Markets & Finance

European Indexes End Lower


A roundup of Monday's action in European markets

London

The FTSE 100 closed in the red Monday, weighed down by mining and banking stocks, and a negative Wall Street. Volume was lower in the US due to the Columbus Day holiday. Alcoa kicks off the third quarter earnings season tomorrow in the US. WTI fell to US$79.18/bbl weighing on energy stocks. LME copper fell 4% as buyers in China stayed away. Beverages stocks were in focus today, helped by a positive Merrill note and upgrade of DIAGEO's (-1.35%) price target. Also, SABMiller (+0.96%) gained after Credit Suisse reiterated outperform rating after an analyst trip to Colombia/Peru. In M&A news, NORTHERN ROCK (+9.21%) held onto gains on a WSJ report that Apollo and Blackstone are interested. The RBS (-1.14%)-led consortium said it has 86% of the ABN Amro shares. VODAFONE (-1.12%) is to buy Tele2's Italy and Spain operations for £537 million. The SAINSBURY (+0.09%) board is set to recommend a revised takeover offer from Delta Two as early as this week, the Independent on Sunday wrote. In negative news, KAZAKMHYS (-5.58%) melted after saying that flooding will hit copper cathode output. Also, Italy suspended BG's (+0.73%) Brindisi LNG project. Regarding appointments, GLAXO (-0.83%) named European pharma unit president Andrew Witty to take over as CEO following Jean-Pierre Garnier's retirement at the end of May 2008.

Paris

The CAC 40 (-0.24%) closed the session lower while Wall Street traded in negative territory on Colombus day. Locally, SANOFI (+1.83%) gained on rumors Pfizer is to buy TOTAL's (-0.49%) stake in Sanofi. ALSTOM (+2.39%) gained as BOUYGUES (-0.38%) has increased its stake in Alstom to 30.07% from 25.35%. CAP GEMINI (+1.88%) gained on news SAP agreed to buy BUSINESS OBJECTS (+17.34%) for €4.8 billion in cash. Centaurus and Pardus, together holding some 19.43% in ATOS (+3.75%), have established a shareholder pact, reported Reuters. The sector was generally buoyant today: DASSAULT SYSTEMES (+1.94%), ALTRAN (+1.83%). Cheuvreux upgraded THOMSON (+4.44%) to outperform from underperform on better momentum. On the downside, AIR France

-KLM (-2.98%) may offer shares to buy up to 20% of Alitalia, Corriere della Sera reported. In further news, Air France-KLM is studying a partial bid for 49% of Alitalia, while the remaining stake would go to an Italian partner Air France is looking for, reports Il Sole 24 Ore. GDF (-0.19%) and SUEZ (-0.72%) are reportedly in talks with German E.ON regarding a potential asset-swapping deal that would see GDF-Suez selling Belgian unit Distrigaz to E.ON.

Frankfurt

Xetra-Dax (-0.4%) closed lower as Wall Street was trading weaker on Monday, with the Columbus Day holiday affecting volumes. Of local note, SAP (-4.04%) agreed to buy Business Objects for €4.8 billion in cash in a surprise reversal of its strategic objective of concentrating on organic growth. The brokers generally judge the deal as expensive and highlight concerns about the French group's third quarter profit warning and lower returns. But SAP gaining a stronger footing in the business intelligence market pleased some. Elsewhere, VW (+1.94%) rejoining the Euro Stoxx 50 index on Wednesday boosted its shares to the top DAX position. Meanwhile, VW said it has no plans to take over auto supplier Karmann, as reported in Focus. THYSSENKRUPP's (+0.51%) head of carbon steel expects another strong fiscal year for the core division amid stabilising demand at a very high level. Saying 2008 will be another good year for steel, SALZGITTER (+1.28%) aims to achieve its mid-term target of generating €13-15 billion in sales by 2010. CONERGY (-10.40%) said it plans to build a wind farm in Australia for some AUD2 billion as part of its goal to expand its presence in the Asia-Pacific region. DOUGLAS (+1.14%) reported 2006/07 sales up 12% to €3 billion and sees EBT for the year between €139 million and €142 million. AIR BERLIN's (+5.84%) passenger count rose 21% in September.

Nordics

Oslo's stock exchange gave up earlier gains and finished flat, while other Nordic bourses ended the week's first session lower. Wall Street extended earlier losses after US stocks surged on Friday, with the S&P 500 index setting an all-time record closing high. Back in the Nordics, TELE2 (+1.64%) got attention as it announced it will report an impairment loss from goodwill and other assets of c.SEK 3.5 billion in third quarter. Separately, Vodafone said it will acquire Tele2 Italy and Tele2 Spain for £537 million in cash on a debt free basis. Also in telecoms, NOKIA's (-0.70%) j/v NSN has landed a broadband network expansion order from Korea Telecom, while Frankfurter Allgemeine Sonntagszeitung reports NSN is preparing for further job cuts. CARNEGIE (-3.47%) was also at the focal point as Deutsche Bank downgraded to sell and cut target objective as the broker argued the usual suspects, the Icelandic banks, do not have the money to buy Carnegie, and thinks the Nordic suspects, DNB NOR (+0.85%) and SWEDBANK (-1.09%) are not that keen. Also in broker action, Credit Suisse cut target on ERICSSON (-1.05%) as it forecasts the telco will see a tougher second half07 with respect to profitability. In earnings, BANG & OLUFSEN (-0.34%) delivered first quarter earnings short of expectations, with sales at DKK926 million and pretax profit at DKK56 million.

Spain

The Spanish market ended lower as Wall Street traded slightly to the downside on Columbus Day. On the Ibex, banking stocks and TELEFONICA (-0.62%) weighed most heavily with profit-taking in evidence after strong closes in Europe and the US last Friday. SANTANDER (-0.57%) was in focus after the UK's Royal Bank of Scotland said about 86% of ABN Amro's shares had been tendered as part of the RBS-led consortium's €70 billion bid. Santander intends to launch a capital increase to fund the purchase. INDITEX (-1.55%) dropped after UBS downgraded the stock to neutral. TELEFONICA (-0.62%) will face competition in the Spanish broadband market after Vodafone agreed to buy Tele2's Spanish business, which also includes fixed-line telecommunications services. The news also weighed on JAZZTEL (-8.33%). ALMIRALL (+0.19%) reached an agreement to acquire a portfolio of eight products from Shire Pharma for US$213 million. On the upside, GAMESA (+0.92%) continued its good run after several positive broker comments last week. IBERDROLA (unch) undertook a 4:1 stock split. ACCIONA (+1.97%) and Italy's ERG agreed to split up their wind power j/v ERG Cesa Eolica. Finally, VUELING (+11.07%) surged. Societe Generale has bought a 1.37% stake in the budget airline.


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