Markets & Finance

European Indexes Mixed


Oil prices and U.S. equity action were in focus Wednesday

European indexes were mixed Wednesday morning. Oil, currently at US$60.87/bbl, was in focus with EIA inventories expected to show draws in gasoline and distillate stocks. Wall Street is seen opening flat with investors feeling that there is still more downside to the market.

UK:The FTSE 100 index slipped lower at mid-session pressured by falling banking stocks going ex-dividend. However, property stocks and water companies rose helped by positive broker notes. In earnings news: ITV (-1.80%) reported a 19% fall in FY underlying PTP hit by a difficult ad market. The broadcaster's new executive chairman Michael Grade called for an improvement in programming.

In the media sector, The Times newspaper noted that a private equity house is considering a leveraged buyout of British Telecom (+0.77%). Also, regional newspaper group Johnston Press (+4.57%) saw its FY PTP fall 6%, with advertising revenues falling 2.9% in the first 9wks of 2007.

In broker moves: JP Morgan's note on property stocks helped British Land (+2.45%), Land Securities (+2.59%); Merrill upgraded Kelda (+1.42%) and Severn Trent (+2.40%). Among other company news: insurer Resolution (+3.53%) appointed finance director Mike Biggs to replace CEO Paul Thompson, with immediate effect.

France: The CAC 40 index (+0.21%) traded higher at mid-session. Suez (+1.36%) led the points gainers, supporting the index 3.29pts on a Le Soir report that the company plans to reorganize its energy division. Carrefour (+1.30%) was briefly volatile as reports emerged that CEO Luc Vandevelde has resigned. Sentiment on the stock was boosted by Groupe Arnault, Colony Capital and Axon Capital taking a 9.8% stake in the retailer.

In results news, Vallourec (-6.43%) weighed heaviest on the blue chip index after posting FY06 net profit of €917m, below consensus expectations of €932m. Credit Agricole (-0.56%) posted 4Q net profit of €1.105bn - a touch lower than expected. Accor (-0.21%) reported net profit Group share up 51% to €501m, but below expectations. It plans a buybacks of €700m and a special dividend of €1.50 per share.

Vivendi (+0.24%) reported FY06 revenues of €20.044bn, +2.9%. It plans to pay a 2006 dividend of €1.20 per share, +20%. Elsewhere, EADS's (+2.16%) CEO Louis Gallois said 'there is no urgent need for a capital increase as the cash position is positive'. In broker news, Deutsche Bank initiated Alstom (+0.53%) with a hold and €90 target; and Exane upgraded Spir (+2.05%) to outperform from underperform.

Germany: The Xetra-Dax index (+0.16%) traded marginally higher at mid-session Wednesday. E.On (+1.46%) reported 2006 adjusted EBIT of €8.15bn, up 12% y/y and higher than expected. It has dropped a key condition in its €41bn bid for Endesa, but would consider halting the attempted takeover of the Spanish utility altogether.

Adidas (-0.31%) saw its sales jump 52% y/y in 2006 to €10.08bn, boosted by the football World Cup in Germany and the purchase of Reebok in the US. The 26% rise in annual net profit to €483m is in line with expectations. Order backlogs not yet improving and negative orders for the Adidas brand in the US are factors weighing on the stock.

DaimlerChrysler (+0.96%) has confirmed that it is in talks with General Motors about sharing development costs of SUVs. According to the FT, VW (+2.16%) wants to return all factories to full capacity through the construction of many models. Meanwhile, VW has lifted its stake in Scania to 20.03% of shares and 35.31% of votes.

MAN (+3.32%) said truck demand was 'extremely high' in January, February and early March. Repower (+3.06%) shareholders have accepted Suzlon's takeover offer, with the Indian group saying it will accelerate growth and improve margins if its US$1.3bn bid succeeds. Kontron (+2.7%) plans to intensify its share buyback program.

Elsewhere:The Ibex 35 index retained its positive momentum at midday, boosted by M&A and broker action.

In Zurich, the SMI index (+0.50%) remained in positive territory even with US futures in the red.


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