A roundup of Wednesday's action in major European markets
The FTSE 100 closed in positive territory as Wall Street was trading higher on strong GDP data. Focus is on the US Federal Reserve's decision on interest rates due later today. A further 25bp cut to 4.5% is widely expected, though doubts persist. The BOJ stayed steady at 0.5%. Oil jumped over US$93/bbl on a large drop in crude stocks. Gold and copper prices fell. £ hit a 26-year high vs US$. Nationwide said British house prices rose 9.7% year-over-year in October. In earnings news, TATE & LYLE (+1.91%) reported a 19% fall in first half adjusted pretax profit, but the £120 million figure came ahead of forecast. TAYLOR WIMPEY (+5.89%) said it saw UK market subdued into the new year. WOOLWORTHS (+3.66%) reported a 0.4% decline in like-for-like sales, and said it was cautious about the trading environment. In M&A news, RESOLUTION's (+0.07%) biggest shareholder, Pearl Group, rejected rival STANDARD LIFE's (+3.71%) £4.9 billion takeover offer for Resolution. MITCHELLS & BUTLERS (+6.72%) chalked up gains after Elpida Group unveiled a 3.36% stake. Rumours did the rounds as well. DSG (+7.03%) jumped on talk that US retailer Best Buy is interested. PREMIER OIL (+6.25%) fired up on speculation of a possible bid from SHELL (-0.52%) or Australia's Santos.
The CAC 40 (+0.76%) picked up momentum to close higher, with Wall Street trading in the black ahead of the Fed's interest rate decision today after the European close. A 25 bps cut to 4.5% is widely expected, though an article in the WSJ yesterday cast some doubt on this. Locally, banks gave support, with SOCGEN (+2.33%) and BNP PARIBAS (+1.97%) adding 13.8 index points. DEXIA (+2.83%) climbed ahead of FSA results. Local results news also made the headlines: SANOFI AVENTIS (+2.18%) this morning reported third quarter net profit (ex-items) of €1.883 billion, up 10.8% year-over-year - ahead of consensus. Expects fiscal 2007 adj. EPS to come in up 10% year-over-year. ALCATEL LUCENT (+1.06%) reported third quarter operating income of €70 million, beating forecasts that had looked for a loss of €2.1 million. Plans to make €400 million in savings and announced a further 4,000 job-cut by end-2009. One market source suggested the headcount reduction program is probably more significant than expected. Wider-market ERAMET (+1.03%) reported third quarter sales up 24.1%, predicting strong second half07 performance. Hagemeyer reiterated it will not accept REXEL's (-0.21%) €3 billion bid. In broker news, Goldman Sachs cut its target, but reiterated buy, on AIR France-KLM (+3.27%); Soc Gen upgraded NEOPOST (+1.48%) to buy, Deutsche Bank downgraded BIC (-1.54%) to hold and HSBC downgraded STERIA (+0.93%) to neutral.
Xetra-Dax (+0.52%) closed higher, with investors on both sides of the Atlantic wondering whether or not the Fed is going to cut interest rates. The decision is due shortly after the European close. Of local note, DEUTSCHE BANK (+3.66%) reported a third quarter pretax profit of €1.4 billion, down 19% year-over-year. Its investment banking business made a €179 million loss in the quarter. The outlook statement was relatively cautious, with the bank saying 'challenges undoubtedly remain.' However, it also indicated a positive start to fourth quarter and reiterated 2008 targets. Providing most cheer was the fact that there were no negative surprises. MAN (+4.12%) reported an estimates-topping 36% rise in third quarter operating profit to €378 million and lifted its full-year targets for new orders, sales and earnings. FMC (+2.73%) posted third quarter operating profit of US$397 million, up 14% year-over-year and a touch better than expected. TOGNUM (+3.79%) tabled a better-than-expected 21.5% rise in third quarter operating profit to €96 million and lifted its guidance. BALDA (+2.92%) reported third quarter EBIT of €2.1 million and said it has issued and privately placed profit participation rights with a nominal value of €34.2 million. Earnings aside, GPC BIOTECH (-59.55%) disclosed that a late-stage trial of its proposed prostate cancer pill satraplatin failed to meet its primary goals. It said a renewed filing in the US is unlikely. Garmin made an offer for TELE ATLAS (+14.87%), topping TomTom's bid.
As other European bourses, the Nordic indices finished higher on Wednesday, boosted by positive trading on Wall Street as sentiment lifted on hopes the Fed will cut interest rates by a further 25 bps to 4.5%. WTI rose to US$93.21/bbl in late trade after a surprise drop in US inventories. Back in the Nordic region, earnings was the focus of the day. NOVO NORDISK (+4.59%) delivered nine months report showing NovoSeven missed sales forecasts. However, the pharma group increased its operating profit by 11%. In Helsinki, KONECRANES (+11.96%) soared as third quarter EBIT came in ahead of estimates. Furthermore the group guides for 2007 EBIT margin of, or slightly above, 9.5%. In Stockholm, SCA's (-0.22%) third quarter came in ahead of forecasts, while the group said energy and raw material costs are seen to rise further. In Oslo, ORKLA's (+1.12%) third quarter top line beat forecasts. In M&A, SAMPO (+0.23%) was late yesterday afternoon rumoured to be planning a bid for the Swedish government's 20% stake in NORDEA (+1.43%). Meanwhile, other rumours hinted INVESTOR (+1.62%) may be eying the government's stake. Yet others suggested Sampo is trying to put pressure on Investor in order to push through a merger between Nordea and SEB (+2.91%). In broker action, DANSKE BANK (+2.25%) extended yesterday's 3.14% gain as Goldman raised target with buy rating intact.
Spanish shares ended the session with solid gains as Wall Street tracked higher after stronger-than-expected GDP data. Treasuries are in decline ahead of the Fed's interest rate decision later today. Most are looking for the FOMC to reduce interest rates by 25bps, although some believe there could be no change. In Spain, results remained the primary focus. ACS (+2.74%) last night delivered 9 million net attributable profit of €1.27 billion, up 108% and boosted by the sale of Continental Auto. CEPSA (+1.36%) reported nine months replacement cost EBITDA -5% year-over-year to €1.108 billion, citing the weaker US$ as a reason for the decline. NH HOTELES (+1.71%) unveiled net profit up 71.9% to €49.9 million and says European RevPAR rose 5.2% over nine months vs 4.4% over first half. MAPFRE (-3.57%) unveiled total premiums of €9.367 billion, up 11.8%. In addition, the insurer has agreed to acquire US non-life insurer The Commerce Group for €1.538 billion. METROVACESA (-0.43%) is to delay a €700 million bond issue until first quarter08 because of difficulties in the debt markets, reports Expansion. In broker action, Merrill Lynch downgraded ANTENA 3 (-3.77%) while SocGen initiated on SACYR-VALLEHERMOSO (+1.03%) with buy. FLUIDRA (+4.15%) gained on its bourse debut.