A roundup of Thursday's action in major European markets
The FTSE 100 closed sharply lower as Wall Street traded in the red after Bank of America's disappointing quarterly results. Financial stocks at home felt the heat. Chancellor Alistair Darling told the Daily Mail that the NORTHERN ROCK (-1.81%) takeover must be swift. Activist investor Knight Vinke, who is seeking reform in HSBC (-2.28%), has reportedly found support from shareholder New Star Asset Management. Energy and retail stocks weighed too; the latter being under pressure following DSG INTERNATIONAL's (-8.90%) first half trading update. DSG says latest like-for-like sales rose 5%, but its Italy performance remained disappointing. The brokers were unimpressed. Real estate stocks took a beating after the IMF warned that UK house market was in danger of a slump. Also, Cazenove downgraded the UK Real Estate sector to underperform. The broker also cut BRITISH LAND (-0.47%) and LAND SECURITIES (-2.42%) to in line. WTI climbed to US$88.74. In the M&A arena, BRITISH AIRWAYS (+1.47%) is looking at merger plans that could create a transatlantic super-carrier and is in talks with bmi's controlling shareholder Michael Bishop, The Times wrote. In broker action, RANK (-2.26%) suffered a downgrade at HSBC to neutral from overweight as well as a target cut.
Negative trading on Wall Street saw the CAC 40 (-0.89%) end deep in the red, along with many other European bourses. Poor third quarter figures from Bank of America weigh across the pond. Locally, TOTAL (-1.37%) was the biggest drag as JP Morgan cut its target price, arguing integrated oils may struggle to outperform. LAGARDERE (+2.22%) refuted French magazine Le Nouvel Observateur's report that it could delist its shares from Euronext. DANONE (+1.53%) CEO Franck Riboud told Les Echos that the food producer expects fourth quarter sales from its China j/v to drop further after falling 30% in third quarter. THOMSON (-0.67%) reported total third quarter07 revenues of €1.375 billion vs €1.435 billion in third quarter06 and €1.450 billion consensus. According to Airbus, India's national carrier, Air India, is considering buying 10 EADS (-1.37%) Airbus A380s and another eight to 10 as options, Business Standard reports. Alitalia is expected to tell Italy's economy minister in mid-November which potential buyer would be best for the airline's interests. The short-list of potential buyers includes AIR France-KLM (-1.0%) and Lufthansa. In the broader market, VALEO (-3.92%) reported third quarter07 total operating revenues of €2.245 billion, +4.3% year-over-year, and a net loss of €40 million vs a €7 million profit in third quarter06. Exane downgraded TECHNIP (-4.19%) to underperform from outperform.
The Xetra-Dax (-0.8%) ended firmly lower, as Wall Street traded in the red after an earnings miss at Bank of America. However, MAN (+2.31%) was well bid on M&A news. Swedish newspaper Dagens Industri reported that VW (+0.86%) and the Wallenberg family, both major owners of Scania, reached an agreement for the Swedish truck maker to bid for MAN. On the earnings front, SAP's (-3.31%) third quarter software revenues met expectations, coming in 11% higher year-over-year at €715 million. Disappointing for some, fiscal guidance was merely maintained. Concerns about DEUTSCHE POST's (-2.64%) third quarter results have come to the fore as some traders fear core earnings may come in on the soft side. UNITED INTERNET (-2.48%) will not bid for FREENET (-4.79%) this year, according to Boersen-Zeitung. GEA (+1.72%) currently has no plans for any large acquisitions, its CEO Juerg Oleas told the same newspaper. GERRESHEIMER (-1.57%) may sell its unit that supplies plastics to the automobile industry in 2008, reports the FTD. PFLEIDERER (+1.14%) was well bid after its Capital Markets Day, with UniCredit saying the day raised confidence in the group's business model. Key broker action, Sal Oppenheim upgraded DEUTSCHE TELEKOM (-0.15%) to buy, saying the valuation is cheap on an free cash flow basis, while JP Morgan cut its price objective on PRAKTIKER (-2.68%).
Helsinki finished Europe's best performing bourse as bellwether NOKIA (+2.54%) boosted sentiment. Meanwhile, the rest of the Nordics ended at the bottom of the list. Wall Street traded in the red at European close as Bank of America's third quarter disappoints. In Europe, investors cheered as NOKIA (+2.93%), contrary to Swedish peer ERICSSON (-3.64%), delivered reassuring third quarter numbers with EPS beating high expectations and gross margin and units sold ahead of forecasts. Nokia Siemens Networks is on track for €1.5 billion of annual synergies by end of 2008. Elsewhere, the SCANIA (-2.23%) and MAN merger saga was given renewed momentum as Dagens Industri reported VW and the Wallenberg family, both controlling shareholders in the Swedish truckmaker, will launch a bid for German rival MAN, depending on the outcome of the court case deciding VW's ownership structure. ELECTROLUX (-3.19%) fell as it is rumoured to issue a profit warning. Local press say traders are now scanning the market for potential profit warnings, highlighting Electrolux and SKANSKA (-4.17%) as current targets. FORTUM (+1.28%) delivered nine months and third quarter results: nine months EPS was up 60% year-over-year, while third quarter sales lagged forecasts. In broker activity, ING initiated coverage of MOELLER MAERSK (-2.59%) with a sell recommendation, while Deutsche Bank upgraded MTG (+0.99%) to buy from hold.
The SLI (-0.47%) ended in the red with Wall Street also weaker after a profit miss at Bank of America. Oil prices are on the up once more with WTI at US$88.50/bbl. Locally, ACTELION's (-13.48%) results disappointed as sales of its key drug Tracleer came in at CHF286.6 million for third quarter, below consensus. The company said this can be attributed to buying pattern variations and a weakening US$. Vontobel downgraded Actelion to hold. Elsewhere, LOGITECH (+17.61%) gained, having reported solid second quarter results and upped its year-over-year operating income growth goal from 15% to 20%. Cheuvreux upgraded Logitech to outperform. NESTLE's (-0.29%) nine months organic growth of 7.2% met expectations but real internal growth of 4.5% fell short of forecasts. CFO Paul Polman has been appointed to head of the Americas, while James Singh will become CFO. NOVARTIS (-0.4%) reported third quarter net profit of US$1.57 billion, down 12% year-over-year, due to a one-off charge. Revenues of US$9.6 billion were better than expected. The group also announced the elimination of 1,260 positions in US and changes to the heads of the Consumer Health and Pharma divisions. SYNGENTA's (+5.77%) third quarter sales beat forecasts, as did SYNTHES' (+2.83%). GALENICA (+4.66%) plans to buy Aspreva Pharmaceuticals. Finally, the value of Swiss watch exports rose 16.3% year-over-year.