Markets & Finance

European Indexes Close Mixed


The major indexes couldn't gain traction Monday

From Standard & Poor's European MarketScope

European indexes ended Monday mixed after slow morning trading. Oil gained over US$59 a barrel as cold US weather and OPEC's supply cuts took effect. Wall Street was trading flat.

UK: The FTSE 100 closed a shade higher helped by energy and telecom stocks. Earlier, investor sentiment took a hit following a letter bomb explosion in Central London. UK services PMI came in lower than expected. US services data came in stronger than expected. Sector-wise, telecom stocks were in demand.

Credit Suisse is preparing to award a contract for its telecoms needs to BT (BT)(+2.02%), in a deal worth about CHF1.4 billion, the FT reported. Also, Citigroup raised the target on the telecoms firm. Cable & Wireless (+1.60%) gained on a Credit Suisse target price upgrade. Platinum specialist Johnson Matthey's (+6.10%) shares got an uplift from a UBS upgrade to buy.

In company news, British Airways (BAB) (-1.90%) said January passenger traffic fell 2.8%. Ryanair (+6.86%) reported a 30% rise in third quarter net profit, despite market worries about a possible fall. Brandes Investment Partners lowered its stake to 9.77% in Sainsbury's (+0.49%). Barratt Development (+4.15%) is to buy rival Wilson Bowden (-1.64%) in a £2.2 billion deal. Estate agency Countrywide (+5.05%) received a preliminary approach.

Germany: The Xetra-Dax index (-0.17%) finished the day's trading in much the same way as it started, in the red. E.On (EON) (-0.35%) raised its bid for Endesa to €38.75 per share, valuing the Spanish utility group at €41 billion. The increased and final offer came a day after Gas Natural pulled out of the bidding race. E.On came off earlier highs, despite net benefit of higher gearing. Also in the news was better performing rival RWE (+0.16%) as it plans to build a gas pipeline from the Czech Republic to Belgium, wrote Focus magazine.

SAP (SAP) (-0.48%) ended the day's trading in the red, even with sales growth of more than 15% in the US this year, its Americas chief told FTD. Continental (+1.19%) said that Siemens' (SI) (-0.30%) automotive supplier business VDO would be a very good addition for it.

Q-Cells (+18.47%) accelerated further after posting 2006 EBIT of €129 million on sales of €539.5 million. Both figures were better than expected. The group acquired a 17.9% stake in REC, the world's largest producer of solar-grade silicon.

Balda (+1.93%), the world's second-largest maker of plastic mobile phone components, lost a pretax €50 million last year, CEO Joachim Gut told the local press. IVG (+0.54%) bought the 'Gherkin' tower in London in a 50/50 joint venture for €950 million from Swiss Re. Key on the broker front, Dresdner downgraded Infineon (IFX) (-0.90%) to reduce and Credit Suisse upgraded Adidas (+2.28%) to outperform.

France: The CAC 40 index (+0.13%) closed the session slightly higher. Total (TOT) (+0.95%) added 6.5 index points as it has begun to eye nuclear energy as access to oil and gas becomes more restricted, the FT wrote. Accor (+2.05%) outperformed on a UBS target price increase. Carrefour (+1.18%) enjoyed an upgrade to neutral from underweight from JP Morgan, reportedly.

Conversely, Axa (AXA) (-0.78%) weighed the CAC 40 some 2.5pts on reports that Italian bank Monte Paschi was studying five offers for its life insurance arm MPS Vita, including one from the French insurer. Following Nissan's profit warning, Carlos Ghosn blamed the current management system that makes him manage both Nissan and Renault (-0.87%) at the same time, Les Echos said.

Car industry insiders expect Christian Streiff to outline a plan to shore up PSA's (-0.68%) sagging profits when he takes the helm as CEO this week, the FT reported - possibly as soon as Wednesday, when PSA posts fiscal 2006 results.

Faurecia (-5.46%), owned 71% by PSA, tabled a fiscal 2006 net loss of €447.9 million vs. €182.5 million in the red in 2005. Germany warned that defense contracts with EADS (-1.72%) could be cancelled if jobs and production are shifted out of the country as part of the restructuring of Airbus, the FT said. Havas (-3.25%) posted a 0.8% rise in revenues for 2006, a touch below expectations.

Elsewhere: Spain's Ibex 35 index (-0.07%) closed a shade down, with Wall Street trading down on higher prices: WTI traded up some US$0.60 at around US$59.68/bbl as OPEC cut production and the US suffered cold weather.

Stockholm continued to build on its lead in late trade, taking the rest of the Nordic indexes with it on to positive ground.

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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