Markets & Finance

European Indexes Fall


From Standard & Poor's European MarketScope

Major European equity indexes finished Friday's session in the red, following weakness on Wall Street after early gains. The Dow was plowed under by Caterpillar's (CAT) poor results. On the plus side, Google (GOOG) reported a sevenfold increase in its profits after the close Thursday.

Germany's Xetra-Dax index finished lower. Among stocks in the spotlight Friday, Boersen Zeitung reports that Deutsche Bank (DB) (-0.33%) may become the largest shareholder in China's Hua Xia Bank with the option to raise its 9.9% stake to almost 14%. RWE (-0.06%) may sell its services unit RWE Solutions, FAZ reports, with the utility giant expecting €700 million to €1 billion from the divestment. DaimlerChrsyler (DCX) (-1.36%) will be the first out of the starting blocks for German auto groups reporting third quarter figures next Wednesday. Meanwhile, VW's (-1.19%) Seat division is looking to cut pay and workdays by 10%, reports Cinco.

Altana (-0.7%) is poised to make three more acquisitions to strengthen its chemicals business, one of which will probably happen by the end of this year, reports FTD. Degussa (+0.29%) is lifting prices on its products worldwide due to higher energy and raw material costs. Comdirect (+0.61%) posted third quarter net profit of €14.5 million versus estimates of €13.8 million. Schering (SHR) (-0.26%) will report its third quarter results on Monday. A poll compiled by Reuters puts quarterly operating profit 19% higher at €217 million on sales up 6% at €1.31 billion.

In the UK, the FTSE 100 index finsihed to the downside, dragged lower by oil and mining stocks. Oil futures dropped to their lowest levels in almost 3 months Thursday and traded just under US$60 per barrel. BP (BP) was down 0.49% and Royal Dutch Shell (RD) lost 1.31%.

PartyGaming (+10.26%) reported a 32% increase in third quarter revenues and says since the end of third quarter there has been a material uplift in performance across all group activities. Compass Group (-5.79%) plunges after announcing it was suspending Peter Harris and was launching an investigation, amid allegations of corrupt buying practices at the U.N., suggesting Compass had access to secret bidding information.

BSkyB (-0.67%) agreed to acquire Easynet at £1.75 per share. Brokers say such a move may spark investor interest in other unbundlers with a leading position in the market. AstraZeneca (AZN) (+0.77%) says it plans to file for a U.S. license extension for Seroquel in the treatment of depressive episodes associated with bipolar disorder around the end of 2005. BAT (BTI) (+0.6%) says it will close Canadian factories, as volumes fall.

The CAC 40 index (-0.55%) in France fell further at the close, trading on a negative breadth of 32-7. The decline in crude oil hurt Total (TOT) (-0.69%). In Paris, France Telecom (+0.44%) is the main supporter of the index as the UK's BSkyB acquired Easynet, prompting CSFB to note that there could be a spate of M&A movement in the unbundling sector. STM (STM) (+1.77%) and Alcatel (ALA) (+0.48%) provided suppoert. Valeo (+2.64%) consolidated gains despite disclosing third quarter net income down 21%. The car-parts maker expects a slight increase in automobile production in Europe in the fourth quarter, driven by a production ramp-up in Eastern Europe and a fall in production in North America of around 2%.

Alstom (-0.03%) reversed losses to turn flat after winning a €474 million contract from Paris's RATP, the underground operator. In addition, the FT reports that the cost of buying the train maker out of its London train management contract makes it impossible for the contract to be cancelled, so London's Tube consortium is in negotiations to take control of the 106 trains that run on the Northern Line. Havas was unchaged after owner Vincent Bollore and Aegis head Robert Lerwill met Thursday. Bollore increased his stake to 19.15% on Wednesday.

Investors in Paris will be looking to third quarter reports from L'Oreal (-0.4%), Michelin (+0.29%), and April Group (+0.17%) on Monday after the market close.

Elsewhere, Scandinavian stocks fell across the board, as an initial positive opening on Wall Street turned sour. Stockholm's OMX was weighed down by Ericsson (ERICY) (-0.38%) after the mobile phone group posted unexciting third quarter figures. Amid the decline in crude oil, Statoil (-0.18%) survived the selloff thanks to upgrades from UBS and Deutsche Bank, but Norsk Hydro (NHY) (-1.90%) and Neste Oil (-1.34%) suffered. AstraZeneca (AZN) (+1.53%) is to file for a U.S. license extension for Seroquel.

Switzerland's SMI index (-0.49%) wrapped up Friday's session in the red. Roche (-1.5%) is meeting four companies prepared to manufacture a generic version of its anti-flu drug Tamiflu. At the same time, Nestle (+1.06%) received a €3.3 million fine from an Italian antitrust authority for colluding with six other baby formula makers to inflate prices of baby milk in Italy. Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)


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