A roundup of Monday's action on major European exchanges
The FTSE 100 closed deep in the red hit by renewed credit worries. Wall Street was trading lower hit by a Goldman Sachs downgrade of Citigroup. Adding to the bad news, Swiss Re became the latest victim of subprime turmoil after it unveiled a US$1.07 billion write-down. Traders noted speculation that UK
mortgage banks were buying cash well above Libor. ALLIANCE & LECISTER (-4.20%) fell. Further, Britain said its rescue for NORTHERN ROCK (-21.42%) (NRK.L) will have to be approved by the EU. Northern Rock said offers so far were below Friday's closing price. The housing sector was in focus today, with Rightmove saying house price inflation fell to 7.9% in the month to 10 November vs 10.4% in the earlier month in England and Wales. BARRATT DEVELOPMENT (-4.88%) (BDEV.L) said it expects operating margin for the half year to be broadly in line with earlier guidance. WTI fell below US$94/bbl on profit-taking and a rising US$. In commodities, metals and gold prices melted on equity weakness. Further in M&A, BHP BILLITON (-5.81%) (BHP) CEO Marius Kloppers may go directly to RIO TINTO (-6.08%) (RTN) shareholders in the future. Also, Abu Dhabi Basic Industries is in final talks with Rio Tinto to construct aluminium smelter worth US$5 billion in the UAE. In other movers, KINGFISHER (-7.66%) fell on a JP Morgan price target cut.
The CAC 40 (-1.65%) closed firmly in the red with the US also in bleak territory. Goldman Sachs downgraded Citigroup, hitting financials. AXA (-3.17%) (AXA) weighed heavy after Swiss Re announced a CHF2.1 billion mark-to-market loss. Axa is also rumoured to be in the running for the UK
's Friends Provident. Staying in the sector, CREDIT AGRICOLE (-4.51%) (CAGR.PA) has purchased a 14.99% stake in Spain's Bankinter at €13.60 per share, totalling €809 million. The French bank now owns 19.53% of Bankinter. In auto news, MICHELIN (-4.74%) plans to invest c.€400 million in doubling production of heavy goods tyres in China, Le Figaro reported quoting managing partner Michel Rollier. Elsewhere, oil giant TOTAL (-0.57%) (TOT) will sell its SANOFI (-1.55%) (SNY) stake bit-by-bit and without flagging it up to the market, CEO Christophe de Margerie reportedly said on Friday. FRANCE TELECOM (+2.58%) (FTE) benefited from a target increase to €29.50 from ING, which maintained a buy stance. VIVENDI (+1.58%) was added to Goldman Sachs' Pan-Europe Conviction Buy List. Nuclear energy producer EDF (unch) could invest in uranium mines to ensure supply, Reuters wrote quoting CFO Daniel Camus. Press reports have pitched PPR (-2.93%) as favorite to acquire cosmetics player CLARINS (+7.7%).
The Xetra-Dax (-1.32%) closed in the red as Wall Street traded lower following lower guidance at Lowe's and downgrade of Citigroup to sell at Goldman Sachs. In Frankfurt, auto and financial stocks weighed on the index. In M&A news, several banks are reportedly interested in acquiring POSTBANK (+3.61%) (DPBGn.DE) from DEUTSCHE POST (-1.35%). FAZ reported that Edeka Group may be interested in acquiring METRO's (+0.95%) Extra shops. Kepler upgraded Metro to buy from reduce. Elsewhere, TomTom launched its official €30/share bid for TELE ATLAS (+0.17%) after US competitor Garmin suggested it is no longer interested. In other news, DEUTSCHE TELEKOM (+2.43%) (DT) was well-bid on talk the telco will be paying a higher dividend. Among autos, VW's (-3.56%) subsidiary Bentley Motors expects fiscal pretax profit of about €150 million, Welt am Sonntag newspaper reported, citing unit head Franz-Josef Paefgen. Also in the news, VW and PORSCHE (-7.47%) said they may cooperate further as the former and Audi were interested in Porsche's lightweight construction of the four-door Panamera model, according to Automobilwoche. DAIMLER's (-2.92%) CFO said it would be worth examining the possibility of expanding US production plus purchasing in the country given the current weakness of the dollar, according an interview with Euro am Sonntag newspaper.
The IBEX 35 (-1.46%) ended the session on a low note with only UNION FENOSA (+0.53) resisting a lurch into the red. Wall Street beats a retreat after Goldman Sachs gave the signal to investors sell shares in Citigroup, assuming a US$11 billion write-off for Citigroup in fourth quarter07 and a further US$4 billion in first quarter08. In local news, France's Credit Agricole has bought a 14.99% stake in BANKINTER (-3.57%) at €13.60 per share, totalling €809 million, stake from Ramchand Bhavnani. Credit Agricole now owns 19.53% of Bankinter. Bilbao Bizkaia Kutxa has not decided whether to support a bid for IBERIA (-3.27%) worth €3.7 billion, ABC reported. The company says BBK is studying the proposed bid led by Gala Capital Partners Equity and backed by billionaire Alicia Koplowitz, and has not yet made any final decision on taking part. Mango will sell a men's fashion line from next March, testing the market and challenging INDITEX (-2.57%), Expansion reported. ARCELOR MITTAL (-3.51%) (MT) announced price increases for flat steel products in NAFTA and Europe as a consequence of raw material and energy cost increases in 2008.
With Stockholm ending among the worst performers in Europe, the rest of the Nordic indices extended earlier losses in late Monday trade as Wall Street fell deeper into negative territory. Financials weighed on sentiment following a downgrade of Citigroup to sell at Goldman Sachs. Back in Stockholm, VOLVO (-6.99%) (VOLV) plunged as Goldman cut from Pan-Europe Conviction Buy List and trimmed its target objective. ELECTROLUX (-5.07%) (ELUXb.ST) was not far behind as the same broker added the stock to its Pan-Europe Conviction Sell List to reflect higher raw material cost inflation. Over in Oslo, TGS NOPEC (-5.82%) was in trouble as Wavefield said it wants to delay its US$1.2 billion tie-up with the group. Moving on, STOREBRAND (+0.58%) said it will issue over 200 million new shares at NOK45/share to raise NOK9.0 billion for financing of its acquisition of Swedish life insurer SPP. In Denmark, CARLSBERG (-2.78%) hit the headlines as Dresdner Kleinwort said it believes that a third and final offer from the Danish brewer and Heineken is on the cards. With MOELLER MAERSK (-5.11%) in mind, many analysts forecast container freight rates not to increase in 2008-09 as shipping groups have ordered more new ships than demand requires, according to Borsen.