Markets & Finance

European Stocks End Mostly Lower


A roundup of Tuesday's action on major European exchanges

London

FTSE 100 closed below the gain line, as investors awaited the FOMC's verdict on interest rates. Forecasts of a 25bp cut appear priced in but talk in some quarters is of a 50bp reduction. US trades mixed ahead of the key decision. At home, CADBURY SCHWEPPES (-1.72%) said confectionery sales will exceed its target range. The company said commodity costs have risen more sharply in second half but it will pass on these increases. XSTRATA (+2.24%) was firm on reports it is open to talk to potential suitors. WHITBREAD (+0.70%) said like-for-like sales for the 39 weeks to 29 November rose by 5.8%. THOMAS COOK GROUP (+6.77%) rallied on the back of a €375 million share buyback and expectations fiscal op profit pro forma will be significantly higher than estimates. SPORTINGBET (-3.15%) retreated on profit taking, after solid first quarter results. INTERTEK (+3.01%) noted that strong first half performance has continued into second half and fiscal numbers should be in line. LAIRD (unch) said fiscal results will be at the top end of market estimates. GAME GROUP (-3.51%) fell after a margin warning, despite a 44.1% jump in like-for-like sales. NORTHGATE (+2.78%) said revenue in first half rose 6.4%. ASHTEAD's (-3.61%) first half numbers beat consensus, upbeat outlook. CARPETRIGHT (+6.40%) said MBO talks are at an advanced stage.

Paris

The CAC 40 (-0.45%) closed the session in the red while Wall Street trades mixed. Investors await the Fed decision due to be announced later. CAC breadth was negative 7-3. Bucking the trend, LAFARGE (+1.25%) was the best gainer percentage-wise on news that GBL, Albert Frere's investment company, may raise its stake in the cement company to 30% vs 17.5% currently. Bloomberg cited board member Paul Desmarais Jr. Separately, a flurry of brokers raised their target on Lafarge following the acquisition of Orascom Cement. ALSTOM (+1.23%) CEO affirmed support for merger with AREVA (+2.55%) in Les Echos. Libyan Airlines has signed a firm contract for the purchase of 15 EADS's (+0.86%) Airbus aircraft and Afriqiyah Airways has signed a firm contract for the purchase of six A350-800s. ARCELOR MITTAL (+0.36%) bought Majdalani y Cia, a leading stainless steel service center and distributor in Argentina. Separately, VALLOUREC (-1.79%) finalised the sale to Arcelor Mittal of Vallourec Precision Soudage and Vallourec Composants Automobiles Vitry units. On the downside, DANONE (-2.85%) plans to appeal the ruling in China which favored Wahaha in its dispute with the French group. In broker news, SocGen reinitiated THEOLIA (-4.08%) with sell. Merrill resumed ARKEMA (+5.61%) with buy.

Frankfurt

Xetra-Dax (-0.3%) ended Tuesday's session lower after the ZEW expectations index slipped to -37.2, a recessionary level and its lowest point in nearly fifteen years. Wall Street makes mixed progress ahead of the Fed's interest rate decision today - when it is expected to cut interest rates. Of local note, AXEL SPRINGER (-1.13%) has agreed to sell its 12% stake in PROSIEBEN (-1.38%) to private equity consortium KKR and Permira for €509.4 million, giving the consortium full control of the TV company. There are rumours Springer is interested in PREMIERE (-0.64%). In other M&A news, FRESENIUS AG (-1.19%) is acquiring Ribbon, an Italian antibiotic agent specialist for an undisclosed sum. Sinotrans Air Transportation is selling its 50% stake in a freight forwarding unit to DHL Exel Supply Chain, a subsidiary of DEUTSCHE POST (+1.19%). WACKER CHEMIE (-0.26%) plans to acquire full control of two of its j/vs. If approved, the move would contribute some €1 billion in sales in its polymer business next year. M&A aside, ALLIANZ's (+0.50%) Dresdner Kleinwort unit confirmed that 60 jobs will be axed due to the turmoil in the credit market. ARCANDOR's (+0.20%) Thomas Cook j/v said its full-year core earnings will beat expectations. Finally, NORDDEUTSCHE AFFINERIE (+9.46) is well bid as it recommends a fiscal dividend payment of €1.45 per share, up from €1.05 last year.

Spain

Spanish shares ended Tuesday's session with modest gains and breadth 20-15 positive. Wall Street is trading around breakeven ahead of this evening's rate decision from the Federal Reserve; a 25 bps cut is expected. The Ibex technical committee announced index changes just after the close: GRIFOLS (+0.44%) and ABENGOA (+1.35%) will join the selective index, replacing ANTENA 3 (-3.01%) and NH HOTELES (-0.29%). INDITEX (+3.39%) moved up ahead of its third quarter results tomorrow. IBERDROLA (+1.49%) is due to set the final price for the IPO of Iberdrola Renovables today. Expansion says experts anticipate a price below €6.40/sh. In M&A news, ABERTIS (+1.19%) could launch a €6.2 billion bid for Portuguese highway operator Brisa, according to La Gaceta. REPSOL (+0.96%) has sold 5% of CLH to Deutsche Bank for €176.5 million. Elsewhere, SANTANDER's (+0.07%) chairman Emilio Botin reportedly expects Abbey to reach net profit of €1.2 billion in 2007. TELEFONICA (+0.56%) is to launch a cut-price broadband and phone offer. In broker moves, ING initiated on GAMESA (+0.46%) with buy and €40 target; JP Morgan raised CINTRA's (+2.41%) target price.

Nordic

Nordic indices closed flat-to-lower as the S&P 500 and Dow traded lower ahead of the Fed's rate decision. Back in the Nordics, FINNAIR (+5.49%) rose as it released traffic figures for November showing a 22% rise in passenger kilometers, corresponding to a passenger load factor of 71.4%, or a 1.9% rise year-over-year. Moving on to M&A, CARLSBERG (-4.35%) and Heineken have clarified that there are no current plans to raise the bid, but they keep the right to do so, after a report in The Sunday Times suggested otherwise. Back in Helsinki, NOKIA (-0.22%) was eyed as j/v Nokia Siemens Networks has won a contract from China's Hefei-Wuhan. In other news, REC (+1.49%) entered a long-term agreement for €500 million with Solland Solar Cells to deliver silicon wafers until 2015. Elsewhere, NOVO NORDISK's (-0.59%) Phase 3 studies of diabetes medication Liraglutide indicate a positive impact on body weight and blood glucose control. In key broker action, TELE2 (-2.5%) was hit by a double downgrade to underperform at Carnegie, while Goldman resumed coverage with a sell rating. FORTUM (-0.94%) suffered a downgrade to neutral at JP Morgan and KINNEVIK (-2.91%) saw its rating cut to neutral at Carnegie.


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