Markets & Finance

European Indexes Rebound


Market players snapped up shares Tuesday as recent equity losses may have made prices more attractive

After Monday’s losses European indexes recover at mid-session Tuesday. Wall Street was expected to open higher on M&A activity. Crude oil moved up to US$60.71 a barrel, helping energy stocks.

United Kingdom The FTSE 100 climbed in the mid-afternoon session led by miners and helped by strong corporate earnings figures. The earnings flow continued: Miner Xstrata (+4.51%) drilled out a forecast-beating 119% rise in fiscal year adjusted profit. The Swiss-based miner said the outlook is positive.

Top gainer International Power (+6.81%) posted a 44% rise in FY profit from operations. The power producer said it sees further growth in 2007. Premier Foods (+1.14%) said FY PTP was £58.1m, a rise of 12.2% y/y, adding that all acquisitions are performing in line or ahead of expectations. Building materials firm Travis Perkins (+0.15%) reported a 6.6% rise in FY adjusted PTP to £220m.

Aerospace firm Meggitt (+0.69%) put out a 14% rise in FY underlying PTP and announced a takeover of US-based K&F Industries in a US$1.8bn deal. In other news: gas producer BG Group (+0.88%) is selling some of its selected Canadian assets for US$445m. Broadcaster ITV (+1.17%) is to suspend all premium interactive services from Tuesday.

France The CAC 40 index (+0.87%) traded higher at mid-session. Axa (+1.78%) was the top points performer on news Italian bank BMPS is in exclusive talks with the French insurer, having whittled down a shortlist, to sell its Vita life insurance arm. Total (+0.69%) moved higher as oil climbed to US$60.65. Vinci (+3.01%) led the percentage gainers as traders noted speculation that Artemis could be building on its 5.1% stake in the company.

Arcelor Mittal (+1.21%) will pay about US$148m to raise its stake in China's Hunan Valin Steel Tube & Wire after the Chinese steelmaker said today that it will issue new shares. PSA (+1.28%) climbed on cost-cutting aims unveiled by CEO Christian Streiff.

Among those reporting, France Telecom (unch.) said FY06 net income fell 28% to €4.14bn. The company plans to keep its 2007 dividend payment unchanged and forecasted 'a near stabilization' of its gross op. margin. M6 (+2.52%) reported net profit of €408.5m, up 161.6% y/y, thanks to a capital gain from the sale of TPS. It announced a 10% share buyback programme over the next three years. Elsewhere, Accor (+0.87%) acquired PPR's (+0.44%) Kadeos for €210m. The acquisition is based on 15x 2007 EBITDA.

Germany: Breadth in the German index remained positive with only four losers in the Dax (+0.69%) Pending home sales figures, which are intended to predict existing home sales, are due at 15:00 GMT. In German stock moves, Fraport (-3.56%) slipped after posting 4Q operating results slightly below analyst expectations. Cheuvreux commented that this is due to lower-than-expected margins in Aviation and Ground Handling.

Escada (-2.89%) reported consolidated 1Q sales of €161.2m and EBITDA up 5.4% to €21.6m. Merck Finck thinks the quarterly results contain elements of 'both light and shadow'. Away from earnings, Continental (+1.75%) paced ahead thanks to an upgrade to buy and higher price target at Goldman Sachs. On a similar note, Salzgitter (+5.14%) shone thanks to an upgrade at Credit Suisse to outperform.

In other news, BASF (+1.49%) removed all CL131 rice from the marketplace following the discovery that some of the seed has been contaminated by an unidentified GM material. American auto parts supplier TRW has entered a race to buy Siemens' (+0.98%) VDO unit worth €7bn, according to the FT.

VW (+2.51%) Chairman Ferdinand Piech plans to join MAN's (+0.47%) supervisory board, Bloomberg reports - citing two people with knowledge of the matter. Symrise (+0.96%) is set to join the MDAX on 19 March.

Elsewhere: The SMI (+1.03%) added on to earlier gains as US markets geared up for a firm start. Novartis (+4.64%) was a runaway gainer after Tekturna received FDA approval for treatment of high blood pressure as monotherapy or in combination with other high blood pressure medications. Tekturna is expected to be available in March in US pharmacies as 150 mg and 300 mg tablets.

At mid-session Italy's benchmark index cruised comfortably higher.


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