Markets & Finance

European Indexes Finish with Gains


A roundup of Wednesday's action in major European bourses

London

The FTSE 100 closed higher as Wall Street was trading in positive territory on the GM deal and as a larger-than-expected drop in durable goods orders for August fuels rate cut hopes. At home, financials led the advance, after NORTHERN ROCK (+13.43%) confirmed it had received a number of bid approaches, without giving any price information. The group cancelled the interim dividend for the time being. INVESCO (+5.07%) jumped after saying it plans to switch its primary listing to the NYSE. HBOS (+5.30%) soared as Goldman Sachs added the stock to its Conviction Buy List. SMITHS GROUP (+2.73%) climbed after posting a 9% increase in fiscal profits. The company announced the appointment of Philip Bowman as new CEO. BARRATT DEVELOPMENTS (-0.14%) eased after a good start. The company reported a 9.3% rise in fiscal pretax profit, but said it saw a tighter UK

housing market due to the credit squeeze and the rate hikes. KESA (-5.52%) and DSG INTERNATIONAL (-3.63%) plunged after Credit Suisse lowered target prices on both stocks, saying the end of the extended warranty market would hit profits by 30% and 65%-75%, respectively. DEBENHAMS (-0.56%) retreated on renewed talk that the retailer could breach its banking covenant. JOHNSON MATTHEY (+2.51%) said first half was trading in line with expectations. DAIRY CREST (-4.87%) soured, after warning the that first half Clover recall costs will impact UK

spreads performance.

Paris

The CAC 40 (+0.87%) ended Wednesday's session higher - although below the 5700 mark - supported by advances in SUEZ and AXA. Wall Street trades in positive territory amid news GM has reached an agreement with UAW to halt strike action. Locally, CAPGEMINI (+5.93%) rebounded on a short squeeze with sources noting that fears of a profit warning are subsiding after CEO Paul Hermelin reiterated guidance and said Kanbay 2007 sales growth will be 'double digit'. ARCELOR MITTAL (+1.55%) shrugged off a negative report from The WSJ having it that the world's steelmakers could face significantly higher costs next year as raw material prices rise. CARREFOUR (+1.91%) reportedly still hopes to IPO its property unit in 2008. EADS (+1.84%) should announce that Sir John Parker, National Grid chairman, and steel tycoon Lakshmi Mittal, are to be non-executive directors, part of an attempt to make the board more international. In the broader market, RHODIA (-3.77%) denied market rumor that it is set to issue a profit warning. MAUREL ET PROM (-2.04%) posted first half07 sales of €137.1 million, down 14% year-over-year; operating income of €21.6 million, down 50% year-over-year. On the broker front, Lehman raised its target on EDF (+1.77%). Citigroup downgraded DANONE (-0.26%) to hold from buy. SocGen downgraded NEOPOST (-4.94%) to hold from buy. Neopost posted first half07 operating income of €123.6 million, up 7.5% year-over-year.

Frankfurt

Xetra-Dax closed higher on Wednesday, rebounding from yesterday's losses. Wall Street was clocking up gains today at the start of the US session amid talk of a Chinese bank building a stake in Bear Stearns. Of local note, speculation had it that DEUTSCHE POST (-0.84%) has made a US$41 per share bid for YRC Worldwide. DP, however, has denied an interest in North America's largest trucking company. Christian Salvesen is also understood to be on DP's radar screen. The UK group disclosed that it has received bid approaches from two parties. Elsewhere, BMW (+3.11%) edged higher on expectations of new targets. Capital magazine ran a story saying there will be a supervisory board meeting tomorrow in which new targets will be discussed. Meanwhile, the Quandt family, largest shareholder in BMW, doesn't plan to buy a stake in DAIMLER (+0.38%), according to Handelsblatt. Landing a further patent for key company technology lifted MORPHOSYS (+3.76%) higher, while taking over two European steel firms gave KLOECKNER & CO. (+0.67%) a boost. DEUTSCHE BOERSE (+3.44%) was well bid after recent cost cuts and share buyback news. Also, Credit Suisse raised its target on the stock to €115 from €107, reiterating outperform. Power groups E.ON (+1.26%) and RWE (+1.72%) were in fine fettle after target hikes at JP Morgan.

Nordics

The Nordic bourses ended higher as Wall Street traded in the black amid news that the national strike at GM has been called off after the automaker reached a tentative agreement with the UAW union. Back in the Nordics, in corporate news, retailer H&M (+3.07%) rose despite delivering third quarter results short of forecasts, with sales at SEK18.7 billion and pretax profit at SEK4.4 billion. Cheuvreux pointed out that in spite of an impressive gross margin, the group's third quarter pretax profit was some 4% below market expectations. In other news, Borse Dubai and Nasdaq said they had secured 47.6% of OMX (+2.03%) and raised their offer to SEK265/share. OUTOKUMPU (+6.01%) soared as market rumours suggested it could be interested in bidding for Acerinox at €24 per share and may already have built up a 6% stake. Meanwhile, Goldman upgraded the stock and added it to its pan Europe conviction buy list. NOKIA (+2.42%) climbed as Nokia Siemens Networks won a €180 million order in China with Henan MCC. Furthermore, Qualcomm increased its fourth quarter guidance. On a weaker note, STONESOFT (-6.98%) dropped after issuing a fiscal sales warning. In broker action, Deutsche Bank upgraded UPONOR (+3.18%) to buy, while lowering its target price. However, S&P Eq Res downgraded the stock to strong sell vs buy and cut its target. JPM downgraded STATOIL (-1.21%) to neutral, based on valuation ahead of the merger with NORSK HYDRO's (+0.32%) Oil & Gas business.

Spain

The Ibex 35 (+1.41%) ended Wednesday's session higher, led by advances in TELEFONICA (+1.97%) and IBERDROLA (+2.26%). Wall Street trades in positive territory amid news GM has reached an agreement with UAW to halt strike action. Spanish shares took their inspiration from M&A speculation. In Spain, ACERINOX (+7.08%) was the top percentage gainer amid market rumours that Outokumpu could be willing to offer €24/share for the Spanish stainless steel firm. IBERIA (+4.92%) was boosted by reports it is in talks with Air France-KLM regarding a possible bid from the latter for the Spanish flag carrier. The press says the French firm could invite Planeta and Juan Abello's investment vehicle Torreal to join it. The RBS-led consortium, which includes SANTANDER (+0.97%), has doubled its stake in ABN Amro through a series of complex derivatives trades, according to the FT. Hemisferio is close to selling its 15% stake in VUELING (-3.19%), reported neg-ocio.com. In other news, TECNICAS REUNIDAS (+6.1%) is in talks with Alliance Oil Company regarding a contract to modernize a petrol refinery in Russia. TELEFONICA's Vivo has bought 13 new wireless licences, which will finally give it nationwide coverage in Brazil. INDITEX (+2.47%) was eyed following H&M's weaker-than-expected third quarter results. JP Morgan cut target prices across the Spanish banking sector and downgraded BANESTO (+0.86%) and BANCO PASTOR (+0.86%).


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