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Hitt og þetta 3. febrúar 2006

DJ EUROPEAN MORNING BRIEFING: US Labor Data May Stoke Worry

US SUMMARY: Inflation Rears To Kick Stocks Lower

DJIA 10851.98 loss 101.97 db 0.9%
NASDAQ 2281.57 loss 28.99 dn 1.3%
S&P 500 1270.84 loss 11.62 dn 0.9%
Dow Future 10860.00 gain 1.00 0.0%
NASDAQ Future 1690.50 gain 1.50 up 0.1%
S&P Future 1273.00 gain 1.00 up 0.1%
10-Yr US Treasury: 4.56% unchanged
(Futures values as of 0550 GMT)
Investors concerned about inflation after a surprise jump in labor costs sent stocks skidding lower Thursday, with unfounded rumors of a terror threat compounding the selling. The decline came despite a drop in oil prices and positive employment news. Treasurys ended little changed.

STOCKS: Wall Street worried that the Labor Department's productivity data, which showed a 2.4 percent jump in unit labor costs, was a harbinger of inflation, since that meant companies were paying more for less productive workers. With the Federal Reserve clearly willing to keep raising interest rates to fight inflation, investors worried about the potential economic damage of such a rate hike.

Stocks took a sharp dive early in the session after a number of floor traders said a rumor circulated that the Homeland Security Department was going to announce a new terror threat. Although the rumor proved false, the major indexes had already fallen too much to mount a rally, as concerns about Iran's nuclear program and instability in the Middle East grew.

"I think the market here is in a very nervous state," said Peter Cardillo, chief strategist and senior vice president at S.W. Bach & Co. "You have geopolitical problems surrounding the Iranian situation heating up, and you have concerns about productivity, and that's keeping investors very cautious."

Riskier small-cap stocks bore the brunt of the selling, along with the technology sector and automotive stocks. Biotech stocks fell 1.43 percent, while computer hardware shares dropped 1.24 percent and auto parts lost 1.07 percent.

Despite the concerns over Iran, oil prices fell as world leaders sought to minimize the chance of substantial conflict there. A barrel of light crude settled at $64.68, down $1.88, on the New York Mercantile Exchange.

A drop in initial jobless claims failed to spark much enthusiasm. The number of first-time jobless claims dropped by 11,000 last week to 273,000. The four-week moving average of claims fell to its lowest level in 5½ years, the Labor Department said.

Amazon.com fell 13% in late trade Thursday after the company posted its fourth-quarter results, including revenue that fell short of expectations.

BONDS: Longer-dated Treasurys fared slightly better than shorter-dated ones Thursday, but overall levels were little changed with investors in wait-and-see mode ahead of key employment data due Friday.

"The trade of the week is trying to be short in front of what's expected to be a strong payrolls report and in anticipation of the refunding supply next week," said Jason Evans, head of government bond trading at Deutsche Bank in New York.

In addition, when the 10-year yield approached 4.60% it triggered some buying interest from foreign central banks, Evans said.

The government is due to release its monthly employment report at 1330 GMT Friday. Economists surveyed by Dow Jones Newswires and CNBC expect payrolls to increase by 250,000 in January and the jobless rate to hold steady at 4.9%.

"The labor market is going to become a constraint, and it will be the employment rate" that investors should watch, Ian Shepherdson, chief U.S. economist at High Frequency Economics said during a conference call. He said he expected hourly wage growth over the course of the year coupled with strong employment data will force the Fed to keep raising rates and will push the 10-year yield up to the 4.75%-5% range. Shepherdson forecasts that such a scenario would lead to recession in 2007.

ASIAN SUMMARY: Tokyo Stocks Fall Ahead Of US Labor Data

USD-Yen 118.52 0.00 0.00%
AUD-USD 0.7524 loss 0.0010 dn 0.1%
Nikkei 225 16635.46 loss 75.09 dn 0.5%
Hang Seng 15458.63 loss 233.40 dn 1.5%
Taiwan Index 6594.60 gain 62.92 up 1.0%
S.Korea Kospi 1331.73 loss 42.71 dn 3.1%
JGB Yield 1.5750% up 0.0300
(All values as of 0550 GMT)
STOCKS: Japanese stocks fell Friday following Wall Street's overnight drop, with Tokyo investors taking profits from the previous day's rally. The market's cautious mood came ahead of the U.S. labor market data later Friday.

BONDS: Prices of Japanese government bonds fell slightly on concern about the effects the U.S. labor data and U.S. Treasurys refunding set for next week will have on global government debt markets, traders said.

OIL: Crude prices fell 12 cents to $64.56 on easing fears about a possible disruption to Iranian oil supply. The market kept watch on a meeting by the International Atomic Energy Agency's board, which was deciding whether to refer Iran, OPEC's second-largest oil producer, to the U.N. Security Council over concerns that it may be seeking to make nuclear weapons.

EUROPEAN OUTLOOK: Shares To Struggle Higher

Euro-USD 1.2086 loss 0.0012 dn 0.1%
Stlg-USD 1.7790 loss 0.0015 dn 0.1%
USD-Franc 1.2869 gain 0.0016 up 0.1%
(All values as of 0550 GMT)
U.S. non-farm payroll numbers due later Friday will ensure stock markets remain cautious but in positive territory at least. Government debt and the euro are seen little changed.

STOCKS: European shares are likely to open only slightly higher as investors weigh the impact of another ECB rate hike next month against the central bank's upbeat expectations for the economy. Key U.S. economic data will also weigh on sentiment.

U.K. spreadbettor City Index is calling the FTSE up 5 points at 5752 and the DAX and CAC up 3 points each at 5652 and 4930 respectively.

In corporate news, cash-rich hedge funds are eager to help Mittal in its $23.6 billion hostile takeover battle for rival steelmaker Arcelor, but Mittal's CEO, they say, has so far kept their hands tied, The Wall Street Journal reports.

European stock markets closed lower Thursday, as losses in the oil sector following slightly disappointing Royal Dutch Shell results offset some upbeat results elsewhere from Alcatel and Rio Tinto.

BONDS: Prices of European government debt are unlikely to move much to start, with technical factors a wash at this point. The Euribor futures contract is already pricing in a 75% chance of a 25 basis point hike to 2.50% in March.

"The market has digested Trichet's words and come to the conclusion that European rates will continue to rise during 2006, while U.S. rates, after Tuesday's 25 basis point hike to 4.50%, have little further to travel," a London-based trader said.

"This thinking has resulted in funds being moved out of the short-end of Europe and into the U.S. paper," the trader added.

Strong U.S. labor figures Friday could exacerbate that move going into the weekend.

European government bonds were lower Thursday on Tichet's rates comments.

FOREX: The euro opens little changed after the dollar slipped Thursday as the prospect of a future euro-zone interest rate hike helped the single currency edge higher. But the U.S. jobs data could change things.

Economists expect a blockbuster January employment report in the region of 250,000 to 300,000 - a result that would support the dollar. Still, investors are opting to play it safe.

The jobs data "has surprised us on a pretty consistent basis, so the market is not willing to price in the upside that most people are expecting," said Michael Woolfolk, senior currency strategist at Bank of New York.

"I don't get the sense the market wants to be long dollars at this stage. There are just too many uncertainties out there," Woolfolk said, pointing chiefly to ambiguity surrounding the future direction of U.S. interest rates.

The rate outlook in the euro zone, by contrast, seems to be growing clearer.

"Trichet is clearly talking about the real possibility that rates will go up, but people believe that already, and it's just a question of how many hikes," said ING Capital Markets currency strategist John McCarthy.

Some, however, contend that recent signs of an economic recovery in the euro zone are not convincing enough to justify tighter policy.

CALENDAR: Friday, Feb 3: Euro PMIs; US Labor Data

GMT Expected Previous
0750 FRA Jan France CDAF / RBS PMI Svcs 58.5 58.7
0845 ITA Jan PMI Svcs 56.0 56.2
0855 GER Jan PMI Svcs 56.5 56.0
0900 EU Jan Euro zone PMI Svcs 57.0 56.8
0930 UK Jan PMI Svcs 57.2 57.9
0930 UK 4Q Mortgage Possession & Repossession
Statistics
1000 EU Dec Euro zone Retail Sales +0.2%MM -0.1%MM
+0.9%YY +0.3%YY
1000 EU Jan Euro zone CPI, flash +2.4%YY +2.2%YY
1000 ITA Jan CPI, Prelim +0.2%YY unch MM
+2.2%YY +2.0%YY
1330 US Jan Nonfarm Payrolls +250K +108K
1330 US Jan Unemployment Rate 4.9% 4.9%
1440 US Jan ECRI Inflation Gauge 121.3
1445 US Jan Final University Of Michigan Consumer 93.2 91.5
Sentiment Index (Prelim Jan 93.4)
1500 US Dec Factory Orders +1.0% +2.5%
1500 US Jan ISM Non-Mfg Index 59.0 61.0
1600 US Tsy Secy Snow participates in
roundtable discussion in Kannapolis,
N.C.
(MORE TO FOLLOW) Dow Jones Newswires

February 03, 2006 01:45 ET (06:45 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.


3 Feb 2006 06:45 GMT =DJ EUROPEAN MORNING BRIEFING: US Labor Data May -2-

N/A US Pres Bush speaks in Albuquerque, N.M.

-By Dennis Baker; Dow Jones Newswires; dennis.baker@dowjones.com

(MORE TO FOLLOW) Dow Jones Newswires

February 03, 2006 01:45 ET (06:45 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.


3 Feb 2006 06:45 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

(This repeats an item published at 0600 GMT)

British Airways (BAB): 3Q 2005 Earnings, Traffic Data
Average pretax profit (Co, 10-15 analysts): GBP145M (GBP115M)
Forecast range: GBP108M - GBP119M
Average sales: GBP2.13B (GBP1.96B)
Note: Rising fuel costs are likely to continue to weigh on

the company's profits. Focus on outlook for full year revenue and yields plus
any indication on when it may hit the full year 10% operating margin target.

Norske Skogindustrier (NSG.OS): 4Q Earnings
Average net loss: NOK168M (NOK545M profit)
Average pretax loss: NOK163M (NOK320M profit)
Note: Sales seen increasing around 4% but result expected to have been hit by negative non-recurring items of NOK277M net, related primarily to the closure of the Union mill. Last year's number however had been boosted by tax gains. Eyes on newsprint price and on any comments on demand trend. Also on any effects of the PanAsia acquisition and on energy cost forecasts.


Rieter (RIEN.EB): FY Sales
Average sales (DJ, 4 analysts): CHF3.10B (CHF3.17B)
Average orders: CHF3.03B (CHF3.09B)
Note: Textile division expected to have been a drag due to competition and uncertainties over Chinese market development. Automotive business expected to show a gain in market share. Analysts eye earnings guidance and any take on likely development of US automotive market will be the main focuses. Update due 0600 GMT.


Sappi (SPP): 1Q Earnings
Average pre-items EPS (DJ, 5 analysts): Nil (N/A)
Forecast range: USC 2 loss (USC 2 profit)
Note: The numbers are not directly comparable with a 6 cents profit reported in the previous 1Q as this figure will be restated under IFRS. "The important thing from these results will be details on paper price increases going forward," says Dave Brennan, analyst at Andisa Securities.


Volvo (VOLVY): 4Q Earnings
Average pretax profit (SME Direkt, 15 analysts): SEK5.148B (SEK4.604B)
Forecast range: SEK4.776B - SEK5.614B
Note: Earnings seen boosted by rising sales and higher profits in key truck division. Focus will be on how Volvo will distribute surplus capital. Analysts on average expect a per-share bonus dividend of SEK16 and a rise in ordinary per-share dividend to SEK13.57 from SEK12.50. Market outlook also in focus.


OTHER SCHEDULED EVENTS:

Ahlstrom (AAO.YY): FY Earnings

Axfood (AXFO.SK): January Sales

Bellway (BWY.LN): Trading Update

Beneteau (3516.FR): AGM

Bonduelle (6393.FR): 1H Sales

Cambridge Antibody Technology (CATG): AGM

Charter Pan-European Trust (CPE.LN): FY Earnings

Clarins (13029.FR): FY Sales

Fortum (FUM1V.HE): FY Earnings

Graphisoft (GRAPHI.BU): EGM

IT Link (7259.FR): FY Sales

Jaakko Poyry Group (JPG1V.HE): FY Earnings

JP Morgan Fleming Asian (JPF.LN): AGM

Komplett (KOM.OS): January Sales

MultiQ International (MULQ.SK): FY Earnings

Odfjell (ODF.OS): FY Earnings

Pankl Racing Systems (PXL.XE): AGM

Petrolia Drilling (PDR.OS): EGM

ProSafe (PRS.OS): 4Q Earnings

Quadrant (QUAN.EB): FY Sales

RAS (R.MI): FY Earnings

Rottneros (RROS.SK): FY Earnings

Rubis & Cie (12125.FR): 4Q Sales

Ryanair (RYAAY): Traffic Data

Smiths Group (SMIN.LN): Trading Update

Spar Finland (SPAAV.HE): EGM

Sunstar (SSTE.EB): 1H Earnings

Telecomputing (TCO.OS): 4Q Earnings

Teligent (TGNT.SK): FY Earnings

Veolia Environnement (VE): FY Sales


(END) Dow Jones Newswires

February 03, 2006 01:45 ET (06:45 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.


3 Feb 2006 06:45 GMT =DJ EUROPEAN MORNING BRIEFING: Div Payment & Ex-Div Dates

(This repeats an item published at 0600 GMT)

Artemis Alpha Trust (ATS.LN): 1H 2005 Dividend Payment Date

C F Berg & Co (BRG-B.SK): FY 2005 Dividend Payment Date

Northumbrian Water (NWG.LN): 1H 2006 Dividend Payment Date


(END) Dow Jones Newswires

February 03, 2006 01:45 ET (06:45 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.