Subprime worries send Europe, US markets lower

Equities markets in the Asia-Pacific region were higher on Friday. In India, the Sensex added 0.1 percent to 15,565.55, while in Australia the Sydney Ordinaries gained 0.6 percent to 6,457.7. The Hong Kong and Singapore markets saw even bigger gains, with the Hang Seng index 1.2 percent higher to 23,291.9 while the Straits Times index was up 1.3 percent to 3,651.38. The gains were smaller in Tokyo, where the Nikkei 225 gained 0.2 percent to 18,157.93 and the Topix closed at 1,776.17, 0.5 percent higher on the session.

Some sectors were higher after big overnight gains on Wall Street. In the electronics sector, Matsushita Electric Industrial (TYO: 6572; NYSE: MC), which makes the Panasonic brand of consumer electronics, added 1.5 percent to ¥2,385. The steel sector was also higher, with Nippon Steel (TYO: 5401) adding 3.9 percent to ¥955 after it was reported that Japan’s output of crude steel was at a 33-year high in the first half of 2007. On the other hand, the telecommunications sector was lower after KDDI (TYO: 9433) and Softbank (TYO: 9984) both decided to cut fees to mobile phone users. NTT DoCoMo (TYO: 9437) fell 1.1 percent to ¥181,000, while Softbank dropped 2.7 percent to ¥2,665 and KDDI was 6.1 percent lower to ¥853,000. The consumer finance sector also saw losses. Sanyo Shinpan (TYO: 8573) was 2.2 percent lower to ¥3,520, while Takefuji fell 5.4 percent to ¥3,820 and Promise was down 6.6 percent to ¥3,540.

European markets saw big losses on the session as investors worried about problems in the US housing sector. The FTSE Eurofirst 300 dropped 1.16 percent to 1,599.63. In Frankfurt the Dax was 1.46 percent lower to 7,874.85, while the CAC-40 fell 1.79 percent to 5,957.16 in Paris. Madrid’s IBEX dropped 1.82 percent to 14,930.1 The Dax and the CAC-40 each had only two gainers on the session. The best performer on the Dax was in the pharmaceuticals sector, where Schering (FWB: SCH) added 0.28 percent to €104.83. The other gainer there was Volkswagen (FWB: VOW; OTC: VLKAY), which gained 0.21 percent to €121.79. In Paris, meanwhile, the automobile manufacturing sector had the biggest winner of the day as Peugeot (Euronext: UG; OTC: PEUGY) was up 1.36 percent to €63.96. Carmakers remained mixed, however, as DaimlerChrysler (FWB: DCX; NYSE: DCX; TYO: 7663) fell 2.47 percent to €65.16. As on the Dax, the other gainer of the day on the CAC-40 was in the pharmaceuticals sector. Sanofi (Euronext: SAN; NSYE: SNY) was 0.32 percent higher to €62.46. The worst performance came from steel good manufacturer Vallourec (Euronext: VK), which was 4.89 percent lower to €216.18 on the news that it will sell two firms to Arcelor-Mittal (Euronext: MT; NYSE: MT). The construction sector in Paris was lower, with Vinci (Euronext: DG) down 2.48 percent to €55.77 and Lafarge (Euronext: LG) falling 3.64 percent to €126.75. Banks also declined. Societe Generale (Euronext: GLE) was 2.29 percent lower to €135.54, while Commerzbank (FWB: CBK) was down 2.77 percent to €33.73 on concerns about the US housing market and BNP Paribas (Euronext: BNP; TYO: 8665) dropped 2.99 percent to €84.24. In the oil sector, Total (Euronext: FP; NSYE: TOT) fell 2.73 percent to €59.47.

The London markets did not decline as much as the continental European markets, but they were down as well. The FTSE 100 fell 0.83 percent to 6,585.2, while the FTSE 250 dropped 0.51 percent to 11,819.4. Gainers on the day included insurer Friends Provident, which had the best day on the 100 as it added 4.25 percent to 186.4p. On the 250, consumer goods group SSL International (LSE: SSL) did the best, gaining 3.99 percent to 469.25p. Other advances on the day included aerospace and defense group BAE Systems (LSE: BA; OTCBB: BAESY), which was up 1.6 percent to 428p. Imperial Tobacco (LSE: IMT) was 1.11 percent higher to £22.78, while British Energy (LSE: BGY) gained 0.86 percent to 527.5p. Off of the major indices, software company iSoft (LSE: IOT) added 19 percent to 65.5p after it received a bid from German computer information systems group CompuGroup (FWB: COP). Miners were mixed on the session, with Antofagasta (LSE: ANTO) up 1.45 percent to 736p but Lonmin (LSE: LMI) 2.72 percent lower to £36.85. The biggest loser on the day on the 100 was Cable and Wireless (LSE: CW), which fell 3.6 percent to 182p on shareholder protests over executive pay. British Airways (LSE: BAY; NYSE: BAB), meanwhile, dropped 2.83 percent to 420p on reports that the current stringent airport security measures could remain in place for the foreseeable future. Asset management group Bluebay (LSE: BBAY) was the worst performer on the 250 as it dropped 4.91 percent to 430.75p. Auto insurer Admiral Group (LSE: ADM) was 4.85 percent lower to 819p, while internet gamer PartyGaming (LSE: PRTY) fell 4.58 percent to 31.25p.

In early afternoon trade, Wall Street also saw steep declines a day after the Dow Jones Industrial Average closed above the 14,000 level for the first time in history. The Dow was down 1.26 percent to 13,824.34, while the Naasdaq Composite fell 1.41 percent to 2,681.56 and the S&P 500 was 1.24 percent lower to 1,533.81. Disappointing quarterly reports and more concerns about the housing market and subprime mortgages drove the declines. In the internet sector, Google (NAS: GOOG) dropped 5.7 percent to $517.53 after it reported that earnings were lower in the quarter on higher operating expenses and the adding of employees. Microsoft’s (NAS: MSFT)report headlined higher earnings but bad news on the sale of personal computers sent shares 1.7 percent lower to $$30.98. Construction machinery maker Caterpillar (NYSE: CAT) fell 8.4 percent to $79.70 after it reported that earnings dropped on declines in truck engine sales and a decline in construction in North America. Construction woes hit homebuilders as well, sending the Dow Jones US Home Construction Index 3.3 percent lower to 516.91, its lowest level since October 2003, on predictions that the US housing market will be in the doldrums well into next year. Pulte Homes (NYSE: PHM) dropped 2.8 percent to $21.78, while Centex (NYSE: CTX) was 3.9 percent lower to $41.73. Comments from the President of the St. Louis Federal Reserve that the mess in the subprime mortgage sector was big enough to affect the housing markets and consumer spending sent shares in banks lower. Citigroup (NYSE: C) had gone higher on a positive quarterly report, but dropped 1.3 percent to $50.45 on subprime concerns. Bank of America (NYSE: BAC) was also lower, down 1.77 percent to $48.40 despite a 5 percent gain in earnings in the most recent quarter after it also increased provisions for losses from bad loans.