Archive for September, 2009

U.S. durable goods orders drop 2.4 percent in Aug (Reuters)

Friday, September 25th, 2009 | Finance News

WASHINGTON (Reuters) –
New orders for long-lasting U.S. manufactured goods fell unexpectedly in August, dropping by their biggest margin in seven months, following a plunge in commercial aircraft orders, the government reported on Friday.

The Commerce Department said durable goods orders tumbled 2.4 percent, the largest decline since January, after rising by a revised 4.8 percent in July. New orders for July were previously reported to have increased 5.1 percent.

Analysts polled by Reuters forecast orders rising 0.5 percent in August. Compared with the same period last year, new orders were down 24.9 percent.

Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health.

U.S. stock index futures fell on the report, while government bond prices rose.

"This is a bit of a reality check for people. It means there is more to be done and we are not out of the woods yet," said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.

The data coming on the heels of a report on Thursday that showed a surprise drop in existing home sales in August was a reminder that recovery from the worst recession since the 1930s would be uneven. Doubts linger over its sustainability as consumer spending remains constrained by a weak labor market.

Non-defense aircraft and new parts orders plunged 42.2 percent in August, likely reflecting a drop in civilian aircraft orders received by Boeing (BA.N). New orders for transportation equipment dropped 9.3 percent.

New durable goods orders excluding transportation were flat in August, after rising for three straight months, the department said. Analysts polled by Reuters had expected new orders, excluding transportation to rise 1.0 percent, after a 1.1 percent increase in July.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, unexpectedly fell 0.4 percent in August. Analysts polled by Reuters had expected core capital goods to increase 1.3 percent.

The prior month was revised to show a 1.3 percent drop, previously reported as a 0.3 percent fall.

Durable goods inventories fell 1.3 percent in August after dropping 1.1 percent the prior month and declining for eight consecutive months. Shipments fell 1.4 percent after two months of straight gains. Shipments rose 2.2 percent in July.

(Reporting by Lucia Mutikani; Editing by James Dalgleish)

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World stock markets mixed as G-20 eyes recovery (AP)

Friday, September 25th, 2009 | Finance News

LONDON – World stocks traded in narrow ranges Friday as investors looked to leaders of the Group of 20 rich and developing economies assembled in the U.S. for assurance that they will not stifle global economic recovery by prematurely taking away stimulus measures.

In afternoon trading in Europe, Britain's FTSE 100 was up 0.4 percent to 5,105.61 and France's CAC 40 climbed 0.02 percent at 3,759.01. Germany's DAX was down 0.1 percent at 5,600.09.

Asian markets closed down, with Tokyo the heaviest loser — down 2.6 percent — and Wall Street was set to open marginally higher after markets fell Thursday. Investors had pulled out of stocks amid worries about the sustainability of this year's rally and news of an unexpected drop in sales of existing homes in August.

Dow Jones industrial average futures rose 0.3 percent to 9,661 and Standard & Poor's 500 futures added 0.3 percent to 1,047.60.

Investors are increasingly nervous that governments will unwind emergency measures that have helped money flow through financial markets since the crisis erupted last year. This week, the U.S. Federal Reserve announced it would slow its purchases of mortgage-backed securities, while the European Central Bank said it would curtail certain types of dollar-denominated loans.

"Investors are a bit nervous after the run the markets have had, which is entirely rational," said David Hussey, head of European equities at MFC Global Investment Management. "We have had a bit of a sell-off this week. The market's probably got a bit overextended in the short term and there has been retrenchment across the board, in America, Asia and Europe has followed that."

Amid the concern, G-20 leaders were gathered for a two-day meeting in the U.S. dedicated to bringing about a strong and sustainable turnaround after the world's worst downturn in decades. Both President Obama and British Prime Minister Gordon Brown said nations should not move too quickly to end low interest rates, stimulus spending and other props to growth.

"Much of the gains across asset classes so far this year — to levels not justified by fundamentals — have been a direct result of cheap and easily available funding," Dariusz Kowalczyk, chief Investment strategist for SJS Markets in Hong Kong, wrote in a note. "News that the amount and availability of liquidity will be imminently limited caused fears that asset bubbles will be diffused sooner."

With little economic and corporate data due for release in Europe, investors were awaiting figures on U.S. durable goods orders in August, due later Friday.

"Anything that gives traders cause for concern — and an unexpected decline in durable goods would do precisely this — could easily act as the trigger to take more money off the table ahead of the weekend break," said Anthony Grech, market strategist at IG Index.

In Japan, the Nikkei 225 stock index shed 278.24 points, or 2.6 percent, to 10,265.98 after Nomura, the country's leading brokerage, announced its biggest shares sale ever, weighing on the broader market.

Hong Kong's Hang Seng lost 0.1 percent to 21,024.40, and China's Shanghai index dropped 0.5 percent.

Elsewhere, South Korea's Kospi shed 0.1 percent, India's Sensex edged lower by 0.1 percent and Indonesia's index lost 1.0 percent. Taiwan and Australia's markets were up 0.3 percent.

Overnight on Wall Street, the Dow fell 0.4 percent to 9,707.44 and the S&P 500 index lost or 1.0 percent to 1,050.78.

Oil prices gained slightly after a two-day plunge. Benchmark crude for November delivery was up 35 cents at $66.24 in European trade.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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Unilever pays 1.3 billion euros for Sara Lee brands (Reuters)

Friday, September 25th, 2009 | Finance News

LONDON (Reuters) –
Consumer goods giant Unilever agreed to pay 1.275 billion euros ($1.87 billion) for Sara Lee's (SLE.N) personal care brands like Sanex and Radox on Friday to reinforce its global lead in deodorants and skin cleansing.

The Anglo-Dutch Unilever Plc/NV (ULVR.L) (UNc.AS) is buying a business with 85 percent of its sales in Europe, while Sara Lee will now look to sell its household goods business separately as it launched a $1 billion share buyback program.

The deal marks the first major acquisition for Unilever's new Chief Executive Paul Polman, while Sara Lee's CEO Brenda Barnes is now half-way through a planned sell-off of non-core business aimed at focusing the U.S. group on food and drink.

"The Sara Lee brands enjoy strong consumer recognition, offer significant growth potential and are an excellent fit with Unilever's existing business," said Polman in a statement.

Unilever says Sanex, Radox and also Duschdas brands will complement its Dove, Axe and Rexona at slightly lower prices and strengthen its European business in key markets such as Britain, the Netherlands, Germany, France, Spain, Italy and Denmark.

Sara Lee said the brands sold accounted for 55 percent of the profits from its businesses up for sale, and added it had seen significant interest in its household brands including Ambi Pur air fresheners, Kiwi shoe polish, Vapona insecticides and its non-European cleaning brands.

"We intend to use proceeds from the divestiture to invest for growth in our core business and to repurchase stock," Barnes said in a Sara Lee statement.

The U.S. group also reiterated it intended to maintain its current quarterly dividend of 11 cents for the next four quarters regardless of the timing of disposals.

Unilever Plc shares were flat at 17.36 pounds by 6:23 a.m. EDT in a slightly firmer UK stock market.

Credit Suisse analyst Charlie Mills said the price Unilever is paying of 10 times core operating profit, or EBITDA, is not huge by industry standards which reflects the fairly disparate collection of assets which also include Brylcream hair gel.

"We're not convinced that this is the greatest collection of assets but another acquisition shows Unilever still moving from the back foot (cost cutting and disposals) to the front foot (volume growth and acquisitions)," he said.

Sara Lee put its household and personal care business up for sale earlier this year, and it was expected by analysts to break up the wide-ranging business to make a sell-off easier.

The Sara Lee brands being acquired by Unilever generated annual sales in excess of 750 million euros with EBITDA of 128 million euros for the year ending June 2009. The overall Sara Lee business up for sale had annual sales of 1.5 billion euros.

The deal is subject to regulatory approval and consultation with European employee works councils.

(Reporting by David Jones; Editing by Jon Loades-Carter)

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