Weak consumer demand mars Hindustan Unilever Q2 earnings

By Nandita Bose

MUMBAI (Reuters) - Sales growth at Hindustan Unilever slowed for the sixth straight quarter between July and September and India's largest consumer goods maker said weak consumer demand would continue to drag until well into next year.

The company's fiscal second quarter results came after parent Anglo-Dutch consumer conglomerate Unilever warned in September that a slowdown in markets such as India had accelerated.

"The slowdown in business environment has continued in this quarter both in terms of volume and value growth," Chief Financial Officer R. Sridhar told reporters at an earnings press conference late on Saturday. "In particular, premium segments and discretionary categories are much more under pressure."

Sales volumes in the September quarter grew 5 percent, in line with market estimates of about 4-5 percent growth but slower than the 7 percent growth logged a year before.

India's economy is facing its worst downturn since 1991. That has hit discretionary consumer spending, leaving HUL's volume growth stagnant at around 5 percent for the past two quarters.

HUL said the slowdown in sales growth could last until next March although it is hopeful of a pick-up in the medium- to long-term as consumer demand improves.

HUL, which manufactures detergent brand Rin and Dove soap, said its net profit in the September quarter rose an annual 13.2 percent to 9.14 billion rupees. Net sales rose 9.6 percent year-on-year, to 67.47 billion rupees.

Analysts had on average estimated a net profit of 8.7 billion rupees on sales of 67.1 billion rupees, according to Thomson Reuters Starmine Estimates.

Rising inflation and meager urban salary increases have reduced incomes in Asia's third-largest economy and heated up the competition in the $13 billion consumer goods sector.

Hindustan Unilever faces a difficult choice between raising prices and retaining market share, as high promotional expenditure pinches margins and higher prices hurt volumes.

"The input cost environment was volatile this quarter due to a sharp depreciation of the rupee," said Sridhar.

The rupee fell as much as 20 percent against the dollar between May and August, which the company reckons will have a greater impact on its December quarter earnings.

Despite the weakness of its Indian business for the past few quarters, Unilever in April pumped in $5 billion to raise its stake in Hindustan Unilever, banking on the country's long-term growth.

Valued at $21.5 billion, Hindustan Unilever also makes Fair and Lovely skin cream, Clinic Plus shampoo and Lipton tea.

Higher promotional spending drove up sales in the personal care segment by 12 percent year-on-year, while the company's food business grew an annual 9 percent.

Promotional spending during the quarter grew 24 percent on year to 9.54 billion rupees.

Shares of the company have risen 13 percent so far this year, compared with a 16 percent increase in the consumer sector index <.bsefmcg> of the Mumbai stock exchange.

The stock has the fourth highest forward 12-month price-to-earnings ratio of 34.4 among top consumer product companies in the world, according to Thomson Reuters Starmine data.

(Additional reporting by Patturaja Murugaboopathy in Bangalore; Editing by Rajesh Kumar Singh and Catherine Evans)

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World shares dip but tech earnings lift Wall Street

By Angela Moon

NEW YORK (Reuters) - World equity indexes edged down on Friday but were near five-year highs as strong earnings from major U.S. technology companies propelled Wall Street to another day of gains.

The euro dropped from a near two year-high against the dollar, pressured by a survey showing an unexpected fall in German business morale.

While equity markets in Europe and Asia were weaker, on Wall Street the S&P 500 was on track to close at an all-time high as shares of Amazon surged 9 percent and Microsoft rose 6.5 percent following their quarterly results. The Dow was also approaching its all-time high, and the Nasdaq touched its highest level in 13 years.

The S&P 500 has gained 23 percent so far this year, just shy of its 23.5 percent jump in 2009. Surpassing that level would give the index its biggest annual gain in a decade. The S&P 500 on Friday afternoon was on track for a third straight week of gains.

"We've been positive on Microsoft for a while, but I can't remember the last time I saw it move up this much after earnings. It is very positive, and helping to boost the overall tape today," said Douglas DePietro, managing director at Evercore Partners in New York.

"Still, the market has been getting tired lately. While I believe we'll see another leg up soon, it isn't out of the question that we would need to consolidate near all-time highs."

MSCI's world share index, which tracks 45 countries, was down 0.1 percent but still near a five-year high.

Nikkei futures index fell 1.6 percent following news that a large earthquake struck in the ocean east of Japan, triggering a small tsunami. There were no immediate reports of damage on land from the quake, classified as magnitude 7.1 by the Japan Meteorological Agency, which struck about 370 km (230 miles) out to sea.

Japan's Nikkei stock average suffered its biggest one-day loss in 2-1/2 months on Friday, hit by the yen's strength against the dollar.

On Wall Street, the Dow Jones industrial average was up 28.38 points, or 0.18 percent, at 15,537.59. The Standard & Poor's 500 Index was up 4.58 points, or 0.26 percent, at 1,756.65. The Nasdaq Composite Index was up 11.45 points, or 0.29 percent, at 3,940.41.

The better-than-expected earnings late on Thursday from Amazon Inc and Microsoft boosted investor confidence in an earnings season that has been slightly disappointing, though Google Inc topped expectations. Next week's earnings spotlight will be on tech companies like Apple Inc and Facebook Inc .

European equities ended slightly lower on Friday, with Telecom Italia leading the telecoms sector down on concerns of a capital hike by the Italian company and Volvo hurting industrials after reporting a sharp drop in profits.

The pan-European FTSEurofirst 300 index closed 0.1 percent lower at 1,284.76 points, but for the week was up 0.6 percent for a third straight week of gains after hitting a five-year high on Tuesday.

In currency markets, the euro hovered close to a two-year high against the dollar as a souring of German business morale did little to dent bullish sentiment toward the euro zone common currency.

Still, the euro's fall was minimal and many analysts say the single currency could rise toward $1.40 as investors seek alternatives to a dollar hobbled by expectations the Federal Reserve will maintain its current level of monetary stimulus.

In afternoon New York trading, the euro was unchanged at $1.3804, not far from an earlier peak of $1.3833, its highest level since November 2011.

The dollar was up 0.1 percent against the yen at 97.38 yen, off a two-week low of 96.94 and above its 200-day moving average, a key chart level, at 97.34, suggesting room for more gains.

After a choppy week for commodities markets, Brent crude for December settled down 6 cents to $106.93 a barrel while U.S. crude oil ended up 74 cents at $97.85.

U.S. Treasuries prices edged up as investors waited on new signs about the strength of the economy, which is key to the timing of when the Fed is likely to reduce its bond purchase program.

Treasuries have been largely rangebound since Tuesday, after data showed employers hired fewer workers than expected in September, stoking fears the economy was slowing even before the government's 16-day shutdown.

Benchmark 10-year notes were last up 2/32 in price to yield 2.51 percent. The yields have fallen from 3.00 percent on September 5, before the Fed surprised investors by leaving its bond purchase program unchanged.

(Reporting by Angela Moon; Editing by Leslie Adler)

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Euro drops from near 2-year high vs. dollar; Wall St up on earnings

By Angela Moon

NEW YORK (Reuters) - The euro dropped from a near two year-high against the dollar on Friday, pressured by a survey showing an unexpected fall in German business morale, while world shares hovered near five-year highs as Wall Street extended yet another day of gains.

The euro's decline was not dramatic, however. It stayed not far from a near two-year high touched earlier against a weak dollar.

Soft U.S. jobs and other data this week have bolstered the view that the Federal Reserve will not tamper with its huge bond-buying program until well into next year, triggering a drop in the dollar and lifting both shares and bonds.

There was an interruption on Friday, though, as a surprise dip in Germany's Ifo business index and soft euro zone lending data sent another reminder of the bloc's fragility a day after a disappointing PMI reading.

But many analysts say the euro can rise towards $1.40 as investors seek alternatives to a dollar hobbled by expectations the Federal Reserve will maintain its monetary stimulus.

"Traders continue to make the euro their favorite anti-dollar trade in light of expectations the Fed will continue its QE (quantitative easing) program well into the start of next year," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

While equity markets in Asia and Europe fell, Wall Street started off on a higher note, setting the S&P 500 on track for a third consecutive week of gains.

Better-than-expected earnings from big tech companies on Thursday - Amazon Inc , Microsoft , and Zynga Inc - boosted investor confidence in an earnings season which has been slightly disappointing with the exception of Google Inc . Next week's earnings spotlight will be on tech companies like Apple Inc and Facebook Inc .

In Europe, worries about tighter cash markets in China and the impact of the strong euro on corporate earnings weighed on equity markets despite an acceleration in British third quarter GDP. The FTSEurofirst300 was down 0.1 percent.

MSCI's world share index, which tracks 45 countries, was down 0.1 percent but still near a five-year high.

On Wall Street, the Dow Jones industrial average was up 35.83 points, or 0.23 percent, at 15,544.37. The Standard & Poor's 500 Index was up 3.96 points, or 0.23 percent, at 1,756.03. The Nasdaq Composite Index was up 25.61 points, or 0.65 percent, at 3,954.57.

The euro fell 0.1 percent to $1.3795, below an earlier high of $1.3833, its strongest since November 2011.

The dollar edged up 0.1 percent against a currency basket to 79.252, off an earlier near nine-month low of 78.998.

After a choppy week for commodities markets, Brent crude slipped further below $107 a barrel on Friday on concern about higher supply and faltering demand. Brent crude for December was down 20 cents a barrel to $106.79, falling for a third day. U.S. crude oil was up 16 cents at $97.27, although still down around 3.5 percent on the week, its biggest weekly loss since June.

Gold eased on Friday as the dollar edged off its lows, but was still set for a second week of gains on the view that sluggish U.S. data would persuade the Fed to keep stimulus intact until well into 2014.

Spot gold fell 0.6 percent to $1,338.05 an ounce, but was still not too far from its highest level since September 20 of $1,351.61 hit on Thursday.

"We are certainly seeing some support this week, which is mainly due to external factors like the weakness of the dollar and dropping yields as the market tries to assess whether we will have tapering in coming months or not," said Credit Suisse analyst Karim Cherif.

U.S. Treasuries prices edged up on Friday as investors waited on new signs about the strength of the economy, which is key to the timing of when the Federal Reserve is likely to reduce the size of its bond purchase program.

Treasuries have been largely rangebound since Tuesday, when yields fell on data that showed employers hired fewer workers than expected in September, stoking fears the economy was slowing even before the government's 16-day shutdown.

The Fed is viewed as unlikely to change it purchase program from $85 billion a month when it holds its policy meeting next week, with most seeing the central bank likely to maintain the same rate of purchases until next March.

Benchmark 10-year notes were last up 2/32 in price to yield 2.51 percent. The yields have fallen from 3.00 percent on September 5, before the Fed surprised investors by leaving its bond purchase program unchanged.

(Reporting by Angela Moon; Editing by Nick Zieminski)

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Wall Street edges up after earnings, data

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks edged higher on Thursday, as investors grappled with a host of corporate earnings and muddled batch of economic data.

Initial claims for state unemployment benefits fell less than expected as California continued to process a backlog of applications caused by computer problems.

Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index grew at its slowest pace in a year this month and factory output contracted for the first time since late 2009. The survey was conducted partly during a 16-day U.S. government shutdown that economists expect will slow overall U.S. growth slightly in the last three months of 2013.

With a mixed bag of corporate earnings so far, any additional gains in the equity market will likely stem from expectations that the U.S. Federal Reserve will continue its stimulus measures, which have propped up the equity market and economy for much of the year.

The S&P 500 <.spx> has risen 1.5 percent since politicians in Washington ended a stalemate October 16 to avoid a debt default and end a partial government shutdown, culminating in a fresh record high on Tuesday, but the damage to the economy has led investors to expect the Fed to delay scaling back its stimulus for several months.

"With the market having hit the 1,760 level earlier this week, we should probably drift sideways for a while and consolidate," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"We think the direction of the market is higher but we may have gotten to 1,760 too quickly and that is why we need to consolidate a bit."

Corporate earnings continue to pour in, with 47 S&P 500 components expected to report Thursday, including Microsoft Corp and Amazon.com Inc after the close.

The Dow Jones industrial average rose 65 points or 0.42 percent, to 15,478.33, the S&P 500 gained 2.72 points or 0.16 percent, to 1,749.1 and the Nasdaq Composite added 11.438 points or 0.29 percent, to 3,918.512.

Dow component 3M Co rose 0.6 percent to $123.91 after it reported a 6 percent rise in quarterly profit with higher sales across all its businesses.

Visa Inc rose 1.6 percent to $202.03 as the top boost to the Dow after the credit card payment processor boosted its annual dividend.

Ford Motor Co rose 1.9 percent to $17.86 after the second-largest U.S. automaker boosted its full-year global earnings and margin outlook, helped by an improved forecast in Europe and better-than-expected results in the third quarter.

(Editing by Bernadette Baum and Nick Zieminski)

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China worries, European banks, earnings pressure world stocks; dollar, yen up

By Angela Moon

NEW YORK (Reuters) - Global equity markets fell on Wednesday on mixed corporate results and concerns that new scrutiny of euro zone banks could prove costly for its weaker members, while the U.S. dollar and the Japanese yen held small gains sparked by worries over Chinese monetary policy.

The dollar edged up from near two-year lows against the euro and an 8-1/2-month trough versus a major currency basket as investors sought the greenback's safety following a spike in China's short-term money market interest rates.

The yen was also in demand, with the dollar down 0.7 percent at 97.40 yen and the euro 0.9 percent weaker at 134.09 yen.

Wall Street opened lower following four straight days of record highs for the S&P 500. Mixed results from major U.S. companies, including equipment maker Caterpillar Inc, which sank nearly 6 percent in early trade, pulled stocks lower.

"With Caterpillar cutting its outlook for the year and concerns over China slowing against a backdrop of a market at a record, some people just decided to ring the cash register and take some profits," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

He said the selling was "orderly" and indicates more a pause than nervousness on the part of investors.

European stocks recorded their sharpest falls in two weeks as the details of a new, year-long test of euro zone lenders by the bloc's central bank amplified anxiety about China and the recent rapid run-up in world equity markets.

The ECB wants to unearth any risks hidden in the banking system before supervision comes under its roof as part of a three-pronged "banking union" plan designed to avoid a repeat of the euro zone debt crisis.

The pan-European FTSEurofirst 300 fell 0.7 as Italian, Spanish and Portuguese markets, as well as banking stocks, all dropped.

Jan von Gerich, chief developed market strategist for Nordea, said that if done properly, the review should help the euro zone, but in the short term it could revive questions about its weaker members if public money is needed for bank repairs.

"The most interesting part will be what it says about Italy. Its banks haven't gone through the same kind of scrutiny as the ones in Spain or those in Greece, Ireland or Portugal - the smaller countries, too, whether Slovenia will need a bailout for example," he added.

MSCI's world equity index, which tracks shares in 45 countries, fell 0.7 percent.

On Wall Street, the Dow Jones industrial average was down 86.51 points, or 0.56 percent, at 15,381.15. The Standard & Poor's 500 Index was down 13.43 points, or 0.77 percent, at 1,741.24. The Nasdaq Composite Index was down 39.68 points, or 1.01 percent, at 3,889.88.

CHINESE WHISPERS

Concerns about soft U.S. jobs data for September, which appeared to rule out a cut in U.S monetary stimulus before next year and caused a plunge in the dollar, took a back seat as Chinese money market rates climbed to levels not seen since July. The People's Bank of China failed for a second day to inject cash.

Rising liquidity needs for Chinese corporate tax payment deadlines and worries about bad banking debt appeared partly responsible for the jump in short-term rates, analysts said.

The rate spike was short-lived but caused a market panic nevertheless, causing a scramble for safe-haven dollars and yen.

"The weight of a weak U.S. non-farm (payroll data released on Tuesday) is surpassed by rising risk aversion on concerns over China's money market. Profit-taking takes hold," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.

U.S. Treasuries yields fell to the lowest in three months after Tuesday's weaker-than-expected jobs data reinforced expectations that the Federal Reserve is unlikely to reduce the size of its bond purchase program in the near term.

Buying overnight helped yields fall further, with no large data releases scheduled on Wednesday. Benchmark 10-year Treasuries were up 8/32, the yield at 2.4836 percent.

In commodities trading, U.S. crude fell below $97 a barrel to its lowest since July, outpacing a smaller drop in Brent futures, pressured by ample supplies and expectations of a further inventory buildup in the United States, the world's top consumer.

U.S. crude fell $1.88 to $96.42 after earlier reaching $96.32, its lowest since July 1. Brent crude fell $1.39 to $108.58 a barrel after hitting a session high of $110.06.

(Additional reporting by Rodrigo Campos, Karen Brettell and Gertrude Chavez-Dreyfuss in New York and Alex Lawler in London; Editing by Dan Grebler)

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Wall Street mixed with eyes on earnings

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were little changed on Monday after the S&P 500 hit a fresh intraday record high, boosted by gains in Apple after a bullish research note, while underwhelming results from McDonald's weighed on the Dow.

The S&P 500 on Friday capped its biggest weekly gain in three months on stronger-than-expected earnings from companies including Google and Morgan Stanley and as a deal in Washington helped avert a possible government default and reopened the federal government after a 16-day shutdown.

"It is positive that investors are focusing on company fundamentals" and not on political dealings in Washington, said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

"The good news is we're returning to reactions that are stock specific," he said.

Apple led gains on the S&P 500 and Nasdaq after Societe Generale lifted its price target on the stock to $575 from $500 and advised clients to buy shares. The stock rose 2.3 percent to $520.82.

Shares of McDonald's fell 0.9 percent to $94.35, ranking the restaurant chain as the top point decliner in the Dow industrials. McDonald's reported revenue that missed estimates and warned global October sales could be relatively flat.

Other companies expected to report results on Monday include Netflix and Texas Instruments . More than 25 percent of the S&P 500 components are due to report this week.

The Dow Jones industrial average fell 7.83 points or 0.05 percent, to 15,391.82, the S&P 500 gained 0.62 points or 0.04 percent, to 1,745.12 and the Nasdaq Composite added 11.153 points or 0.28 percent, to 3,925.431.

Hasbro , up 7.7 percent at $50.91, was one of the top performers on the S&P 500 after the toy maker topped Wall Street's profit estimates.

JPMorgan Chase & Co shares edged up after it reached a tentative $13 billion deal with the U.S. government to settle investigations into bad mortgage loans sold to investors by JPMorgan and the banks it bought during the financial crisis. Shares rose 0.4 percent to $54.51.

"A settlement of this size brings closure for many and it allows them to put the episode behind," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

Shares of Tellabs Inc rose 4 percent to $2.45 after the network services provider agreed to be taken private by Marlin Equity Partners for $891 million.

The market barely reacted to news that U.S. home resales fell in September and prices rose at their slowest pace in five months, in the latest signs higher mortgage rates were taking some edge off the housing market recovery.

Japan's exports rose but were well short of expectations in September, a sign that slowing demand in Asia was taking the shine off Prime Minister Shinzo Abe's stimulus policies and clouding the outlook for a recovery.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama, Kenneth Barry and Nick Zieminski)

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Wall Street mixed with eyes on earnings

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were little changed on Monday after the S&P 500 hit a fresh intraday record high, boosted by gains in Apple after a bullish research note, while underwhelming results from McDonald's weighed on the Dow.

The S&P 500 on Friday capped its biggest weekly gain in three months on stronger-than-expected earnings from companies including Google and Morgan Stanley and as a deal in Washington helped avert a possible government default and reopened the federal government after a 16-day shutdown.

"It is positive that investors are focusing on company fundamentals" and not on political dealings in Washington, said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

"The good news is we're returning to reactions that are stock specific," he said.

Apple led gains on the S&P 500 and Nasdaq after Societe Generale lifted its price target on the stock to $575 from $500 and advised clients to buy shares. The stock rose 2.3 percent to $520.82.

Shares of McDonald's fell 0.9 percent to $94.35, ranking the restaurant chain as the top point decliner in the Dow industrials. McDonald's reported revenue that missed estimates and warned global October sales could be relatively flat.

Other companies expected to report results on Monday include Netflix and Texas Instruments . More than 25 percent of the S&P 500 components are due to report this week.

The Dow Jones industrial average fell 7.83 points or 0.05 percent, to 15,391.82, the S&P 500 gained 0.62 points or 0.04 percent, to 1,745.12 and the Nasdaq Composite added 11.153 points or 0.28 percent, to 3,925.431.

Hasbro , up 7.7 percent at $50.91, was one of the top performers on the S&P 500 after the toy maker topped Wall Street's profit estimates.

JPMorgan Chase & Co shares edged up after it reached a tentative $13 billion deal with the U.S. government to settle investigations into bad mortgage loans sold to investors by JPMorgan and the banks it bought during the financial crisis. Shares rose 0.4 percent to $54.51.

"A settlement of this size brings closure for many and it allows them to put the episode behind," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

Shares of Tellabs Inc rose 4 percent to $2.45 after the network services provider agreed to be taken private by Marlin Equity Partners for $891 million.

The market barely reacted to news that U.S. home resales fell in September and prices rose at their slowest pace in five months, in the latest signs higher mortgage rates were taking some edge off the housing market recovery.

Japan's exports rose but were well short of expectations in September, a sign that slowing demand in Asia was taking the shine off Prime Minister Shinzo Abe's stimulus policies and clouding the outlook for a recovery.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama, Kenneth Barry and Nick Zieminski)

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