Markets & Finance

European Indexes Pare Losses


A sell-off in Chinese stocks rattled major stock exchanges Wednesday morning but they recovered by the close

From Standard & Poor's European MarketScope

European indexes recovered from morning lows shrugging off earlier bearish sentiment triggered by a slide in Asian equities after China trebled stamp duty to cool down its red-hot stock market.

Wall Street was trading flat as share buyback news raised sentiment. Crude was at US$63.45/bbl.

UK: The FTSE 100 index came off intra-day lows to close flat. Mining stocks took a hit. Antofagasta (+0.65%) said first quarter EBITDA rose 19.6% in the first quarter. In oil sector news, BP (BP) (-1.06%) announced a US$900 million gas deal with Libya. Real estate companies - British Land (+1.79%), Land Securities (+1.89%) - gained on sector consolidation hopes after US REIT Archstone-Smith agreed to be bought by Lehman and Tishman Speyer in a US$13.5 billion deal.

Among earnings, nuclear power company British Energy (-5.31%) reported adjusted EBITDA of £1.22 billion - at top end of a forecast of £1.07 billion-£1.26 billion. Also, the UK said it was selling a 25% stake in the nuclear firm. Goodfella's pizza-maker Northern Foods (-0.57%) dished out a 21.1% rise in fiscal continuing pretax profit, adding that the biscuits market still remained tough to crack. Radio broadcaster GCap (-13.93%) reported a 35.1% slump in fiscal underlying pretax profit. In other news, Glaxo (GSK) (+1.76%) saw a Merrill downgrade, but the shares turned positive after the drugmaker reaffirmed the safety of Avandia in a letter to medical journal Lancet.

France: The CAC 40 index (-0.24%) closed lower but off lows and above the 6000 points level while Wall Street traded flat. Total (TOT) (-0.80%) weighed heaviest. It said it was still in talks with Gazprom on a possible partnership in the US$20 billion Shtokman gas project.

In banking, SocGen (-0.90%) isn't in talks with Unicredit or BNP Paribas, CEO Daniel Bouton told La Tribune. BNP (-0.41%) was hit by a 'bribery' scandal involving a former executive in the Shanghai office, wrote the FT. EADS' (-1.46%) Airbus plans to outsource more than 50% of its work, compared to the current 20-25%, according to Reuters. Elsewhere, Suez (+0.43%) proposed to the French government that it makes a bid for GDF (+3.04%) to complete their postponed €43 billion merger, Le Figaro wrote.

Michelin (+3.85%) gained on news that Morgan Stanley raised its target price. UCB and Sanofi (SNY) (+0.61%) won US approval to sell Xyzal, a new allergy drug for adults and children. Among the second liners, Maurel & Prom (-1.39%) sold Congolese assets to Italian Eni for US$1.395 billion. Air France-KLM (AKH) (+2.39%) took off on news it will be included in the CAC 40 index from June 18. It, along with Unibail (+1.26%), will replace AGF (unch.) and Thomson (-1.60%).

Germany: The Xetra-Dax index closed lower but was elevated from the day's earlier losses. The WSJ wrote that Ford has denied that it is in talks with any parties, including BMW (-1.42%), which had signaled an interest earlier this year, to sell Volvo, but is continuing to weigh strategic options for its portfolio of assets. The newspaper reported people close to the situation saying BMW's interest in the unit has cooled. Broker-wise, HVB said it is not overly positive on the prospective acquisition. It sees a lot of risks but only few things Volvo can offer BMW.

In other news, Deutsche Telekom (DT) (+0.44%) said there are no plans to sell T-Mobile USA, its most important growth and value driver. US antitrust authorities have approved Deutsche Boerse's (-0.31%) plan to buy International Securities Exchange. Deutsche Bank (DB) has exercised a €61.5 million over-allotment option on a convertible bond issued by TUI (-2.4%), increasing the total size of the offering to €694 million. Broader market-listed Air Berlin (-4.76%) reported a higher-than-expected first quarter EBIT loss of €60.7 million.

Elsewhere: The SPMIB ended Wednesday's session flat; breadth was 29-11 negative - as banking stocks turned around earlier losses.

Claudia Perotti, Sara Oscarsson, Isabell Witt, Michael Sanderson, Gaurav Panchal, Julien Manrique, John West, Ben Marino, Emma Stevenson, Pawan Girglani, Mohammed El Sadek.

Steve Ballmer, Power Forward
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