Markets & Finance

European Indexes Close Mixed


The major markets couldn't find their footing Wednesday

From Standard & Poor's European MarketScope

European indexes closed flat to lower Wednesday. Wall Street was higher lifted by strong Boeing (BA) earnings and a faster than expected growth in fourth quarter GDP. Crude traded at US$57.68 a barrel, despite EIA data showing a rise in crude and gasoline stocks.

UK: The FTSE 100 index closed in the red ahead of the FOMC's decision on interest rates. Sector wise, water companies Kelda (+0.65%) and Severn Trent (+0.78%) gained on sector consolidation hopes and also govt. plans to introduce water meters. Tobacco stocks slumped after Morgan Stanley downgraded the sector. A partial smoking ban takes effect in France from Thursday. Imperial Tobacco (ITY) (-1.38%) fell on a Morgan Stanley rating downgrade.

In company news, Corus (CGA) (+6.84%) kept its lead among the Footsie percentage gainers with Tata Steel winning the auction with a £6.2 billion offer for the steelmaker. Among other heavyweights, mobile phone giant Vodafone (VOD) (+0.68%) said it added 8.7 million new customers in the third quarter, ahead of a forecast of 7.5 million.

BSkyB's (+0.18%) 10% rise in first half revenues was in line with analysts' expectations. Insurer Friends Provident (-3.98%) said 2006 life and pensions sales rose 31% in 2006. F&C Asset Management (-17.81%) plunged after saying its AuM at Dec-end fell to £104.1 billion from £105.8 billion at the end of September. Kingfisher (+1.81%) gained on a JP Morgan target upgrade. Pearson (PSO) (-1.72%) dropped on a lowered JP Morgan recommendation.

France: The CAC 40 index (-0.66%) closed in the red. Sanofi (SNY) (-1.6%) weighed heaviest on the CAC 40 on news that Bristol-Myers (BMY) hired several banks for advice on a possible takeover bid by Sanofi. Michelin (-2.7%) fell on a five-month high in natural rubber prices. PSA (-2.42%) and Renault (-1.5%) were both hit by the recent surge in oil prices, with EIA inventories adding misery.

STM (STM) (-0.83%) declined on news that Hynix Semiconductor forecasts memory chips prices will fall. Among those reporting, Vivendi (V) (-2.11%) posted fiscal 2006 sales growth of 3% to €20.044 billion in fiscal 2005, though its French mobile arm SFR weighed the stock, posting fiscal year sales of €2.181 billion, 2% below consensus of €2.228 billion.

Nexans (+4.96%) posted fiscal 2006 sales of €7.489 billion, +8.2% like-for-like. JC Decaux (+2.21%) reported fiscal 2006 organic revenue growth was 7.7%, reflecting stronger-than-expected growth in the fourth quarter. Latecoere (-2.49%) reported fiscal 2006 sales of €432.7 million, +22, expecting fiscal 2007 sales growth of 10%, but suffered an HSBC downgrade to underweight and a target cut. Elsewhere, Danone (DA) (-0.67%) has bought the remaining half of its Japanese joint venture, Calpis Ajinomoto Danone.

Germany: The Xetra-Dax index closed flat on Wednesday. Of local note, German retail sales rose more than expected: 2.4% in December in real and seasonally adjusted terms, according to preliminary data from the Federal Statistics Office. Weighing on Metro (-1.74%), though, was a downgrade to neutral by JP Morgan.

Among the gainers: Deutsche Bank (DB) (+1.0%) rallied after it announced a dividend increase of €0.60 to €4 per share ahead of its results tomorrow. In earnings, Heideldruck's (-4.15%) third quarter EBIT fell short of expectations, coming in 16.7% higher year-over-year at €84 million. A consensus view was for €94 million quarterly operating earnings at the world's largest printing machine maker.

Norddeutsche Affinerie (+2.29%) posted first quarter EBT of €39 million, up 77% year-over-year. Quarterly sales rose nearly 60% to €1.47 billion. Europe's largest copper producer said it is well positioned for the full year. Results aside, Milano Finanza wrote that Lufthansa (-1.38%) may be behind Unicredit's expression of interest in taking over the Italian government's stake in troubled Alitalia.

Elsewhere: The Nordic bourses finished mixed on Wednesday. Stockholm turned lower and joined Helsinki in negative territory, while Copenhagen shot ahead of Oslo, finishing as the best European performer.

The AEX index slipped lower still and finished trading as one of the worst performing European indices.

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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