Markets & Finance

On the Move: Northern Rock, Schneider, BMW


Plus more European stocks making headlines Monday

UK

NORTHERN ROCK was down £0.20 to £1.74... Taking legal advice over dividend - the company is understood to have been taking legal advice about the payment of its forthcoming £59 million dividend, the FT writes. The company stands accused of reckless lending after it emerged this weekend that it is still offering mortgages of six times salary to potential borrowers, The Times reports. The company says despite provoking the worst banking crisis for decades, the company last week offered a reporter posing as a first-time buyer a £180,000 mortgage even though he had a salary of only £30,000. - The Sunday Telegraph reported that three leading hedge funds are planning a break-up of the company They, however, have yet to approach the company 's board.

MARKS & SPENCER was up £0.21 to £5.88... Buy, 42% upside to target - Deutsche - Deutsche Bank says that the shares have underperformed the market by 20% over last 4M due to concerns that a slowing UK

consumer will hurt the business, and that the recovery has lost momentum. Broker believes second half will prove a positive surprise and that profits growth will re-accelerate. Suggests to buy now before news of improving autumn trading and before a possible large share repurchase program. Adds the market is underestimating the benefit of the modernization program. Rates buy with £8.15 target.

WOLSELEY was down £0.41 to £8.07... fiscal pretax profit falls, ups DPS; US still weak - posted fiscal pretax profit before amortization of £758 million, -7.3%; pretax profit £634 million, -17.6% (vs cons £817 million); revenue £16.221 billion, +14.%; basic EPS 73.52p, -19% (vs cons 98.8p); total DPS 32.40p, +10.2%. The company says recent events relating to the US subprime market and subsequent concerns over liquidity in global financial markets have created uncertainty. Adds there are no signs yet of any upturn in the US housing market and the repairs, maintenance and improvement market is now beginning to soften.

BHP BILLITON was up £0.98 to £17.54... Reserves update this week - the company is expected to announce this week that it has uncovered what is potentially the largest gold resources in the world at its Olympic Dam mine in South Australia, the Melbourne Herald-Sun newspaper writes. the company will release its resource upgrade for the copper, gold and uranium mine, as part of its annual report on Wednesday, the paper adds.

France

EDF was up €2.02 to €72.56... The French govt may sell a 5% stake in the company , La Tribune reports. The company says the sale could happen this week.

SCHNEIDER was down €3.40 to €91.27... Citigroup downgrades to hold from buy and cuts target to €100 from €110. Argues the blow-up in the sub-prime market has been worse than it had expected and that the uncertainty caused is increasing weakness in the housing market and is likely to lead to a further slowing of commercial construction projects. Cuts fiscal 2008 EPS target by 5% to €7.48.

DANONE was up €1.06 to €57.57... Credit Suisse upgrades to outperform from neutral and lifts target to €67 from €65, arguing 'the time to buy a quality stock is surely when it is out of favor.' Stock is down 10% over 6 months. However, broker believes bad news is in the price and that the company will emerge as 'the fastest growth food company in the developed world'.

VINCI was up €0.85 to €55.03... Eiffage granted a 1% toll tariffs hike - press - The French environment ministry is to grant a tariffs hike of 1% to Eiffage's toll-highway operator unit APRR, according to French weekly newsletter La Lettre de l'Expansion. The company says the environment ministry should do the same with toll-highway operator Sanef, controlled by Spain's Abertis, on 1 December, and with the company 's toll-highway operator ASF on 1 February 2008.

Germany

BMW was up €1.57 to €45.14... Barron's on margins / Mini in demand - Barron's writes the company will reveal a target for return on capital employed in early October after last year's decline to 21.7% from 30% in 2002. The publication reckons the company 's shares are set to rise 20% or more if second half07 margins expand on easing costs and easy comparisons to 2006. In other news: production capacity at the company 's Mini unit won't meet demand in 2008 and the company may boost capacity at a factory in Oxford or find an external partner, Automobilwoche reports, citing Frank-Peter Arndt, head of production.

FREENET was up €2.00 to €18.00... UTDI & Drillisch create j/v for Freenet - United Internet and Drillisch have announced an agreement, within which both companies become 50/50 partners in a j/v named MSP Holding GmbH, holding 24.5% of the company They are keeping all options open, including to increase their holding in Freenet or to fully acquire it.

DEUTSCHE BANK was down €1.65 to €90.20... Profit could take hit of up to €1.7 billion in third quarter from revaluing of leveraged debt commitments, Reuters reports sources as saying. Press-wise, CEO Josef Ackerman told Der Spiegel that he sees first encouraging signs that financial markets are recovering after a global credit crisis.

Italy

ENI was up €0.14 to €26.26... Honoured 'Best in Class' in approach to climate change - the company has been admitted to the Climate Disclosure Leadership Index released today as part of the Carbon Disclosure Projects (CDP). The CDP is a special project of Rockefeller Philanthropy Advisors in New York, a coalition of over 315 global investors with more than US$41 billion in assets. The FT Lex Column notes that CEO Paolo Scaroni has until 22 October to reach a friendly agreement with the Kazakh govt over Kashagan. The company says the company is in a tight spot but the worst case scenario for the company - losing its lead position on the project - seems remote. Notes the best outcome is a tweak to the profit sharing agreement to allow more cash to flow in the govt at an early stage. Adds Scaroni will probably have to accept a larger role in the consortium for state-controlled KazMunaiGaz.

SNAM RETE GAS was up €0.02 to €4.41... Energy Authority calls for spin-off - The President of the Energy Authority, Alessandro Ortis says that the company must be spun off from ENI, adding this would offer clear advantages to the consumer.

Netherlands

CRUCELL was down €0.52 to €14.29... Target cuts after Merck's HIV vaccine discontinuation - Lehman trims target to €21 from €22 since Merck has discontinued development of its V520 prophylactic HIV vaccine on Friday, based on the lack of efficacy. V520 utilised the company 's AdVac technology in PER.C6 and contributed EUR 0.9, or nearly 5%, of broker's sum-of-the-parts valuation. Maintains overweight recommendation as believes the company is uniquely positioned within EU biotech, with a growing vaccine business and a proprietary technology for the production of biotech drugs. SNS Securities cuts target to €27.50 from €30, maintains buy recommendation.

Noridcs

PROSAFE was up NOK6.10 to NOK97.00... Possible split into two entities - the company 's Board of Directors will evaluate the possible effects of a split of the company into two separate listed companies; Oil Production and Accommodation.

VOLVO was down SEK3.00 to SEK117.75... Truck deliveries fall 59% in NA - Heavy truck deliveries fell 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.

Spain

IBERDROLA was up €0.42 to €40.75... Set for stock split - press - the company is to undertake a stock split, offering four shares for every one currently held, according to Expansion. The company says this will add liquidity and make shares more attractive to minority shareholders. The paper adds many small investors have money available after exiting Endesa. A local broker notes that while the split has little real economic effect, such splits have in the past sparked upward moves in share prices. Adds the company is set to enjoy further positive catalysts, such as the listing of Iberenova.

Switzerland

LONZA was up CHF6.50 to CHF130.00... Shares spike ahead of investor event - the company holds an investor event on 27/28 September in Visp; a local broker believes that the event may contain potential positive newsflow regarding Biopharmaceuticals as well as other divisions that may prove supportive for the share price.


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