The European indexes rallied in afternoon trading to finish higher. Across the Atlantic, Wall Street edged higher amid solid earnings from Hewlett-Packard (HPQ) and Applied Materials (AMAT), rising oil prices and mixed economic data.
Germany:The Xetra-Dax index ended Thursday's session with modest gains. In Frankfurt, DaimlerChrysler's (DCX)(-3.51%) fiscal 2005 operating profit topped estimates, coming in at €5.2 billion. DCX said it sees an improvement in profitability this year, which the market considered somewhat vague guidance. Unit-specific: Mercedes wasn't as bad as feared; Chrysler and trucks disappointed.
Meanwhile, new car registrations in Europe rose 2.6% in January to 1.26 million, with VW (+0.98%) showing a strong performance, up 19.4%. BMW (+0.03%) said its sales in Asia rose 17% to a record last year. TUI (+2.13%) has agreed to sell its US steel-trading unit PNA Group to financial investor Platinum Equity to focus on travel and shipping. No financial details were disclosed, but TUI is understood to be able to reduce its net debt by some €300 million.
Deutsche Post (-2.21%) extended Wednesday's marked losses with broker downgrades coming to the fore in the wake of light results. Earnings-wise today, Merck's (MRK)(-0.08%) fourth quarter operating profit missed estimates, coming in 1.6% lower at €191.7 million compared to an expected rise. The drugs group expects profit after tax, excluding exceptional items, to increase by a high single-digit percentage this year. Schwarz Pharma's (+0.02%) fourth quarter 2005 results are due out Friday. Consensus sees a quarterly net loss of €5.5 million, with sales dipping some 4% to €225.9 million.
United Kingdom:The FTSE index closed higher on Thursday. In London, Diageo (+1.7%) gained after reporting strong first half figures, beating analysts' forecasts, with sales up 8%. The group doubled its share buyback to £700 million and raised its interim dividend by 5% to 11.95p.
It was another poor quarter for Kingfisher (-0.44%) as a 9% like-for-like sales decline at its DIY unit B&Q hit earnings. Media shares retreated after Reed Elsevier (RUK)(-5.05%) reported a disappointing performance at its education arm. Pearson (PSO)(-0.9%) fell in sympathy. Mortgage lender Bradford & Bingley (-0.06%) reported a robust mortgage market and said it saw strong lending in the second half, with a good pipeline for 2006.
Xstrata (+1.48%) was lifted by speculation that the miner could be a good target for BHP Billiton (BHP)(-0.1%). Smiths Group (+1.32%) was supported by talk it could spin off its medical business. In the broader market, De La Rue (+9.78%) said operating profit will be ahead of last year after strong trading throughout the group. Among broker changes, Morgan Stanley upgraded Rolls-Royce (+2.83%) to equal weight and BAE Systems (+2.68%) to overweight, while UBS raised its target on Man Group (+3.39%).
France: The CAC 40 index (+0.79%) staged a late rally, helped by financials after strong results from SocGen (+3.96%). Total (TOT)(+0.19%) recovered from earlier losses, as brokers trimmed price targets on the back of in-line results but a weak 2006 outlook. SocGen (+3.96%) was the largest upwards force, as fourth quarter net profit beat expectations; it reversed the previous day's losses, caused by BNP-Paribas's (+1.01%) disappointing set of figures.
Arcelor (+0.37%) posted fiscal 2005 results just above estimates and raised its DPS by as much as 85%, although Guy Dolle commented that this increase was a sign of confidence in the future and not a defense move against Mittal's (MT) hostile bid.
L'Oreal (+1.02%) hit a 12M high after unveiling in-line fiscal year results, with EPS up 13.5%. Autos underperformed the Western European car sales market, up 2.6% as a whole in January: PSA's (+0.31%) car registrations were down 2.5%, while Renault's (-0.06%) fell 17%. Outside of the reference index, Air-France's (AKH)(-1.82%) third quarter sales rose 12.4%. Subject of much M&A speculation, Maurel et Prom (+3.47%) reported an impressive four-fold increase in sales. Oil services firm Technip (-1.53%) was lower after warning that net income would be below target.
Elsewhere: The SMI index (+1.4%) ended Thursday's session markedly higher on solid domestic earnings reports. ZFS's (+6.08%) fiscal 2005 net profit came in ahead of forecasts. The insurer raised DPS to a surprisingly high CHF7.0 from CHF4.0 in 2004. ABB (+4.69%) reported fiscal year net income of US$735 million, beating estimates, and declared a dividend of CHF0.12, the first in five years. Julius Baer (+9.27%) jumped as it posted fiscal 2005 AuM ahead of forecasts.
Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)
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