European stocks hit by ash cloud fears

Europe's main stock markets fell sharply on Monday as shares in airlines dived on fears that a new ash cloud from an Icelandic volcano could ground flights, while debt concerns also weighed.

London's benchmark FTSE 100 index slid 1.51 percent to stand at 5,858.45 points in midday trade.

Frankfurt's DAX 30 shed 1.67 percent to 7,145.98 points and in Paris the CAC 40 index tumbled 1.84 percent to 3,937.24.

The Stoxx 50 index of leading eurozone companies dived 1.75 percent to 2,804.10 points.

Airline shares tumbled at the threat to traffic from an Icelandic volcanic ash cloud closing the skies over Europe, a year after European airlines were hit by month-long similar chaos.

In Monday trade, shares in German airline Lufthansa plunged by 4.11 percent, Air France-KLM stock was down 3.83 percent and International Airline Group (IAG), the owner of British Airways and Iberia, lost by 3.68 percent.

Scandinavian airline SAS dropped 4.02 percent and Finnair fell 3.32 percent.

Iceland's Grimsvoetn volcano began erupting late on Saturday. Ash from the eruption is expected to reach Scotland on Tuesday, and might reach France and Spain on Thursday.

In April 2010 Iceland's Eyjafjoell volcano erupted, spewing a massive cloud of ash that caused the planet's biggest airspace shutdown since World War II with more than 100,000 flights cancelled and eight million passengers stranded.

Traders were meanwhile also spooked on Monday by a downgrade of Greece's credit rating and fears over how the eurozone can dig itself out of its debt hole, and by data suggesting slowdowns in the eurozone and Chinese economies.

In late European trade on Friday, ratings company Fitch slashed Greece's rating by three notches to B+, citing its growing problems in getting its public finances in order.

On Monday, rising concerns emerged over the state of European economic recovery -- with key indicators slowing sharply, and eurozone stragglers behind Germany and France showing signs of stagnation.

London-based research giant Markit's composite eurozone index for manufacturing and services output suggested eurozone growth slowed to a seven-month low in May.

Separate figures showed Chinese manufacturing eased to a 10-month low in May, fuelling fears of a slowdown in the world's number two economy and sending Shanghai and Hong Kong shares down.

The HSBC China Purchasing Managers Index (PMI) slipped to 51.1 last month -- the lowest since July 2010 -- from a final reading of 51.8 in April, the bank said in a statement.

A reading above 50 indicates the sector is expanding while a reading below 50 indicates contraction.

Although the figures suggest production is still growing, they follow a number of measures by Beijing aimed at taming the economy and reining in soaring inflation, including several interest rate hikes.

Tata Steel to cut 1,500 UK jobs

Tata Steel is set to cut 1,500 jobs at sites in the North of England.
The Indian steel giant has proposed cutting 1,200 jobs in Scunthorpe and 300 in Teesside at its Long Products division, which is loss-making due to falling demand for steel, Tata said.
The firm also said it would invest £400m in the division over the next five years to help turn it around.
Tata is one of the biggest steel makers in the world, with operations in 26 countries.
In 2010, the company, which employs more than 80,000 people worldwide, recorded a turnover of $22.8bn (£14bn).
'Careful scrutiny'
The firm said demand for structural steel in the UK was only two-thirds of the level seen in 2007 and "is not expected to fully recover within the next five years".
As a result it proposed closing or mothballing parts of the Scunthorpe plant.
"We are proposing to take these actions only after going through an inclusive consultative process that involved very careful scrutiny of the Long Products business performance," said Karl-Ulrich Kohler, chief executive of Tata Steel's European operations.
He said the company would do "everything we can to provide [employees] with support and assistance".
Unions said the job losses would have a real impact on local communities.
"This is a real blow for the region," said Unite's national officer Paul Reuter.
"We have already demanded that there should be no compulsory redundancies and we believe that this should be possible to achieve."
George Dunning, leader of Redcar & Cleveland Borough Council, also said the job losses on Teesside would represent a "bitter blow" for the local economy.
However, he said the council, along with Jobcentre Plus, would do all they could to support those affected.
"We have a strong track record of responding swiftly to precisely this kind of situation," he said.
Tata has recently announced a number of investments in its Scottish and Welsh plants, including an £8m investment at its Clydebridge plant near Glasgow and a £53m investment at its Port Talbot plant.

US Stocks Fall for Third Straight Session, Housing Data Declines

US markets slid for a third consecutive session as housing data and a lowered forecast from Hewlett-Packard triggered worries of more economic weakness, although recent strength in corporate earnings helped shares to get of the boost, towards the end of the trading.

Hewlett-Packard guided the Dow Jones down following news that the giant PC maker suggested a lower estimate for the third quarter as well as for the whole year. The firm had a good first quarter results but the quarter ended April 30 cited the impacts of the Japanese disasters, weedy personal computer sales and falling operating profit for services.

Moreover, at least four of the brokerages cut HP ratings. Hewlett-Packard (NYSE:HPQ) shares led the bottom dwellers at Blue-chip, slumping 7.30%.

HP’s financial outcome were released a day before it was initially planned due to a leaked memo by CEO Leo Apotheker, which intimated managers of another tough quarter.

According to US federal department stats, builders initiated construction of new homes in smaller quantity during the month of April whereas permits also saw a downturn, showing no sign of improvement in the scruffy US housing industry.

The Commerce Department reported on Tuesday that housing starts slipped 10.60% on yearly rate of 523,000 in April, while starts in March were altered up to 585,000 from a real figure of 549,000.

Eeconomists had anticipated that housing starts to reach 575,000 on April on a seasonally adjusted basis. In a linked report, the Federal Reserve also reported on Tuesday that industrial production was almost flat throughout April.

Starts had averaged an inadequate 542,000 for the last quarter, representing a mere change in the declining US housing market. Meanwhile, economists weigh on a longer progressing average as the housing data often under goes steep fluctuations month to month.

The Dow Jones Industrial Average (INDEXDJX:DJI) dropped 68.79 points or -0.55% to close at 12,479.58. The index throughout for the trading hours remained down than the support line. The volume for the last session remained healthy at 192.71 million shares where as the index opened at the level of 12,541.33.

Hewlett-Packard Company led the blue chip index after the news that the tech giant cut its forecasts for the Q3 and for the full year.

Meanwhile, Home Depot (HD) was among index gainers following the home decorator topped earning estimates by 0.01 as stakeholders overlooked a drop in sales in comparison with last year stats. HD stated that bad weather impacted its sales.

Other notable shares of the companies included; Caterpillar (CAT) lost 3.80%, while Alcoa Inc. (AA), aluminum producer shares experienced a fall of 2.80%.

The S&P 500 Index (INDEXSP:INX) went down 0.04% or -0.49 points to settle at 1,328.98, , the lowest finish since April 19 and the third continuous day in red. The index experienced a lift to reach 1.330.36 and than towards the end it gave up several points. Among major S&P 500 sectors, industrials and materials dropped, whereas utilities moved forward.

The NASDAQ Composite Index (INDEXNASDAQ:IXIC) was the only sector which managed to gain during the last session by +0.03% or +0.90 points to 2,783.21. It achieved day’s low of 2,759.29 while the day’s high remained 2,783.61.

Index demonstrated a better monthly performance of +0.67% or +18.56 points which made it for a quarter with -48.37 points or -1.71% but it presented solid performance of 18.59% or 436.36 for the year.

Wal-Mart (WMT) slid as investors paid attention on US same store sales results that declined 1.10%. The retailer individually, however, reported a better than projected profit.

Meanwhile, financial stocks were remained up as JPMorgan (NYSE: JPM) was among the leaders, increasing after the financial institutions annual shareholder meeting on Tuesday.

The stocks which added most for the session were eLong Inc. (LONG) while it followed by the Gulf Resources Inc (GFRE), Oilsands Quest Inc (BQI), MAKO Surgical Corp. (MAKO), Oxigene Inc (OXGN) and Sino Clean Energy Inc (SCEI) during the last trading session. GFRE soared 57.68% to close the day’s trading at $4.18 while its volume reached 8.50 million shares.

Bank of America Corporation (NYSE:BAC) was among the top volume gainers for the session with 144.66 million shares. Joining the list was SIRI, SPY, HPQ, INTC and XLF.

The dollar shed some of its earlier gains versus a basket of key currencies, after dealing at higher prices early in the session.

The dollar’s down fall relaxed losses in oil prices as light sweet crude fell 0.50% to settle $96.91 per barrel, while Brent crude declined 0.80 percent to $109.99. Considerable precious metals also declined as gold prices fall to reach $1,479.80 per ounce and silver ended the North American session at $34.49.

Microsoft Corp said on Tuesday that it has agreed to buy popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker’s 36-year history. Buying Skype would give Microsoft a potentially valuable communications tool as it tries to become a bigger force Internet and in the increasingly important smartphone market.
Microsoft said it will marry Skype’s functions to its Xbox game console, Outlook email programme and Windows smartphones. The company said it will continue to support Skype on other software platforms.
The sellers include eBay Inc. and private equity firms Silver Lake and Andreessen Horowitz.
About 170 million people log in to Skype’s services every month, though not all of them make calls. Skype users made 207 billion minutes of voice and video calls last year.

Most people use Skype’s free calling services, which has made it difficult for the service to make money since entrepreneurs Niklas Zennstrom and Janus Friis started the company in 2003. An average of about 8.8 million customers per month, or just over 1% of the user base, pay to use Skype services.
Skype lost $7 million on revenue of $860 million last year, according to papers that the company has filed since announcing its intentions last summer to launch an initial public offering (IPO) of stock. The IPO was later put on hold. Skype’s long-term debt, net of cash, was $543,883 at the end of 2010.
The Skype takeover tops Microsoft's biggest previous acquisition of a $6-billion purchase of the online ad service aQuantive in 2007.
Microsoft said Skype will become a new business division headed by Skype CEO Tony Bates, who will report directly to Steve Ballmer.
Although it makes billions from its computer software, Microsoft has been accustomed to losing money on the Internet in a mostly futile attempt to catch up to Google in the online search market. Microsoft had made a $47.5-billion bid to buy Yahoo three years ago, but withdrew the offer after Yahoo balked. Yahoo is now worth about half of what Microsoft offered.

Google 'to make bulbs and dishwashers'

After the internet, Google is now set to foray into the domain of household appliances - it will produce bulbs, thermostats and dishwashers, and integrate them with wireless technology, the search engine giant has said. According to Google, the new range of "almost anything electrical" household devices would be launched by the end of this year, and wireless technology will help these devices to communicate with tablets, 'The Daily Telegraph' reported.
Announcing the new initiative, codenamed Project Tungsten, at a software developers' conference in San Francisco, Google said its aim was to let a range of devices "discover, connect and communicate" with each other.
In a series of demonstrations using its Android operating system 'Android@home', Google showed a tablet that could turn lights on and off, send music from the Internet to a hifi and even a "near-field communications" chip that simply had to be touched on speakers to start them playing an album.
Although entering the crowded "home automation" market is brave move by Google, the US-based firm highlighted 400,000 Android devices are now being activated every day.
It said that apps integrated into the home environment, such as an alarm clock application that gradually raised the lights and turned on a user's radio, were the next logical extension.
The company already offers 200,000 different apps and they have been downloaded 4.5 billion times on 100 million different devices, mostly mobile phones.
Google also announced a service allowing users to rent movies online as well as to store music they already own on the Internet.

Sony to restore PlayStation Network by end of May

Sony said Tuesday it aimed to fully restore its PlayStation Network, shut down after a massive security breach affecting over 100 million online accounts, by the end of May. Sony also confirmed that personal data from 24.6 million user accounts was stolen in the hacker attack last month. Personal data, including credit card numbers, might have been stolen from another 77 million PlayStation accounts, said Sony Computer Entertainment Inc. spokesman Satoshi Fukuoka.
He said Sony has not received any reports of illegal uses of stolen information, and the company is continuing its probe into the hacker attack. He declined to give details on the investigation.
Sony shut down the PlayStation network, a system that links gamers worldwide in live play, on April 20 after discovering the security breach. The network also allows users to upgrade and download games and other content.
Sony was under heavy criticism over its handling of the network intrusion. The company did not notify consumers of the breach until April 26 even though it began investigating unusual activity on the network since April 19.
Last month, U.S. lawyers filed a lawsuit against Sony on behalf of lead plaintiff Kristopher Johns for negligent protection of personal data and failure to inform players in a timely fashion that their credit card information may have been stolen. The lawsuit seeks class-action status.
Fukuoka declined to comment on the lawsuit.

Toyota Q4 operating profit down 52 per cent, production woes cloud outlook

TOKYO: Toyota Motor Corp posted a 52 percent fall in quarterly operating profit on Wednesday and gave no annual forecasts, as expected, as it struggles to measure the scope of the disruption to production after the March 11 earthquake.

The world's biggest automaker is facing another tough year as a severe shortage of parts caused by Japan's biggest earthquake on record hammers production just as it was putting its recall woes behind it.

President Akio Toyoda said Wednesday the automaker should see a pick-up in output from June to 70 percent of prequake plans, earlier than expected on April 22 when it forecast a return to full production by November or December from less than half of planned volumes now. It did not specify how fast it would get there.

On Tuesday Toyota denied a Nikkei newspaper report on Tuesday that normal production would come two to three months earlier than planned.

The massive hit to production will almost certainly mean Toyota will fall behind General Motors Co and possibly Volkswagen AG to rank third in global vehicle sales this year.

With inventory tight and supplies short for popular models such as the Prius hybrid, Toyota is losing consumers to rivals such as South Korea's Hyundai Motor Co, which has been nipping at its heels for the past several years.
Toyota said on Wednesday its January-March operating profit was 46.1 billion yen ($570 million) , compared with an average estimate of 94.6 billion yen from 17 analysts who revised their numbers after the quake, according to Thomson Reuters I/B/E/S.

Fourth-quarter net profit, which includes earnings made in China, fell 77 percent to 25.4 billion yen.

For the business year to March 2012, analysts forecast an average operating profit of 307.5 billion yen ($3.83 billion), down 34 percent from 468 billion yen last year. Uncertainties over the broken supply chain have yielded a wide range, from a loss of 25 billion yen to a profit of 846 billion yen.

Analysts say the disruption is a temporary one caused by the shortage of supply, not demand, and that Japanese automakers should reverse the trend next business year.

Toyota's shares have led a fall in Japanese auto stocks since the disaster, losing 11 percent compared with 9.9 percent at Honda and 5.8 percent at Nissan as of Tuesday's close.

Wipro to acquires majority stake in Brazil-based manufacturer

IT bellwether Wipro Ltd on Wednesday said it has signed an agreement to acquire majority stake in Brazil-based hydraulic cylinder manufacturer RKM Equipamentos Hidraulicos. "Subject to customary regulatory approvals, the acquisition is expected to be completed during the quarter," the company said in a statement.
The acquisition will be part of Wipro's infrastructure engineering division. However, the company did not divulge the financial details of their transaction.
Wipro is a tier-1 supplier to global original equipment manufacturers (OEMs) of construction and earth moving machinery, material handling equipment, forestry equipment, heavy and medium commercial vehicles among other industries, across Asia and Europe.
"Brazil is an extremely attractive market for us, driven by a high growth economy and huge investments in infrastructure over the next few years," said Pratik Kumar, president, Wipro Infrastructure Engineering.
"RKM provides us an ideal platform to expand our portfolio of offerings in the Brazilian market as well as the rest of Latin America. We are extremely impressed by their management team and vision in creating one of the finest hydraulic cylinder operations," he added.
At the Bombay Stock Exchange, the shares of the company were up 1.07% to trade at Rs 441.

HSBC eyes $3.5 billion in savings, reviews US cards business

HONG KONG/LONDON: HSBC Holdings Plc is reviewing its US cards business and streamlining its wealth management and retail banking operations as it eyes savings of up to $3.5 billion, Europe's biggest bank said on Wednesday.

HSBC said the savings would help it reduce the proportion of revenue spent on expenses to 48-52 per cent by 2013 from 61 per cent in the first quarter, as it battles rivals such as Standard Chartered to keep costs under control.

The extent of HSBC Chief Executive Stuart Gulliver's task to streamline and revive HSBC was laid bare on Monday, after a jump in costs dragged quarterly profits down some 14 per cent.

"A target of 2013 will give them enough time," said John Wadle, an analyst with Mirae Asset Securities in Hong Kong.

"I think they are going to streamline high-cost income businesses and my personal guess is that the actual cost cutting may result in only about $1-2 billion."

HSBC will now focus its wealth management business to 18 of the most relevant economies, and limit retail banking to markets where it can achieve profitable scale, it said. Currently, the bank has operations in some 87 markets and employed more than 287,000 people as of June 2010.

HSBC said it would exit retail banking in markets including Russia and grow those operations in places such as Singapore, Mexico, Brazil and Turkey.

The US card and retail business delivered profit before tax of $306 million in the first quarter of this year, down about 15 per cent from a year ago. HSBC could free up to $25 billion from selling the credit card operations, analysts at Barclays Capital had estimated before the statement.

The United States has typically been seen by many analysts as a low-return area for the bank, following HSBC's disastrous purchase of the Household mortgage business there before the global financial crisis.

It currently has some $33 billion in customer loans and 475 branches there.

UBS hires Kamat as chairman, financial institutions coverage for Asia-Pac IB

HONG KONG: Swiss bank UBS AG has hired Aashish Kamat, a former J P Morgan Chase & Co banker , as chairman of financial institutions coverage for the investment bank for Asia-Pacific, according to an internal memo seen by Reuters on Wednesday.

"Aashish will work with all business divisions of the Investment Bank in the Asia-Pacific ... to provide advice and solutions to our FIG (financial institutions groups) clients to address the challenges that they face in light of all these changes," the memo added.

Kamat would report to UBS Asia-Pacific co-CEOs Alex Wilmot-Sitwell and Chi-Won Yoon, the memo added.

HSBC to cut retail banking to save up to $3.5 bn

Hong Kong/London: HSBC Holdings Plc, Europe’s biggest bank, is looking to slash up to $3.5 billion in costs by cutting the scale of its wealth management and retail banking businesses, it said on Wednesday.
Cutting costs would help the bank reach a cost efficiency ratio of 48-52% by 2013, HSBC said in a statement posted on the Hong Kong stock exchange.
“We will increase capital deployment discipline, directing investment to faster growing markets and businesses as we scale back elsewhere,” HSBC chief executive Stuart Gulliver said in a statement.
It was also conducting a strategic review of its credit card business in the United States, Gulliver said. If sold, HSBC could release $25 billion from the operations, analysts at Barclays Capital had said before the statement.
The extent of Gulliver’s task to streamline and revive the bank was laid bare on Monday, after a jump in costs helped drag quarterly profit 14% lower.
HSBC would focus its wealth management business in 18 of the most relevant economies, and limit retail banking to markets in which it can achieve profitable scale, it said. Currently, the bank has operations in about 87 markets.
HSBC did not identify the 18 economies it would focus on.
The bank would also target a dividend payout ratio of 40-60%, while maintaining its return on common equity at 12-15%, the bank said.
That “could free up both some costs and also some capital to invest into higher-growth markets like Asia or Latin America,” said Tom Quarmby, analyst at Barclays Capital in Asia.
Gulliver, 51, was named CEO in September after a damaging boardroom power struggle, and had been expected to put most immediate attention on the retail arm, especially in the United States.
The bank made no mention of its 16% stake in Chinese insurer Ping An Insurance (Group) Co of China Ltd , which could potentially deliver a $5 billion gain if sold.
After a disappointing first-quarter update, HSBC shares could be vulnerable, “unless management can provide a convincing case at the strategy day as to why returns can be improved,” said Robert Law, analyst at Nomura in London.