and in line with consensus forecasts.

The house price index rose 0.3% in August, below the 1% gain the month before and under the 0.8% rise expected.

Caterpillar drops after cutting forecasts

Industrial machinery manufacturer Caterpillar was a heavy faller today after cutting its full-year guidance for revenue and profit. The company reported a 44% drop in earnings in the third quarter as weakness in the mining sector hit demand for its products.

Chipmaker Broadcom plunged despite beating analysts’ forecasts with its third-quarter results, as it estimated fourth-quarter revenue that fell short of expectations.

Networking equipment maker Juniper Networks fell sharply after saying that sales in its fourth quarter will be between $1.2bn and $1.23bn, disappointing analysts who were expecting $1.23bn.

Aircraft manufacturer Boeing jumped after raising its full-year earnings forecast following a strong third quarter. The company delivered 170 commercial plans during the period, up from 149 the year before, helping it to top earnings expectation for the eighth quarter in a row.

College chain Apollo rocketed after adjusted fourth-quarter profits came in at 55 cents, well ahead of the 25 cents estimate.




Broker Tips
Abcam: Numis downgrades to add with a target of 570p.

ARM Holdings: Deutsche Bank increases target from 1080p to 1130p and maintains a buy recommendation. JP Morgan raises target from 625p to 750p and leaves its neutral rating unaltered. Societe Generale ups target from 640p to 680p, but still recommends selling. UBS increases target from 970p to 1050p, while downgrading from buy to neutral. Exane ups target from 940p to 960p and stays with its neutral rating.

BHP Billiton: Canaccord Genuity ups target from 2025p to 2065p retaining a hold recommendation. Morgan Stanley raises target from 2090p to 2190p reiterating its overweight rating.

Britvic: UBS takes target from 500p to 575p maintaining a neutral rating.

Centaur Media: Westhouse Securities moves target from 54p to 59p retaining an add rating.

Cineworld: JP Morgan shifts target from 428p to 425p and keeps an overweight rating.

Computacenter: Panmure Gordon ups target from 504p to 548p maintaining a hold recommendation.

De La Rue: Panmure Gordon reduces target from 964p to 786p and downgrades from hold to sell. Investec cuts target from 1070p to 885p downgrading from add to hold.

EnQuest: Westhouse Securities ups target from 130p to 138p and stays with its neutral rating.

Faroe Petroleum: Liberum Capital cuts target from 183p to 175p, while retaining a buy recommendation.

GKN: Societe Generale moves target from 425p to 430p and retains a buy recommendation. Exane moves target from 390p to 400p and keeps a neutral rating.

International Consolidated Airlines Group: RBC Capital raises target from 360p to 400p and keeps an outperform rating.

International Personal Finance: Canaccord Genuity downgrades from buy to hold with a target of 700p.

Kenmare Resources: Canaccord Genuity lowers target from 27p to 25p, while its buy recommendation remains unchanged.

Ocado: Exane downgrades from neutral to underperform, while leaving its target unchanged.

Petropavlovsk: Westhouse Securities lowers target from 130p to 120p, while its buy recommendation remains unchanged. JP Morgan moves target from 70p to 80p and reiterates an underweight rating. RBC Capital cuts target from 105p to 85p retaining an underperform rating.

Reckitt Benckiser: Societe Generale raises target from 4000p to 4750p and upgrades from sell to hold. Exane shifts target from 44p to 45p retaining an underperform rating.

Regus: RBC Capital increases target from 200p to 250p maintaining an outperform rating.

Renold: N+1 Singer shifts target from 44p to 53p and keeps a buy recommendation.

RM: Numis downgrades to add with a target of 140p.

Smiths News: N+1 Singer ups target from 185p to 200p, while downgrading to hold.

Spectris: UBS raises target from 2000p to 2400p reiterating a neutral rating.

Telecity Group: JP Morgan cuts target from 1200p to 1100p and maintains an overweight rating.

UBM: Liberum Capital reduces target from 890p to 840p staying with its buy recommendation. Nomura cuts target from 860p to 800p, while reiterating its buy recommendation. JP Morgan lowers target from 830p to 815p, while upgrading to overweight. Exane cuts target to 820p and maintains an outperform rating.

Vodafone Group: Credit Suisse increases target from 195p to 245p and reiterates an outperform rating.

Whitbread: Deutsche Bank raises target from 3350p to 3485p, while downgrading to hold. Credit Suisse raises target from 3530p to 3900p and retains an outperform rating

European Markets at Close by MarketWatch October 23, 2013: Banks Hit Europe After ECB Stress-Test News.

By Sara Sjolin, MarketWatch 
 
LONDON (MarketWatch) European stocks moved firmly lower on Wednesday, retreating from the longest winning streak in more than three years, as investors digested more quarterly earnings and news of European Central Bank stress tests on euro-zone banks. 

Markets were also hit by a report saying China’s largest banks tripled the amount of bad loans written off in the first half of 2013. See: Dollar, yen get safety bid on China bank worries
The Stoxx Europe 600 index XX:SXXP -0.62%  dropped 0.6% to close at 318.99. On Tuesday, the benchmark closed in positive territory for a ninth straight day, marking the longest winning run since June 2010, and ended at the highest level since June 2008. 



'Airpocalypse' in China: Scenes of heavy smog
Much of northeastern China has been shrouded in heavy smog, forcing the closure of roads, schools and a major airport, and adding to public pressure on Chinese officials to address mounting concerns over air pollution. 

“We had a difficult session in Asia, we had some talk about more nonperforming loans from Chinese banks, we had talks about tightening conditions in China and we’ve had the discussion about the [ECB’s] asset-quality review. The sum of those things has been not a great deal of positive impetus for the markets,” said Guy Foster, head of portfolio strategy at Brewin Dolphin. 

Wednesday’s selloff shouldn’t, however, mark the beginning of a longer-term correction, he said.
“Generally the months from October to April are pretty reasonable. We’re expecting further progress from equities, but not for them to race away. Valuations are reasonable,” he added. 

Among biggest decliners in the pan-European index, shares of STMicroelectronics NV FR:STM -8.88%   STM -8.29%  slid 8.9% after the chip maker posted a loss for the third quarter and said overall revenue fell on weakness in its wireless-chip business. 

Heineken NV NL:HEIA -4.45%   HKHHY -1.59%  slumped 4.5% after the Dutch brewer cut its outlook for the full year to reflect weakness in central and Eastern European markets, and some developing markets.

ECB stress tests

As a sector, banks weighed the most on the European indexes after the European Central Bank said it would begin a thorough review of the balance sheets of 130 financial institutions in the euro zone in November, to unearth potential risks before moving closer to a banking union for the region. As part of the asset-review exercise, the ECB will ask these banks to set aside 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their balance sheets. The 8% capital benchmark was slightly more than what many analysts had anticipated. 

Analysts at Société Générale said, however, there were no major surprises on the methodology of the stress test. “At first sight, the ECB appears as rigorous as expected. It’s good to see a fairly detailed account of how the ECB aims to proceed with its comprehensive assessment of banks, as transparency will be a key ingredient for success. All asset classes will be covered, including sovereign debt,” they said. 

“For Europe, the comprehensive assessment is a potential game changer in the broader context of building a European Banking union. This could break the negative feedback loop between confidence and uncertainty on the one hand, and credit growth and investment on the other,” they added. 


Commerzbank AG DE:CBK -3.64%  dropped 4.1% in Frankfurt, Intesa Sanpaolo SpA IT:ISP -2.61%  fell 2.6% in Milan, Banco Santander SA ES:SAN -2.39%   SAN -2.82%  fell 2.4% in Madrid, and BNP Paribas SA FR:BNP -2.18%  slipped 2.2% on Paris.

Movers

Among country-specific indexes, Spain’s IBEX 35 index XX:IBEX -1.84%  posted one of the biggest losses, off 1.8% at 9,828.30 even as the country’s central bank said that a two-year recession ended in the third quarter, when the economy grew 0.1%. 

Italy’s FTSE MIB index XX:FTSEMIB -2.38%  lost 2.4% to 18,910.68. Germany’s DAX 30 index DX:DAX -0.31%  dropped 0.3% to 8,919.86, retreating from an all-time closing high. The U.K.’s FTSE 100 index UK:UKX -0.32%  fell 0.3% to 6,674.48 and France’s CAC 40 index FR:PX1 -0.81%  dropped 0.8% to 4,260.66. 

Shares of Royal Bank of Scotland Group PLC UK:RBS -2.74%   RBS -3.57%  lost 2.7% in London after Citigroup reiterated its sell rating on the firm. 

Shares of drug maker GlaxoSmithKline PLC UK:GSK -1.91%   GSK -1.84%  dropped 1.9% after the company said net profit fell 12% in the third quarter, as sales to China were hurt by a high-profile Chinese-government investigation, alleging the company bribed doctors and others to sell more drugs. 

Orange SA FR:ORA -5.35% , formerly known as France Télécom, slid 5.4% after reporting a decline in third-quarter earnings, hit by a price war in its home French market. 

Shares of Peugeot SA FR:UG +3.32%  gained 3.3% in Paris after the car maker reaffirmed its full-year financial guidance. It also said it now expects the European automobile market will contract by 4% this year, compared with a previous forecast of a 5% fall.

Shares of Celesio AG DE:CLS1 +6.47%  rallied 6.1% to 21.73 euros ($30) in Frankfurt after The Wall Street Journal said McKesson Corp. MCK -0.26%  is expected to announce an offer on Thursday for the German health care firm. McKesson is expected to offer between €21 and €23 per Celesio share, people familiar with the matter said. Representatives from Celesio and McKesson weren’t immediately available to comment. 

Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.