Markets & Finance

European Indexes End Mixed


A look at Monday's action in major bourses

London

The FTSE 100 closed higher Monday, helped by positive news from mining giant BHP BILLITON (+5.68%) and strength in commodity prices. BHP is to release an update on its reserves this week. Renewed bid talk that XSTRATA (+4.64%) may take a second look at LONMIN (+1.99%) also helped. Gold hit a 28-year high on weak US dollar. Copper and lead gained on the back of the weakened US currency. £ was at US$2.0219. However, banking stocks continued to be at the receiving end of some sell orders on a report Deutsche Bank's debt bill may hit €1.7 billion. WTI slipped to US$81.14/bbl, taking down energy stocks. Wall Street cut gains after GM workers went on strike. In company results, WOLSELEY (-4.71%) slumped after reporting a 7.3% fall in fiscal year pretax profit before amortization - below estimates - on weak US housing. In further US-centric news, HSBC (-0.44%) is to close its US subprime unit, cutting 750 jobs and taking US$954 million in charges and write-downs. NORTHERN ROCK (-10.24%) fell on news that it is taking legal advice on its £59 million dividend payout and uncertainty over whether there will be a buyer for the troubled mortgage lender. In banking news, BARCLAYS (-3.24%) is preparing to sell one of its subprime consumer loan businesses at a loss, The Sunday Telegraph wrote. Among other stocks, MARKS & SPENCER (+4.50%) benefited after Deutsche Bank reiterated buy.

Paris

The CAC 40 (-0.14%) closed flat-to-lower, as Wall Street traded higher. At home, EDF (+2.86%) was the standout gainer as rumours gathered momentum that the French government may sell a 5% stake. MICHELIN (+1.73%) also picked up after Les Echos reported that the tyremaker plans to replace roughly one worker for every two that leave. La Lettre de l'Expansion reported that EIFFAGE's (+2.05%) APRR tollway unit has been granted a 1% tariff hike. VINCI's (+1.57%) ASF can expect a similar rise from 1 February 2008. DANONE (+1.88%) was in fine fettle as Credit Suisse upgraded to outperform from neutral. The European Commission on Friday gave the nod to France

TELECOM (+0.4%) and private equity firm Mid Europa Partners' proposed €1.4 billion acquisition of Austrian mobile operator One. On the downside, BNP PARIBAS (-2.27%) and SOCGEN (-1.35%) fell as reports Deutsche Bank could be facing €1.7 billion of losses on a non-performing loan revived subprime fears. SCHNEIDER (-3.59%) was hit by a downgrade to hold from buy by Citigroup. AIR France

-KLM (-1.46%) and Alitalia have had talks since Friday, without their bank advisers, over the future of Alitalia, Il Messaggero wrote, adding a 'low-level' merger could be a possibility. Elsewhere, REXEL (-4.49%) is 'cautious' about the US market, CEO Jean-Charles Pauze told weekly Investir.

Frankfurt

Xetra-Dax was flat at Monday's close but with breadth on the negative side (2-1), while Wall St was higher. Among the 10 stocks that moved ahead in Frankfurt were those buoyed by stakebuilding rumours. DAIMLER (+1.28%) rose on speculation that BMW's (+3.6%) Quandt family is looking to take a 3% stake, while there was unsubstantiated talk of US-based Nucor having bought 10% of THYSSENKRUPP (+0.82%). Separately, media reports had it that Daimler plans a two-day meeting, starting on Wednesday, to examine the strategy of all business units. BMW stepped on the gas as Barron's reckons shares are set to rise 20% or more if second half margins expand on easing costs and easy comps. DEUTSCHE BOERSE (+3.67%) was prominent on the gainers list as it expects a 'very good' third quarter as volatility has boosted trading revenues. Banks were on the losing side after reports that DEUTSCHE BANK's (-1.8%) profit could take a hit of up to €1.7 billion in third quarter from revaluing of leveraged debt commitments. HYPO REAL ESTATE (-1.09%) saw proceedings started against its takeover of DEPFA (-0.21%) by a German shareholder. But, generally, Depfa shareholders have okayed the US$7 billion cash and share bid. UNITED INTERNET (+2.37%) and DRILLISH (+5.31%) have announced a joint venture aiming for consolidation of FREENET (+11.36%).

Spain

The Ibex 35 closed moderately higher, with Wall Street in similar territory. The index came of highs, however, as IMF Managing Director Rodrigo Rato reportedly said the forecast of 3.3% GDP growth for Spain is no longer valid and will be revised downwards. In corporate news, IBERDROLA (+1.04%) gained on reports it is to undertake a stock split, offering four shares for every one currently held, according to Expansion. El Economista reported that Sonatrach is willing to pay €5.7 billion for SANTANDER's (+0.22%) stake in CEPSA (+0.14%). Meanwhile, market rumours suggested that Santander could be interested in Barclays, though sources are sceptical. Spanish press reports had FERROVIAL (-2.26%) this week taking a 20% stake in real-estate firm Habitat, which is undertaking a capital increase. SEPI is set to sell its 2.95% stake in ENDESA (+0.10%) to ACCIONA (+2.7%) and Enel, according to the press. British Airways and TPG are due to meet with IBERIA's (+2.13%) core shareholders this week to discuss the upcoming bid, wrote website El Confidencial. In the wider market, MECALUX (+6.56%) is planning to build two plants in China by 2010, investing €125 million, reported Expansion. In broker moves, Caja Madrid upgraded DERMOESTETICA (+4.62%) to buy.

Nordics

Stockholm ended Monday's session lower, Copenhagen and Oslo in the black, while Helsinki finished flat. Wall Street trades higher at European close. WTI hovered around US$81.19/bbl. Back in the Nordic region, VOLVO (-2.48%) fell as heavy truck deliveries declined by 4% year-over-year in January to August, in North America truck deliveries fell 59% for the same period, while European heavy truck deliveries rose 4% year-over-year. The latest news in the OMX (-0.37%) saga suggested NORDEA (-1.90%) and INVESTOR (+0.93%) may be offered up to SEK300 per share for their stakes in the Nordic exchange operator by Borse Dubai and and QIA, The Sunday Times reports. Moving on, PROSAFE (+6.71%) soared on news its Board of Directors will evaluate the possible effects of a split of the group into two separately listed companies; Oil Production and Accommodation. TELIASONERA (-0.44%) will establish a new fully-owned telecom infrastructure subsidiary in Sweden. SAAB's (-1.69%) deputy CEO will leave the group following differences with CEO. In broker action, Bear Stearns re-initiated coverage of DSV (+0.81%) with outperform. Credit Suisse and Cheuvreux took a positive stance on STORA ENSO's (-0.58%) divestment of its North American paper operations, with Credit Suisse raising its target.


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