Markets & Finance

European Indexes Slip

Lower futures on Wall Street weighed Thursday morning

From Standard & Poor's European MarketScope

After Wednesday's gains European indexes drifted lower Thursday morning. U.S. futures suggested that Wall Street will see profit taking after the DJIA hit fresh all-time highs Wednesday. Crude futures rebounded to US$60.58/barrel, after settling at US$60.34, down US$0.76, or -1.2%, last night on forecasts that the current mild weather spell would persist in the U.S. Northeast.

UK: The UK FTSE 100 index edged lower in lackluster holiday-season trade. Corporate news flow will likely remain quiet with many investors on holiday until the new year. Still, M&A action - or speculation - kept a few traders busy. Vodafone (VOD) (-0.70%) remained lower as the battle for India's Hutchison Essar heated up. Essar, the Indian conglomerate that holds 33% of Hutchison Essar, has offered US$11 billion for the rest of the company.

ICI (+1.18%) remained well bid, as The Times reported that Holland's Akzo Nobel is a likely buyer into the new year. Takeover speculation has lifted shares in Intercontinental Hotels (IHG) (+2.56%) by more than 12% since mid-December. Land Securities (+2.28%) and British Land (+1.59%) were amongst the top-five performers in the FTSE on REIT enthusiasm ahead of conversion to its new status next week.

PartyGaming (+3.36%) is interested in assets from Empire Online, The Guardian reports. (BP) (-0.78%) and Shell (RDS) (-0.67%) were in focus ahead of EIA data this afternoon. Centrica (unch.) confirmed that four employees died in a helicopter crash following a routine flight between platforms in the Irish Sea.

France: The CAC 40 index (-0.28%) traded in a narrow range on Thursday. Shares edged lower as investors took profits in a low-volume session. At home, Total (TOT) (-0.46%) was lower ahead of inventories data.

Accor (-0.34%) appeared uninspired by a report that Colony could become the hotel group's primary shareholder in early 2007. The U.S. investment fund may convert bonds into Accor shares, obtaining a 10.5% stake.

Broader market-listed, Air France-KLM (AKH) (+1.82%) was reported to be eyeing a stake in troubled Italian airline company Alitalia. Havas (+0.72%) is seeking acquisitions again and is targeting advertising firms that can be easily integrated into the group, wrote the WSJ Europe.

Germany The Xetra-Dax index (-0.08%) is flat at mid-session Thursday. Of local note, as expected, Siemens (SI)(+1.01%) has, together with IBM (IBM), signed the HERKULES military IT project contract following a vote by Germany's Bundestag. HVB estimated a deal size of about €4 billion (55-60% of total volume) for Siemens over the next ten years.

E.On (EON) (-0.25%) said it will cut its offer for Spain's Endesa to €36.5 billion from an earlier €37 billion, with the reduction corresponding to the conditions of the offer. SAP (SAP) (+0.2%) expects double-digit growth in the coming years and may raise its dividend payment for 2006, reported Boersen-Zeitung.

VW's (+0.32%) Audi expects a return on capital of 13% in 2006, the FTD reported, citing sources close to the unit's supervisory board. Hanover Re's (-0.26%) CEO said that thanks to attractive market conditions, the reinsurance group expects another successful year in 2007. UBS has lifted its stake in Depfa Bank (+1.36%) to 10.03%.

Broker-wise, Deutsche initiated coverage of several biotech groups - GPC (GPCB) (+3.3%) and Morphosys (+3.5%) with a buy and Evotec (-0.62%) with a hold.

Elsewhere: At mid-session both the S&P/MIB (-0.07%) and MIBTEL (-0.09%) indexes slipped below the gain line. Spanish markets continued in the red amid thin news flow as well.

Alexander Wisch, Rocio Opazo-Aniotz, Claudia Perotti, Michael Sanderson, Emma Stevenson, Mariella Mongio, Pawan Girglani, Guarav Panchal, Julien Manrique, Isabell Witt, Sara Oscarsson, Ben Marino, John West

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