Europe's major indexes closed modestly higher Wednesday. US indexes traded lower after Amazon (AMZN) cut its profit forecasts and Boeing's (BA) outlook failed to impress investors. Crude traded higher at US$74.45/bbl after the EIA said that gasoline stocks fell last week.
UK: The FTSE 100 index closed higher as oil and banking stocks outweighed a weak performance by GlaxoSmithKline (GSK). The pharma giant (-1.70%) retreated after posting earnings below analysts' forecasts. Sales came in ahead of expectations and the group raised 2006 earnings guidance to around 12% EPS growth.
Information provider Reuters (+5.36%) jumped after lifting fiscal year revenue growth to between 5%-6% at constant currency rates. Northern Rock (+7.79%) reported a 28.3% rise on gross lending in the first half. The mortgage lender upped its interim dividend by 16% and lifted growth targets.
CSR (+3.66%) said second quarter pretax profit rose by 123% and expected its Bluetooth unit market growth in 2006 to be 60%-70%. Woolworths (+6.50%) said the environment had remained challenging and sales fell 3.1% in the 25 weeks to July 22, with Woolworths like-for-like down 7.7%. Autonomy (+1.65%) reported a 368% rise in second quarter adj. pretax profit and said the competitive environment remained benign. Wolfson (+2.69%) said profits doubled in the second quarter.
France: The CAC 40 index (+0.20%) ended a touch higher. Total (TOT) (+1.55%) gained. In autos, PSA (-10.11%) tumbled as first half results came in well below forecast. STM (STM) (-3.08%) also slid, as the market focused on a disappointing third quarter margin forecast, despite second quarter numbers ahead of consensus.
Casino (-1.75%) fell despite second quarter sales ahead of estimates. Investors looked at Franprix and Leader Price's weak performance. Air Liquide (+0.39%) posted second quarter revenue of €2.170 billion, +5.6%. Hermes (-2.73%) fell as it posted below-consensus second quarter sales.
In other news, the new head of corporate and investment banking at BNP Paribas (+0.07%) is preparing an ambitious expansion into Germany, Spain and the UK, wrote the FT. On the broker front, Citigroup upgraded CapGemini (+2.04%) to buy from hold. SocGen upgraded Valeo (+3.82%) to hold from sell. Finally, lawmakers from France's ruling party who oppose the merger of Suez (SZE) (-1.75%) and GdF (+0.33%) will submit an alternative plan for the deal that would maintain the government's majority stake in GdF, said Les Echos.
Germany: The Xetra-Dax index (+0.31%) ended Wednesday's session higher. In Frankfurt, earnings releases continued apace in Germany. Lufthansa (-1.02%) posted a better-than-expected first half operating profit of €297 million, with the net level at €85 million on interim sales of €9.6 billion. There was no outlook statement. Merck (+1.9%) tabled in-line second quarter operating profit of €251.5 million, up 24% year-over-year, on sales 4.5% higher at €1.52 billion.
SGL Carbon's (+0.27%) first half EBIT rose 45% year-over-year to €79.2 million on sales of €568.9 million. Praktiker's (+0.39%) second quarter EBITDA rose some 18% to €62.4 million on sales 7.5% higher year-over-year at €888.3 million, with turnover in its eastern European and German business particularly strong. MTU Aero Engines (-2.09%) lifted its fiscal year EBITDA forecast to €290 million after it posted a rise in interim EBITDA to €142.1 million.
Earnings news aside, TUI (+1.95%) was marked higher as Denmark's AP Moller Maersk is rumored to be on the verge of launching a bid for its CP Ships business, said to be worth €5 billion. TUI said it is unaware of any takeover offer. Commerzbank (+0.75%) is understood to be ahead of rivals in a bid to buy Norisbank. Looking ahead, its earnings galore Thursday, with blue-chips VW (-0.69%), DaimlerChrysler (DCX) (+0.28%) and Siemens (SI)(+0.78%) key in Germany.
Elsewhere: The main Spanish and Swiss shares also closed above breakeven.
Soren Billing, Pawan Girglani, Julien Manrique, Mariella Mongio, Rocio Opazo-Aniotz, Guarav Panchal, Michael Sanderson, Emma Stevenson, Valerie Vidal; Alex Halperin (BusinessWeek Online)
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