Europe, Asia Lower

European stock markets were lower Tuesday on a wider-than-expected U.S. trade deficit figure

European stock markets were lower Tuesday. In London, the Financial Times Stock Exchange 100 lost 27.00 points, or 0.54%, to close at 4946.20. The FTSE extended losses as U.S. stocks fell on concerns over the widening trade deficit. Supermarket giant Tesco reported fiscal 2004/2005 pretax profits of 2.029 billion pounds with fiscal year group sales rising 12.4% to 37.1 billion pounds. The result was largely in line with expectations but analysts raised a question mark over the long-term margin outlook. Marks & Spencer gained on expectations fiscal 2004/2005 pretax profits will be in the range of 610 million pounds to 625 million pounds, in line with forecasts. But RBS fell on reports it will pay up to $4 billion for a 15% to 20% stake in Bank of China. Among media stocks, Reed Elsevier dropped after its LexisNexis division said the Seisint unit fraud review unearthed 59 incidents where unauthorised persons may have fraudulently acquired personal ID information on a total of 310,000 U.S. individuals. WPP was out of favour after French peer TF1 was downgraded by CSFB on advertising revenue concerns. In the telecoms sector, O2 and Vodafone suffered from news that they are to be called before the EU Commission to answer questions about overcharging.

Germany's Dax lost 23.97 points, or 0.55%, to close at 4372.12 Frankfurt closed lower, the U.S. trade deficit widened and there was a slight uptick in oil prices. Caution to commit to the long-side was evident as the world awaited the release of the minutes from the U.S. Federal Reserve's Mar. 22 meeting to see if the U.S. central bank is contemplating increases in its rate hikes. German wholesale prices increased 0.8% as oil prices boost production costs for businesses. On the corporate front, the release of Karstadt's earnings results takes centre stage. The troubled retailer says it expects fiscal 2005 EBITDA to increase to 500 million euro up from last year's 373 million euro but also forecasts a drop (fourth straight year) in fiscal sales in the low-to-mid single-digit percent range.

In France, the CAC 40 lost 20.81 points, or 0.51%, to close at 4096.81. Paris ended lower as Wall Street offered a poor start to trade due to a wider-than-expected trade deficit figure and caution ahead of FOMC minutes due out at 18:00 GMT. In Paris, performances were mixed, with morning fallers experiencing further pressure in the afternoon. TF1 ended down 3.13%, hit by a downgrade from CSFB. Casino fell as Citigroup argued the stock is vulnerable to IFRS shocks. The retailer is due to present IFRS figures on Friday. Eyes were also on Carrefour, due to present first-quarter sales after the close. Sanofi-Aventis extended a morning fall after the U.S. Attorney's Office in Boston included a unit of the group in an investigation into drug sales practices that affect Medicaid. On a positive note, M&A speculation lifted a few stocks, with Alcatel seen raising its stake in Thales. Pernod also gained, with eyes on a potential bid for Allied Domecq.

Asian markets were lower Tuesday also. In Japan, the Nikkei 225 lost 75.34 points, or 0.64%, to close at 11,670.30. Exporters led the fall on increasing concerns earnings growth will slow down following the rebound in oil prices from a five-week low and the gain of the yen against the dollar. Sony slid 1.8% to 4,260 yen, Pioneer was 2.5% lower to 1,984 yen and Canon fell 1.6% to 5,730 yen. Automakers, like Toyota Motor, Mitsubishi Motor, and Honda Motor, helped set the declining trend. Tech-related counters slid after UBS cut its recommendation on chipmaking-equipment manufacturers, such as Tokyo Electron and South Korea's LG.Philips. Tokyo Electron fell 1.3% to 6,100 yen, Advantest declined 1.4% to 8,230 yen and Sharp slumped 2.6% to 1,642 yen.

In Hong Kong, the Hang Seng gave up 1.88 points, or 0.01%, to close at 13,658.05. Of the 33 HSI constituents, seven fell and 14 rose. Leading laggards were Denway Motors, MTR Corporation, and China Unicom. Top HSI percentage gainers were China Resources, Yue Yuen Industrial, and Henderson Inv. Jiangxi Copper reported a 40.7% year-over-year increase in first-quarter 2005 net profit to 466 million yuan (under People's Republic of China GAAP), accounting for 34.3% of S&P Equity Research's full-year forecast (under IFRS).

Canada's benchmark TSX/S&P lost 14.33 points, or 0.15%, to close at 9,629.39.

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