Fort Myers & Naples Insurance | Site For Lease

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) — European stocks eked out gains on Friday, buoyed by a late surge on Wall Street in the prior session, but action was subdued as traders took to the sidelines ahead of key U.S. nonfarm payrolls data due later.

The Stoxx Europe 600 index
/quotes/comstock/22c!sxxp
(ST:SXXP
259.32,
+1.14,
+0.44%)
gained 0.2% to 258.66 points, after ending unchanged on Thursday at 258.18 points, with bigger gains becoming muted by the day’s end after an initial boost on a string of upbeat U.S. economic data.

While Europe markets are firmer in the early going, the backdrop was looking jittery. Asian markets were struggling to stay positive late on Friday and early indications for U.S. futures showed expectations for opening losses on Wall Street.

Key data on the table is August non-farm payroll data. Economists surveyed by MarketWatch forecast a net gain of 30,000 private-sector jobs, but an overall decline of 105,000.

Analysts warned that if the data falls short, it could reverse the big rally seen for markets on Wednesday. The Stoxx 600 index logged a 2.7% gain that day, while the Dow Jones Industrial Average
/quotes/comstock/10w!i:dji/delayed
(DJIA
10,320,
+50.63,
+0.49%)
rose 254.75 points, or 2.5%.

Ben Potter, market strategist at IG Markets, said “anything with a bit of gloss on it could help again lock in confidence for equities.”

“Another risk, however, comes with the U.S. Labor Day holiday on Monday, so any uncertainty could add to the temptation to take money off the table, ensuring traders don’t get caught on the wrong side of any big move lower in Asia or Europe at the start of next week,” he added.

Among regional indexes, Germany’s DAX-30
/quotes/comstock/30p!dax
(DX:DAX
6,112,
+27.94,
+0.46%)
rose 0.1% to 6,090.95 points.

France’s CAC-40 index
/quotes/comstock/30t!i:px1
(FR:PX1
3,653,
+21.23,
+0.58%)
added 0.2% to 3,638.38 points and the U.K. FTSE 100 index
/quotes/comstock/23i!i:ukx
(UK:UKX
5,397,
+25.82,
+0.48%)
gained 0.2% to 5,380.75 points.

Among sectors contributing to the positive European tone were oil and mining stocks.

Shares of BP PLC
/quotes/comstock/13*!bp/quotes/nls/bp
(BP
36.57,
+0.41,
+1.13%)

/quotes/comstock/23s!a:bp.
(UK:BP.
393.85,
+1.25,
+0.32%)
gained 0.5% after the firm said the total cost of responding to the Gulf of Mexico oil spill has now reached $8 billion. The company has created a $20 billion escrow account to cover related costs of the spill.

Shares of U.K.-based mining group Antofagasta
/quotes/comstock/23s!a:anto
(UK:ANTO
1,084,
+2.00,
+0.18%)
were cut to hold from buy at Citigroup for valuation reasons. The broker said it would seek cheaper copper exposure through their top mining pick, Xstrata
/quotes/comstock/23s!a:xta
(UK:XTA
1,095,
+7.00,
+0.64%)
. Shares of Antofagasta dropped 0.5% on the London Stock Exchange.

In Zurich, shares of Roche Holding AG
/quotes/comstock/06p!rog
(CH:ROG
142.10,
+2.40,
+1.72%)
gained 1.2% after the Swiss pharmaceutical firm announced a cost-cutting initiative and confirmed its full-year outlook.

In Germany, car makers’ shares posted gains. Daimler AG
/quotes/comstock/11e!fdai
(DE:DAI
41.01,
+0.14,
+0.33%)
and Volkswagen AG
/quotes/comstock/11e!fvow3
(DE:VOW3
81.55,
+0.12,
+0.15%)
both rose 0.6%.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

Europe Markets: Europe stocks gain as traders await U.S. jobs data

By MarketWatch

SAN FRANCISCO (MarketWatch) — Among the companies whose shares are expected to see active trade in Monday’s session are Focus Media Holdings, Sanderson Farms Inc. Ltd. and Kensey Nash Corp.

Focus Media
/quotes/comstock/15*!fmcn/quotes/nls/fmcn
(FMCN
18.11,
+0.28,
+1.57%)
is estimated to report a profit of 23 cents a share in the second quarter, according to analysts surveyed by FactSet Research.

Sanderson Farms
/quotes/comstock/15*!safm/quotes/nls/safm
(SAFM
43.16,
+0.13,
+0.30%)
is forecast to post earnings of $1.87 a share in the fiscal third quarter, according to analysts surveyed by FactSet Research.

Kensey Nash
/quotes/comstock/15*!knsy/quotes/nls/knsy
(KNSY
22.86,
+0.37,
+1.65%)
is expected to report fiscal fourth-quarter earnings of 52 cents a share, according to analysts surveyed by FactSet Research.

After Friday’s closing bell, Bank of America Corp.
/quotes/comstock/13*!bac/quotes/nls/bac
(BAC
12.87,
-0.15,
-1.15%)
had its preferred stock rating raised to an investment grade of BBB- from BB- by Fitch Ratings.

Watch list

Whole Foods Markets Inc.
/quotes/comstock/15*!wfmi/quotes/nls/wfmi
(WFMI
36.72,
+0.33,
+0.91%)
had its corporate credit rating raised to BB from BB- by Standard & Poor’s because of a recent rebound in operating performance.

Stocks to Watch: Stocks in focus Monday: Focus Media, Sanderson

By MarketWatch

Don’t miss these top money and investing columns:

• Druckenmiller exit signals woes for global macro funds

• Hedge funds tap gold ETF as stock correlation rises

• Five mortgage funds for yield-hungry buyers

• How to avoid a crash in your flight to safety

• New criticism lobbed at SEC’s plan on fund fees

The decision by Stanley Druckenmiller, the veteran hedge-fund manager, to shut down his Duquesne Capital Management highlights the trouble facing investors making big bets on the economy and rates.

U.S. government bonds have extended their rally, sending yields to multi-month lows, and defying many predictions for a spectacular bust to the Treasury rally. Adding to the murkiness is the possibility that the government could try to institute a new program to pump up refinancing, a likelihood that’s already knocked mortgage-backed securities.

One bet big investors aren’t shy about is gold, an asset its fans say should hold its value whether inflation and rates start to simmer or stay nicely chilled. Still, there are worrying signs that gold may be losing its role as an alternative asset, as a correlation with stocks rises. With the outlook for interest rates carrying its share of “unusual uncertainty,” it may pay for investors to watch what their bond funds are buying — and have a sell strategy.

– Laura Mandaro, Markets/Investing editor

INVESTING

Druckenmiller exit signals woes for global macro funds

Hedge funds that trade on broad economic trends have underperformed this year. Manager Stanley Druckenmiller’s exit highlights how hard it is to gauge the economy.


See Hedge Funds on Druckenmiller exit signals woes for global macro funds.

Bigger funds may not be better

Druckenmiller’s exit, his second from a high-profile firm, suggests bigger funds may not be better.


See Hedge Funds on difficulties generating returns as assets expand.

Hedge funds are tapping gold ETF

Recent public filings show hedge fund investors John Paulson and Eric Mindich have been stocking up on the biggest gold ETF, SPDR Gold Shares
/quotes/comstock/13*!gld/quotes/nls/gld
(GLD
120.39,
+0.17,
+0.14%)
. At the same time, its correlation with stocks is on the rise, putting gold’s value as an alternate asset in jeopardy.


See ETF Investing on hedge funds tapping gold ETF.

Mortgage market knocked by ‘mega-refi’ talk

The market for mortgage-backed securities has had a good run this year, but it’s taken a hit in recent days on growing talk of a “mega-refi” program that could let homeowners refinance home loans more easily at lower rates.


See Credit Markets for mortgage market knocked by ‘mega-refi’ talk.

Five mortgage funds for yield-hungry buyers

Lower lending rates are particularly hard on shareholders of mutual funds and ETFs that ply the giant and unpredictable mortgage market. Yet the best should be able to choose attractive mortgage-backed securities and ride out this tough rate environment.


See story on five mortgage funds for yield-hungry buyers.

Yields on dividend ETFs come with stock-like risks

Low bond yields and stock-market volatility are pushing more investors into ETFs that concentrate on dividend-paying stocks, but that hunger for income and stability may lead to losses if equity markets come under pressure.


See ETF Focus on stock-like risks in dividend ETFs.

Mutual Funds Weekly: Funds hunt for yield, gold as rate bets go awry

By Sarah Turner, MarketWatch

LONDON (MarketWatch) — Commodity firms were in the spotlight Monday, after mineral extractor Vedanta Resources and oil-exploration firm Cairn Energy signed a deal for Cairn’s Indian unit.

The U.K. FTSE 100 index
/quotes/comstock/23i!i:ukx
(UK:UKX
5,276,
+0.66,
+0.01%)
ended virtually unchanged, up 0.01% at 5,276.10 points.

Shares of Vedanta Resources
/quotes/comstock/23s!e:ved
(UK:VED
2,153,
+100.00,
+4.87%)
rose 4.9% after it announced it will acquire as much as 60% of Cairn Energy’s Indian unit. Shares of Cairn Energy
/quotes/comstock/23s!e:cne
(UK:CNE
493.20,
+24.90,
+5.32%)
jumped 5.3%.

Vedanta said it expected the deal to immediately enhance its earnings per share, and Scotland-headquartered Cairn Energy said it intends to return a substantial portion of the deal proceeds to its shareholders.

J.P. Morgan analysts said they believe Vedanta needs to move into new resource areas to keep its business growing beyond 2015.

Insurance group Aviva
/quotes/comstock/23s!a:av.
(UK:AV.
377.90,
-9.50,
-2.45%)
declined 2.5%, paring monthly gains to 5.7%.

It has received and rejected a 5 billion-pound ($7.8 billion) bid from RSA Insurance Group
/quotes/comstock/23s!a:rsa
(UK:RSA
124.50,
-2.90,
-2.28%)
— which was trading down 2.3% — for most of its general insurance businesses in the U.K., Ireland and Canada.

A combination of life and nonlife insurance operations allows the company to operate with substantially less capital than the two businesses would on a stand-alone basis, it added.

Banks were broadly weak, with Royal Bank of Scotland Group
/quotes/comstock/23s!a:rbs
(UK:RBS
45.92,
-1.05,
-2.24%)
shares ending down 2.2%.

Oil giant BP
/quotes/comstock/23s!a:bp.
(UK:BP.
409.75,
-6.65,
-1.60%)

/quotes/comstock/13*!bp/quotes/nls/bp
(BP
38.52,
-0.41,
-1.05%)
declined 1.6%.

Outside the top index, shares of recruitment firm Michael Page International
/quotes/comstock/23s!e:mpi
(UK:MPI
368.00,
-5.00,
-1.34%)
fell 1.3%.

The firm’s first-half net profit rose 46% to £41.5 million from £28.3 million in the year-earlier period, as revenue grew 7.9% to £393.5 million.

“Although this was an excellent set of results, we believe this is already priced in the shares and there are still some doubts over the outlook for the second half,” said analysts at Seymour Pierce.

Sarah Turner is a markets reporter for MarketWatch in London.

London Markets: Vedanta Resources outperforms flat FTSE

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — Asian stock indexes ended mixed Friday, with shares in Shanghai slightly higher after China’s banking regulator sought to reassure markets on the reasons behind stress tests for the banking sector.

Tokyo stocks were lower as investors were nervous ahead of the U.S. payrolls report due later on Friday.

“There’s a lot riding on the U.S. jobs data, because if the numbers are weak, people will be talking about a possible double-dip recession in the U.S. and further quantitative easing,” said IG Markets institutional dealer Chris Weston, in Sydney.

China’s Shanghai composite ended 1.4% higher and Japan’s Nikkei Stock Average was down 0.1%, while Australia’s S&P/ASX 200, South Korea’s Kospi Composite and New Zealand’s main index ended little changed.

Hong Kong’s Hang Seng Index closed up 0.6% and India’s Sensex was up 0.1% late.

The China Banking Regulatory Commission sought to play down the meaning of stress tests designed to assess the impact of a sharp fall in property prices, even as separate reports Friday said such tests were being expanded to include credit risks from the cement and steel sectors.

These tests are “one commonly used method for commercial banks to manage risk … [and] do not represent judgments of the trend in real estate, nor do they represent possible changes to real-estate policy,” the CBRC said in a statement on its Website.

Analysts said the statement calmed concerns that the stress tests would be expanded to include credit risks to the cement and steel industries.

“The meaning of this is that the stress test is not necessarily something bad,” said Ting Lu, China economist with Bank of America-Merrill Lynch in Hong Kong.

Among Shanghai-listed financials, shares of Bank of Communications
/quotes/comstock/28c!e:601328
(CN:601328
6.54,
+0.16,
+2.51%)
rose 2.7% while Bank of China
/quotes/comstock/28c!e:601988
(CN:601988
3.52,
+0.03,
+0.86%)
added 0.9%. Shanghai-listed shares of developer China Vanke
/quotes/comstock/28b!e:200002
(CN:200002
9.40,
+0.62,
+7.06%)
jumped 7.1%.

Wheat futures prices soared Thursday to their highest levels in two years after Russia said it would ban grain exports due to a severe drought, a move that heightens concerns about global supplies of the grain and the impact on food prices.

September wheat futures at the Chicago Board of Trade were down 1 cent at $7.8425 a bushel in late Asia trade, after rising by their 8.3% limit on Thursday.

The news prompted Australia’s Graincorp
/quotes/comstock/22x!e:gnc
(AU:GNC
6.37,
+0.20,
+3.24%)
to rise 3.2% while Incitec Pivot
/quotes/comstock/22x!e:ipl
(AU:IPL
3.46,
+0.08,
+2.37%)
, a fertilizer seller, was up 2.4%, on expectations of higher demand in the event wheat output is pushed higher.

In Hong Kong, shares of Gome Electrical Appliances Holding Ltd.
/quotes/comstock/22h!e:493
(HK:493
2.40,
-0.33,
-12.09%)
tumbled 12.1% in resumed trade, a day after the company said it would launch a lawsuit against its jailed founder, Huang Guangyu, for breach of fiduciary duties, according to reports.

Huang is currently serving a 14-year prison sentence in China on charges of insider trading, illegal business dealings and bribery.

Shares of Hutchison Whampoa
/quotes/comstock/22h!e:13
(HK:13
58.20,
+5.15,
+9.71%)

/quotes/comstock/11i!huwhy
(HUWHY
34.20,
-0.03,
-0.09%)
surged 9.7% following stronger profit and a statements by the company that it expects its third-generation mobile-phone business to be profitable on an earnings before interest and tax basis.

In Japan, Nikon

(JP:7731
1,571,
+59.00,
+3.90%)

/quotes/comstock/11i!ninoy
(NINOY
178.50,
+6.85,
+3.99%)
was up 3.9% after news it swung to a first-quarter net profit compared to a loss a year earlier on robust sales of digital cameras and a recovery in demand for semiconductor-manufacturing equipment.

Real-estate shares outperformed for the second straight day on a decline in office vacancy rates in central Tokyo. Mitsui Fudosan

(JP:8801
1,392,
+52.00,
+3.88%)
gained 3.9% and Mitsubishi Estate

(JP:8802
1,311,
+34.00,
+2.66%)
was up 2.7%.

Elsewhere in the region, Taiwan’s Taiex was up 0.3%, Singapore’s Straits Times Index fell 0.4%, Philippine shares were 0.2% lower and Thailand’s SET ended flat.

Malaysia’s Kuala Lumpur Composite Index was down 0.1% and Indonesia’s Jakarta Composite was up 0.5% late.

In foreign-exchange markets, the euro was at $1.3185 against the U.S. dollar, from $1.3186 in late New York trade on Thursday, and at 113.43 yen from ¥113.16. The dollar was at ¥86.03 from ¥85.74.

Spot gold was at $1,194.40 per troy ounce, up $1 from late New York trade.

September Nymex crude-oil futures were down 16 cents at $81.85 per barrel.

Chris Oliver is MarketWatch’s Hong Kong bureau chief.

Shanghai edges higher; Tokyo, Sydney trade flat

By MarketWatch

MARKETWATCH FRONT PAGE

The U.S. stock market is likely to continue pulling risk on and off the table in the days ahead, with another heavy round of earnings reports in store, along will a full slate of data on the economy, employment in particular.
See full story.

How short-selling sleuths spot accounting tricks

As the 2010 second-quarter earnings season wraps up, accounting sleuths are once again scouring the latest reports for disconnects between what company executives are telling investors and what the numbers are saying.
See full story.

Stocks in focus Monday: Humana, NRG, VeriSign

Among the companies whose shares are expected to see active trading in Monday’s session are Humana Inc., NRG Energy Inc. and VeriSign Inc.
See full story.

Stocks cheer a benign July; gold, dollar suffer

A modicum of confidence returned to markets in July, as U.S. and European stocks erased losses inked in the frenzy of prior months and investors took heart that slow growth is better than none at all, dumping gold and the U.S. dollar in light of this more sanguine view.
See full story.

U.S. stocks end July with strong gains

Markets stage a late rally to push into the positive ahead of the close, bucking a slowdown in second-quarter economic growth.
See full story.

MARKETWATCH COMMENTARY

Rambus Inc. investors have been dancing a little jig lately because of some legal victories, but they’ve got a long way to go down litigation road, writes Therese Poletti.
See full story.

MARKETWATCH PERSONAL FINANCE

As the 2010 second-quarter earnings season wraps up, accounting sleuths are once again scouring the latest reports for disconnects between what company executives are telling investors and what the numbers are saying.
See full story.

NewsWatch: U.S. stock market to continue balancing act

By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) — Russian and Turkish stocks were standouts among their emerging-market rivals in July, helping push the investment class to its best gain in four months as panic over European debt loads subsided and as China’s economy expanded, albeit at a slower pace.

The MSCI Barra Emerging Markets Index, which tracks stock performances in 21 countries, climbed 8% this month, its strongest gain since notching a similar advance in March. Those performances were the best since a nearly 11% jump in July 2009.

“Since we hit this low and bottomed back in May, the technicals have been steadily improving and have been in stronger positions coming out of that major correction,” said Richard Ross, global technical strategist at Auerbach Grayson, in a telephone interview.

“We’ve had nice reactions to those bear markets,” which had been seen in a number of countries including Russia, he added. China’s Shanghai index in May also dropped into what’s known as a bear market, or a tumble of 20% off recent highs.
Read previous story about global bear markets.

Of the MSCI index’s country constituents, Brazil, on the last trading day of the month, emerged as the top performer, with a 10.8% advance. Russian stocks rose than 10% and Chinese stocks gained 10%. Turkey’s market ended up more than 9%.

The iShares MSCI Emerging Markets Index, an exchange-traded fund that tracks the performance of the index
/quotes/comstock/13*!eem/quotes/nls/eem
(EEM
41.40,
+0.20,
+0.49%)
, jumped 10.9% this month.
Read about fund investors’ attraction to emerging markets this year.

While all of the MSCI EM Index’s constituents finished higher in July, Morocco’s market was the weakest advancer, with a slim gain of about 0.1%, followed by a 1% rise for India and a 1.6% increase in the Philippines.

The key EM index had been in a slump in recent months. It slipped 0.9% in June, extending a 9.2% slide in May.

China sets the tone

Russia’s market made one of the most dramatic comebacks since the spring. Its dollar-denominated RTS stock index rose 10.7% this month.

For the commodity-rich Russian market, the “China story is an important one,” as the country drives a global infrastructure buildout that’s been key for other commodity producers, including countries in the Middle East, Chile and Brazil,” according to John Derrick, portfolio manager of U.S. Global Investors’ Eastern European Fund
/quotes/comstock/10r!eurox
(EUROX
9.12,
-0.11,
-1.19%)
.

The fund has $372 million in assets under management, and Russia is its most heavily weighted country, at 52.94%.

“People were concerned that China was tightening and at risk for a hard landing, with growth slowing to 5% to 6%,” Derrick said during a telephone interview. “Now expectations are that China will engineer that soft landing, with about 8% growth for the rest of the year.”

China, according to government statements in the past week, doesn’t expect an economic slowdown to result in a “double-dip” recession, but it will continue with stimulus spending to support the economy.
Read about China’s economic expectations.

Brazil’s stock market is also heavily weighted by shares in companies providing natural resources, including Vale SA
/quotes/comstock/13*!vale/quotes/nls/vale
(VALE
27.80,
+0.24,
+0.87%)
, the world’s largest provider of iron ore. Vale counts China as a top customer, and China last year became Brazil’s biggest trading partner.

Emerging Markets Report: Emerging markets, on healing path, climb in July

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) — A months-long battle between Spain’s Telefonica and Portugal Telecom came to an end on Wednesday, with the two companies announcing they reached a €7.5 billion ($10 billion) deal over Brazilian mobile operator Vivo Participacoes.

In a statement to the Spanish regulatory authorities, Telefonica
/quotes/comstock/13*!tef/quotes/nls/tef
(TEF
66.47,
+0.42,
+0.64%)

/quotes/comstock/06x!ctef
(ES:TEF
16.99,
+0.10,
+0.59%)
said an agreement had been reached with Portugal Telecom to finally settle the question of who will end up with Portugal Telecom’s
/quotes/comstock/13*!pt/quotes/nls/pt
(PT
11.20,
+0.46,
+4.28%)
stake in Vivo
/quotes/comstock/13*!viv/quotes/nls/viv
(VIV
27.31,
+1.21,
+4.62%)
.

The deal was believed to have been made possible owing to a separate deal announced by Portugal Telecom simultaneously, in which it will take a 22.4% stake in Brazil’s Tele Norte Leste Participacoes
/quotes/comstock/13*!tne/quotes/nls/tne
(TNE
16.11,
-1.16,
-6.72%)
, known as Oi Telemar, for 8.4 billion Brazilian reais ($4.75 billion). The deal is likely to placate the Portuguese government which has objected to the telecom selling its stake in Vivo, a prized asset.

Shares of Portugal Telecom, which were suspended much of the day in Lisbon, reopened with a 4.4% gain as trading resumed.

Shares in Telefonica, which will reported second-quarter results on Thursday, gained 0.7%.

Telefonica and Portugal Telecom jointly own Vivo via investment vehicle Brasilcel, which owns 60% of the company.

Telefonica will pay for Vivo in stages: €4.5 billion at the closing of the transaction (within 60 days at the latest), another €1 billion on Dec. 31 and the remaining €2 billion by October 31, 2011.

Telefonica will also offer a tender offer for the ordinary shares of Vivo that aren’t held by Brasilcel, which represent 3.8% of Vivo’s equity, roughly estimated to be worth €800 million.

Telefonica said in a statement that the acquisition gives it “undisputed leadership” of Brazil’s telecom market, which has been key for the group since it entered there in 1999. It plans to combine Vivo with its Telesp unit in Brazil, making it the largest integrated operator by customer numbers (69.2 million as of March 2010), revenue and profitability.

For the group, its global businesses are particularly important right now, as its home country struggles with a deep recession, fueled by a collapse in the housing and construction market. Shares of Telefonica have lost 21% this year, largely by association with its troubled home market.

Rod Sleath, Jersey-based fund manager for Collins Stewart, said Telefonica has a 5% position in their Continental Europe Focus Fund. He said they’ve had the acquisition of Vivo modeled in for some time, and it didn’t present any change to their upside potential of the group.

“Over the medium term, the company should experience structural growth from its Latin American assets, while the business in Spain should be “relatively” non-cyclical (note though that we do budget in a contraction of earnings for Spain in our 2010 expectations),” he said in emailed comments. “In the meantime the business pays a high dividend yield and it is worth noting that approximately 50% of operating profits are generated outside of Spain.”

An Iberian battle, a final happy ending

Telefonica’s pursuit of Portugal Telecom’s Vivo stake last spring ended up drawing in both Portugal’s government and the European Union. Telefonica has raised its offer three times in pursuit of the Vivo stake.

Two weeks ago, Portugal Telecom let Telefonica’s €7.15 billion ($9.3 billion) offer for its stake expire, and the Spanish group refused to extend the offer period. However, analysts were saying it was only a matter of time before Portugal Telecom gave in.

Portugal Telecom and the government have resisted the sale on grounds that the Brazilian mobile operations are a key part of growth of the country’s largest telecom company. Last month, the Portuguese government used its golden shares in Portugal Telecom to block the sale of Portugal Telecom’s stake to Spain’s Telefonica, which was followed by a ruling from the European Court of Justice that Portugal’s actions were unlawful, constituting a restriction on the free movement of capital.

A deal for Oi Telemar

As for Portugal Telecom, a deal for Oi Telemar is expected to ease ruffled feathers among investors and the government. Oi Group is the leading provider of telecommunications services in the Brazilian market and the largest fixed telecoms operator in South America in terms of active clients. In 2009, the group reported revenues of over $15 billion.

Under the terms of the deal, Portugal Telecom will have a “relevant role” in the management of Telemar Participacoes and its subsidiaries and will be able to “proportionally consolidate” its stake in Telemar.

Earlier, Deutsche Bank analysts said a deal each for Portugal Telecom and Telefonica was the best way to avoid “the potentially value-destructive legal path for both parties.”

And a higher price tag for Portugal Telecom’s Vivo stake is likely to help the group pay down domestic debt and return cash to shareholders, they said in a note to investors.

For stocks of both Portugal Telecom and Telefonica, the analysts said it’s a win-win situation, with shares of the former rallying on potential gains in its dividend — either due to dividend flow from Oi or cash left on its books after the Vivo sale.

“Either way, Portugal Telecom should rally hard to levels €9.5…Telefonica too should rally on relief,” Deutsche Bank said.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

Telefonica finally gets its stake in Vivo

By Steve Goldstein, MarketWatch

LONDON (MarketWatch) — Springtime in Europe reflected one of the most tumultuous economic periods in years, with Greece requiring international assistance to avoid default and with countries from powerhouse Germany to minnow Portugal unveiling austerity plans to calm bond-market vigilantes.

So as second-quarter earnings season on the Continent starts in earnest, it would be natural to assume that companies here will be reporting a difficult April-through-June experience.

It also would be wrong.

Second-quarter earnings per share for constituents of the Stoxx Europe 600 index
/quotes/comstock/22c!sxxp
(ST:SXXP
248.29,
-4.68,
-1.85%)
are projected to grow 26%, according to data from FactSet Research. That’s not so much lower than the 30% EPS growth rate seen for S&P 500
/quotes/comstock/21z!i1:inx
(SPX
1,072,
-24.05,
-2.19%)
constituents.

Sales growth also won’t be drastically different: 9% in Europe, 10% in the U.S.

Take Novartis, one of the first major European companies to report second-quarter results. The drugmaker said it was able to grow European sales by 8% even as governments across the region cut prices.
See Novartis story.

“It’s a classic case that the market is not the economy,” said Georgina Taylor, equity strategist at Britain’s Legal & General Investment Management.

“We have had concerns about fiscal issues, that’s about to be a drag on growth, but that hasn’t happened yet.”

Indeed, Novartis said the impact from European pricing will be felt more in the second half of the year.

Besides, European firms are hardly unprepared for tepid growth at home. The likes of BMW
/quotes/comstock/11e!fbmw
(DE:BMW
42.14,
-0.19,
-0.44%)
, which on Tuesday upped its earnings outlook, Siemens
/quotes/comstock/11e!fsie
(DE:SIE
74.20,
-0.88,
-1.17%)
, Alstom
/quotes/comstock/24s!e:alo
(FR:ALO
36.57,
-1.71,
-4.46%)
and Nokia
/quotes/comstock/22u!noki-sek
(FI:NOK1V
6.77,
-0.06,
-0.88%)
have become giants by selling overseas, not by focusing domestically.
See BMW story.

Alstom reports sales figures next Tuesday, Nokia reports earnings Thursday, Siemens releases quarterly results the following week and BMW’s full second-quarter results are due Aug. 3.

“You have very global companies, particularly the large caps that have sales outside the U.K. and the euro zone, and sell to the U.S. and also fast-growing areas like Asia,” said Nick Nelson, strategist at UBS.

In a research note, Citigroup analyst Adrian Cattley says the best lead indicator for European earnings growth over the last 20 years isn’t any European economic release — it’s the Institute for Supply Management’s U.S. manufacturing index.

“History shows a good fit between the two,” he said, which would imply a pretty good second-quarter earnings season in Europe.

Still, if the ISM/Europe earnings pattern holds up, it spells caution in future quarters because that gauge is beginning to decelerate.

But Cattley also found a close correction between Europe earnings and global GDP.

European Stocks to Watch: Second-quarter earnings may miss euro-zone pain

By Sarah Turner, MarketWatch

LONDON (MarketWatch) — European shares posted mild losses on Monday as a bit of caution entered the market following last week’s gains, although deal speculation helped aerospace and defense group Zodiac and oil giant BP to gain ground.

The Stoxx Europe 600 index
/quotes/comstock/22c!sxxp
(ST:SXXP
250.05,
-0.04,
-0.02%)
traded down 0.3% at 249.37.

Last week, the index gained 5.4%, the best weekly performance in more than a yer, as economic data, central bank comments and some details on European bank stress tests buoyed sentiment toward stocks.

Banks and miners were behind much of last week’s gains but both sectors retreated on Monday, with Anglo American
/quotes/comstock/23s!e:aal
(UK:AAL
2,405,
-17.00,
-0.70%)
shares down 1.2% and Deutsche Bank
/quotes/comstock/11e!fdbk
(DE:DBK
48.99,
-0.39,
-0.79%)
shares down 1.2%.

Of the main regional benchmarks, the French CAC-40 index
/quotes/comstock/30t!i:px1
(FR:PX1
3,559,
+4.81,
+0.14%)
declined 0.2% to 3,547.30, the U.K. FTSE 100 index
/quotes/comstock/23i!i:ukx
(UK:UKX
5,150,
+16.75,
+0.33%)
traded flat at 5,133.17 and the German DAX index
/quotes/comstock/30p!dax
(DX:DAX
6,082,
+17.24,
+0.28%)
climbed 0.1% to 6,072.48.

Asian shares were mixed, while U.S. stock futures were pointing to a mild retreat on Monday with Dow Jones Industrial Average futures down 42 points.

Of companies in the spotlight, shares of BP
/quotes/comstock/23s!a:bp.
(UK:BP.
385.15,
+20.35,
+5.58%)

/quotes/comstock/13*!bp/quotes/nls/bp
(BP
34.05,
+0.31,
+0.92%)
jumped 5%.

The oil giant said that the installation of a new sealing cap that is intended to capture more of the leaking oil from its well in the Gulf of Mexico is proceeding as planned.

Also, the Sunday Times newspaper reported, without citing sources, that the oil major is in talks to sell up to $12 billion of assets to U.S. Apache Corp.
/quotes/comstock/13*!apa/quotes/nls/apa
(APA
87.88,
+0.48,
+0.55%)
, including a big stake in Alaska’s Prudhoe Bay. The same newspaper reported that Exxon Mobil
/quotes/comstock/13*!xom/quotes/nls/xom
(XOM
58.78,
-0.03,
-0.05%)
was mulling a takeover bid for the company.

Zodiac Aerospace
/quotes/comstock/24s!e:zc
(FR:ZC
41.26,
+1.48,
+3.71%)
shares climbed 2.9% to 40.95 euros.

The firm said over the weekend that it had received, and rejected, an approach from rival Safran
/quotes/comstock/24s!e:saf
(FR:SAF
21.95,
-0.39,
-1.72%)
, which fell 1.4%.

Safran said that it “acknowledges the reaction of Zodiac’s board while remaining convinced of the obvious logic from an industrial and a strategic perspective.”

Away from potential deals and German airport operator Fraport
/quotes/comstock/11e!ffra
(DE:FRA
37.35,
+0.66,
+1.79%)
rose 1.3% after it said that the total number of passengers at its five majority-owned airports in June rose 11.8% to 9.2 million, with cargo throughput up 27.5% from a year earlier.

“These numbers convincingly show that the finance and economic crisis has been overcome and that the aviation industry — despite several small traffic blips — is back on track to reaching and even exceeding the results of the pre-crisis years,” said CEO Stefan Schulte.

Sarah Turner is a markets reporter for MarketWatch in London.

Europe Markets: Europe stocks edge back; BP, Zodiac climb