Markets & Finance

European Indexes End Higher


A roundup of Monday's action on major European exchanges

London

The FTSE 100 closed higher as Wall Street traded in positive territory ahead of an interest rate decision by the Federal Reserve tomorrow. Also, sentiment received a boost after news that JP Morgan had held talks with the Investment Corporation of Dubai. At home, LLOYDS TSB (+3.38%) said it had limited exposure to the market dislocation and underlying performance has been strong. This followed UBS reporting a US$10 billion subprime write-down. Also, there were vague rumours that PRUDENTIAL (+2.87%) may float its Asia business. Miners were in focus on M&A hopes. Blackstone emerged over the weekend as a potential bidder for RIO TINTO (+0.66%), looking for a break-up of the group. Press reports also pointed to Brazil's Vale as being interested in XSTRATA (unch). WILLIAM HILL (+1.65%) and LADBROKES (unch) were lifted by a positive note from Morgan Stanley. MOSS BROS (+16.78%) soared as Baugur confirmed that it may bid. FKI (-16.72%) warned that US customers of its Logistex unit have cancelled contracts and sales at FKI Logistex in second half will fall by 10-15%. Insurer HISCOX (+0.57%) said fiscal results should be better than last year. NORTHGATE IS (-8.76%) fell despite a positive outlook, as the market focused on below-forecast interims.

Paris

The CAC 40 (+0.56%) closed the session in positive territory with breadth positive at 3-1, while Wall Street traded in the black. Of local note, LAFARGE (+13.08%) surged on news it bought Egypt's Orascom Construction OCI Cement Group for €8.8 billion. The rest of the construction sector was also in fine fettle: SAINT GOBAIN (+2.28%), BOUYGUES (+2.62%), CIMENTS FRANCAIS (+4.52%). AIR France

-KLM (+4.29%) said its November passenger traffic rose 3.5%. Separately, UBS upgraded the airline to buy from neutral. RENAULT (+4.67%) bought a stake in Russia's AvtoVAZ, the maker of Ladas. No price for the c.25% stake was disclosed. The Sunday Times put the price at US$1.25 billion. SocGen upgraded PSA (+5.01%) to buy from hold and raised the target by 10% to €75. According to Le Figaro, EADS's (+2.07%) Airbus will this week receive an order for more than €3 billion from Libya. On the downside, SANOFI's (-1.29%) Lovenox was in focus as Bayer's experimental drug Rivaroxaban worked better than Sanofi's enoxaparin, according to a late-stage study. A Chinese arbitration commission ruled in favor of Wangzhou Wahaha Group on a trademark disagreement with DANONE (-0.72%).

Frankfurt

The Dax (+0.49%) settled above the 8,000 mark on Monday, supported by a positive early performance on Wall Street. Expectations for the Fed to cut interest rates tomorrow push US stocks broadly onto positive ground. Locally, market talk has it that French media giant Vivendi may put €1.8 billion on the table for PREMIERE (+3.81%). Related rumours see Highlight Communications AG and Leo Kirch buying 15% of the German pay-TV group. In other news: COMMERZBANK (+2.07%) said the number of retail customers it has will rise by 400,000 to 5.4 million this year and should reach 5.8 million by the end of next. Studies show BAYER's (+0.65%) experimental drug rivaroxaban works better than Sanofi's enoxaparin to prevent blood clots in patients following hip replacement surgery. TOGNUM (+2.66%) said the Puma, Germany's new armoured personnel carrier, uses its innovative diesel drive system. The order volume is put at €350 million. MORPHOSYS (+2.05%) announced the initiation of a therapeutic target sourcing collaboration in Japan. Q-CELLS (+5.42%) has landed a key solar wafer supply deal with LDK Solar. SOFTWARE AG (+4.32%) disclosed it is on track to reach the upper end of its sales target range this year. ESCADA (+1.81%) expects to return to profit in fiscal 2007/08 after restructuring efforts. And, finally, BALDA (+4.62%) revealed the subscription price of its latest cap injection as €10 per share.

Italy

Milan ended Monday's session in the black boosted by a positive performance on Wall Street amid hopes of interest rate cuts at the US FOMC meeting on Tuesday. At home, cement makers ITALCEMENTI (+6.73%) and BUZZI UNICEM (+4.02%) were boosted by read-across from Lafarge's acquisition of the cement unit of Orascom for €8.8 billion. ALITALIA (-1.42%) ended at the bottom of the benchmark as Maurizio Prato said that the Air France-KLM business plan was clearer than that of its rival AP Holding. On the upside, FIAT (+5.75%) accelerated in late session trading after CEO Sergio Marchionne was quoted as saying that the automaker could consider spinning off its Auto unit. BANCA ITALEASE (+6.8%) rallied as traders covered short positions. GENERALI (+0.53%) could carry out a purchase between now and early 2008 in US and Asia in particular. IMPREGILO (+2.51%) was in focus following the news that several hedge funds were building up large stakes in the company. Regarding ENI (-0.92%), the Kazakh govt wants to lift the stake of national oil company KazMunaiGas in the consortium developing the Kashagan oilfield to 16.5% from 8.33%. Broader market listed SAES GETTERS (+3.35%) climbed after announcing the purchase of 62,350 ord shares at €19.627/sh, as part of a buyback program.

Spain

Spanish shares ended a whisker north of breakeven but with some mixed sector performances as utilities dragged while banks and most media stocks gained. Wall Street was trading stronger in anticipation of a rate cut from the Fed tomorrow. Locally, UNION FENOSA (-2.87%) was the weakest Ibex performer as Credit Suisse issued a trading sell alert following new legislation on CO2 rights. Other firms with utilities exposure also dropped: ACS (-2.05%), IBERDROLA (-2.27%). Among the gainers, SOGECABLE (+7.55%) was boosted by rumours Vivendi could bid for Premiere, with traders also noting the stock's weak performance YTD. EBRO PULEVA (+4.48%) gained as El Confidencial reports Bestinver has bought a 5% stake in the food group. SANTANDER (+0.74%) was eyed on news Abbey National plans to open 300 new branches by 2012, according to The Times. TELEFONICA (+0.96%) is to float part of its call centre unit Atento next year, La Gaceta writes. The consortium led by Javier de Salas has advanced with financing for an offer for IBERIA (-0.61%), Expansion says. Meanwhile, Negocio said, citing an ABN Amro document, that Gala Capital will shortly launch an offer for Iberia. In broker moves, HSBC lifted ABERTIS's (+1.47%) price objective to €24 from €22.86.


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