Markets gave up Monday's early gains after U.S. equities weakened
The FTSE 100 switched into reverse in late session, ending lower as Wall Street gives up its early gains. Concerns regarding the US economy weighed on banks, while lower crude oil futures saw oil stocks fall: BP (-0.36%). Leading the FTSE gainers was ITV (+2.02%), pushed up by a Times report that advertising revenues on the flagship channel are up by an estimated 4-5% in September, due to interest in the Rugby World Cup. Bob Diamond of BARCLAYS (-0.43%) said BarCap profits YTD are well ahead of the same period in 2006. In broker action, SMITHS GROUP (+0.62%) was supported by an upgrade at Morgan Stanley. KELDA (+1.55%) attracted a trading buy from Credit Suisse as the broker anticipates positive read-across from an upcoming Southern Water sale. SAINSBURY (-0.55%) was subject of another Times report, which says Delta Two is understood to have been given the green light from Qatar to increase the cash component of its £10.6 billion bid. NORTHERN ROCK (-0.77%) was in the spotlight after The Telegraph said it could be subject of a bid. AB FOODS (-3.41%) revealed a mixed trading update, with Primark margins looking a bit lower than expected due to discounting. Elsewhere, BOVIS HOMES (-0.94%) unveiled interim pretax profit of £58.4 million. SPORTS DIRECT (+0.92%) stuck to its fiscal guidance.
The CAC 40 (-0.8%) ended lower on Monday in volatile trading. Wall Street edged into negative terrain as hopes the Fed would cut interest rates next week were overshadowed by uncertainty about the economic outlook. At home, breadth ended 32-8 negative with BNP (-1.04%) and SOCGEN (-0.9%) wiping 6.3 points off the index. ARCELOR MITTAL (-2.9%) was also dominant amongst the losers, wiping off 6.1 index points, after Citigroup downgraded to hold from buy. Construction plays such as BOUYGUES (-2.97%) and VINCI (-1.15%) sank after Exane BNP Paribas issued a note reiterating its negative view on the European construction sector. Amongst the outperformers, SANOFI AVENTIS (+0.05%) managed to hold its head above water, benefiting from a Dresdner's note reaffirming its buy recommendation, despite trimming its target. PSA (+0.63%) was firm as plans emerge to cut some 3,000 jobs per year in Western Europe until 2010, La Tribune reported, citing CEO Christian Streiff. VEOLIA (+1.06%) gained as Credit Suisse saw read-across from machinations in the UK water sector involving the sale of Southern Water. Among second-liners, SCOR (-0.87%) expects stable non-life premiums in 2008 of some €3.3 billion following the takeover of Switzerland's Converium.
Xetra-Dax (-0.82%) closed lower on Monday, tracking losses on Wall Street. Locally, reinsurers took centre stage amid comments from the insurance conference in Monte Carlo. MUNICH RE (-0.5%) said reinsurers were under pressure to cut premium prices, but added that even a reduced level is high enough to allow it to reach its target of fiscal 2007 net income of up to €3.8 billion. Press-wise, the FT reported that Munich Re will within months begin offering insurance coverage to global companies for their hard-to-insure risks, taking the group away from being a pure reinsurer. HANOVER RE (-0.42%) said it will not participate in any potential consolidation in the non-life reinsurance market. Over in Switzerland, Swiss Re said claims for the reinsurance industry from natural catastrophes are about US$35 billion this year, well above the US$12 billion in claims in 2006. In autos, DAIMLER's (-2.64%) Mercedes unit said it is open to partnerships with BMW (-1.5%) in smaller cars. Labor union IG Metall warned PORSCHE (-3.67%) that it faces massive conflict if it seeks changes to rules on pay and working conditions at VW (+0.39%). Separately, according to magazine Auto Motor und Sport, Porsche's 2006/2007 profit is up 66% to around €3.5 billion. STADA (+1.56%) rose on rumors that Wyeth may be interested.