Markets & Finance

European Indexes Finish Lower


Major European equity indexes ended lower Thursday. The markets failed to find support from Wall Street's marginally positive trading and a continued slide in oil prices. European borrowing rates were in focus, with the European Central Bank and Bank of England leaving benchmark interest rates unchanged.

Germany's Xetra-Dax finished firmly in negative territory. Among issues on the move Thursday, autos traded lower on general negative sentiment and on currency moves. VW's (-2.89%) Audi unit stated late Wednesday that September sales were up 12% year-over-year to 77,600 vehicles. The group expects to "significantly" exceed its full-year target of 800,000 cars. Porsche (-3.54%) is close to its target of buying a 19% stake in VW.

Elsewhere, Deutsche Bank (DB) (-1.19%) denied it is looking to acquire Switzerland's Bank Sarasin. Siemens (-1.67%) is buying Wheelabrator Air Pollution Control, which had sales of US$116 million in the first eight months of this year. Meanwhile, Siemens CEO Kleinfeld told Boersenzeitung that he's confident to reach profit goals for all units by 2007. Degussa (-4.01%) may not pay a dividend after it predicted a loss of €450 million this year. AWD (-17.33%) slumped as it says it won't be possible to fulfill market expectations for the full year. Peer MLP (-1.45%) is also under pressure despite pointing to a positive trend in pension product sales in recent months. On the broker front, Goldman Sachs upgraded Adidas (-0.03%) to outperform.

In the UK, the Financial Times-Stock Exchange 100 index fell throughout the day, hit by the energy sector and concerns about inflation and economic slowdown, a sure sign of stagflation. The BoE announced no change to its 4.50% benchmark rate, as expected. Meanwhile, crude oil prices fell towards US$61.00 per barrel, the lowest level since early summer, but this was used as an excuse to sell energy stocks, rather than buy back cyclical plays: BP (BP) (-2.21%) and Royal Dutch Shell (RD) (-1.75%) knocked 23 points off the FTSE.

Only a handful of FTSE stocks traded on positive ground, with Rio Tinto (RTP) (+2.71%) turning around in afternoon trade after yesterday's plunge. British Airways (BAB) (+3.15%) was another gainer thanks to cooling oil prices and excellent traffic data Wednesday. This also supported BAA (+0.40%).

Cadbury Schweppes (CSG) (-4.69%) fizzled out after warning it will miss its 2005 margins target, despite recent improvements.

Among midcaps, LSE (+1.23%) advances as a bid from Australia's Macquarie is expected within days, says The Daily Telegraph. National Express (-0.18%) confirms it is in talks to buy Alsa, Spain's largest bus and coach operator. Among earnings, Halfords (-1.02%) reports first half same-store sales up 2.6%, higher than expected, while Austin Reed (+1.85%) narrowed its first half losses.

In France, the CAC40 ended lower on Thursday, with losses across the board. Breadth was 37-3 negative, in above average volumes. Total (TOT) (-2.17%) wiped 15 points off the index as crude oil prices moved lower. Danone (DA) fell 2.33% after the UK's Cadbury-Schweppes warned it will miss its 2005 margins target due to the recent rise in oil prices. Airbus won shareholder backing to launch the A350, to compete directly with the Boeing 787 Dreamliner. EADS (-1.32%) wants to avert a trade conflict between the US and Europe over state subsidies to Boeing and Airbus for the development of large civil aircraft. SocGen upgraded EADS to buy from holdearlier Thursday. Sodexho (-4.43%) fell as Merrill Lynch downgraded to neutral. Investors took profits on Neopost (-1.9%). Fortis downgraded the stock to hold from buy after lifting its target to €84 from €80. Vallourec (-5.33%) dropped on talks that Bollore is selling down his 9.75% stake in the group.

On the upside, France Telecom (FTE) (+1.32%) bucked the market trend, in line with the sector, as investors looked for defensive hedges. Rhodia (+8.72%) jumped on ongoing speculation of a buyout. However, BASF said it has no plans to launch a takeover.


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