LONDON (AFX) - Leading European exchanges are expected to open flat, as investors lock in profits following last weeks solid earnings, and as dealers digest a busy earnings diary this week, although good numbers from Deutsche Bank could offer some relief, dealers said.
On Monday, the DJIA lost 18.41 points to 11,201.292. Meanwhile, the tech-heavy Nasdaq composite index fell by 2.04 points or 0.1 pct to 2,092.10.
And over on Asia, the Nikkei 225 ended the morning 11.15 points higher at 15,467.963, while the Hang Seng began its afternoon session slipping by 25.02 points at 16,946.32.
Still in Asia, oil prices remained in focus amid caution about the Middle East conflict, with crude light reaching 74.5 usd per barrel from its closing price of 74.40 on the New York Mercantile Exchange.
The Swiss market will remain closed for the Swiss National Day holiday.
In Europe, the financial sector will provide focus on a busy earnings day, with numbers expected from Deutsche Bank and Deutsche Post.
Deutsche Bank said its second quarter pretax profit rose 32 pct from a year earlier to 1.9 bln eur, largely in line with market consensus, as it saw substantial year-on-year profit growth in its investment banking and asset management businesses.
Revenues before risk provisioning increased 15 pct to 6.8 bln eur, again in line with market expectations, which were at 6.825 bln.
Administrative expenses rose 9.7 pct to 4.838 bln eur, compared with analysts' expectations of 4.837 bln.
Net income was 1.226 bln eur, up from 947 mln and slightly below the market consensus of 1.232 bln.
Chief executive Josef Ackermann said the bank remains 'committed to growth by organic investment and by focused incremental acquisitions.'
Meanwhile, German peer Deutsche Post reporter second quarterly sales of 14.488 bln eur from 488 mln eur, with EBIT reaching 641 mln eur from 781 mln and net profit 254 mln eur from 488 mln eur in the year before, and expects to see full year EBIT of at least 3.9 bln eur.
Still among financials, investors will eye Banesto as it joins Spain's IBEX-35 Index today.
Elsewhere, Man AG, one of Europe's leading manufacturers of vehicles, engines and mechanical engineering, reports second quarter results tomorrow. The group is expected to unveil robust second quarter results, with strong profit improvements in its Diesel Engines and Commercial Vehicles businesses, analysts said.
Operating profit is expected to average 245.25 mln eur from 171 mln, sales at 3.56 bln from 3.35 bln and net profit at 177 mln from 97 mln.
'We expect MAN to report another strong quarterly performance, with notable margin improvement in both Commercial Vehicles and Diesel Engines,' according to Dresdner Kleinwort.
Dresdner said it expects group operating profit margin at 6.8 pct from 4.8 pct for the same quarter last year, with the core Commercial Vehicles division gaining an 80 basis point margin improvement to 7 pct and in Diesel Engines, profit margin is estimated at 11.0 pct from 5.7 pct.
Still within the engineering sector, high-end car manufacturer Bayerische Motoren Werke is expected to report an average growth of 18.9 pct in second quarter group pretax profit, with the core Automotive division achieving an average growth of 7.3 pct as revenues increased during the period, analysts said.
Group pretax profit is estimated at between 1.044-1.147 bln eur, or an average of 1.090 bln, up by nearly 19 pct from 916 mln last year.
Automotive pretax profit is forecast in the range of 851-876 mln eur, or an average of 867.6 mln, up 7.3 pct from 808 mln for the same period last year. Sales are estimated at 12.7-13.97 bln eur, giving an average of 12.82 bln compared with 12.159 bln last year, with sales in the Automotive division forecast at 9.8-12.63 bln or an average of 11.93 bln compared with 11.911.
Meanwhile, the utilities sector is expected to register movement, with Suez and Veolia Environnement both reporting second quarter sales.
For Suez, UBS expects interim revenues up 12 pct year-on-year to 22.7 bln eur, driven primarily by higher electricity prices in Europe and international energy positive developments.
The broker said this is a marginal slowdown from the first quarter of this year, which benefited from particularly favourable weather conditions.
Regarding Veolia, UBS is looking for interim revenues up 14 pct to 14 bln eur, with EBIT of 484 mln eur and net debt of 13.7 bln, all numbers on track with the group's first quarter results, and noted that the energy and transport divisions should remain the key drivers.
Telecoms will be in focus as Tele2 AB is expected to report a fall in second quarter EBITDA to 1.453 bln skr from 1.689 bln a year earlier, on the back of the continued migration from fixed-line services, and due to the acquisition of loss-making Versatel and Communitel, according to a survey of analysts by AFX News and SME Direkt.
Analysts said the market will primarily be looking for confirmation that the company's increased marketing expenditure has paid off in increased numbers of customers, particularly for broadband services. The impact of the erosion of the fixed-line business would also be of interest, they added.
Analysts see sales for the operator at 13.869 bln skr, up from 12.043 bln last year.
Carnegie was looking for sales of 13.676 bln skr, and an EBITDA of 1.381 bln.
Meanwhile, Dutch peer Royal KPN is expected to report higher second-quarter earnings on the back of stronger sales at its Dutch and German mobile operations, while those at the fixed line division are expected to again show a decline, analysts said.
'We expect just another quarter that will show a continuation in trends,' said Rabo Securities analysts.
According to analysts polled by AFX News, net profit is seen at between 299-338 mln eur, from 239 mln in the same quarter last year, while operating profit is estimated at 1.150-1.161 bln eur, from 1.164 bln.
Sales are seen at 2.946-3.029 bln eur, from 2.950 bln, while the interim dividend is estimated to be 0.15 eur from 0.13 last year.
Second-liner tech company Iliad will also report second quarter results. UBS is looking for sales of 228 mln eur, up 30 pct year on year, driven by the internet and forecast sales of 200 mln eur, up 46 pct year on year for the segment.
The broker also expects a seasonal decline in Telephony revenues, noting that while it believes that the launch of the Freebox HD supported customer intake, seasonality has probably led to a lower subscriber growth than in Q1 2006.
In the UK, the market will receive second quarter data from HBOS and William Hill, while Ryanair, the Dublin-based low fares airline, today announced record first quarter profits, but warned that it may incur a loss in the final three months of 2006-07 if oil prices remain high.
Over in the US, investors will await macro data including the June reading of consumer spending , and data for construction spending in June, as well as the July reading of the ISM Index, seen as 54.0 pct from a previous reading of 53.8 pct. The market also awaits second quarter results from Eastman Kodak, and Verizon. newsdesk@afxnews.com ze/cmr COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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