A roundup of Monday's action on major European exchanges
The FTSE 100 closed sharply lower tracking falling US indices after AIG got a rebuke over its method of valuing credit derivatives. At home, financials weighed, as STANDARD CHARTERED (-3.00%) said the liquidity plan for its SIV, Whistlejacket, has lapsed. Further pressure came from bearish comments out of the G7 meeting in Tokyo, coupled with fears that the US is slipping into a recession. Datawise, UK PPI for January rose faster than expected, cooling hopes of a rate cut. WTI was at US$93.61/bbl. Among gainers, GLAXOSMITHKLINE (+1.31%) received a boost after UBS upgraded the drugmaker to buy from neutral arguing the sell-off following the 2008 guidance was overdone. COMPASS (+1.23%) also benefitted after Credit Suisse raised the price target to GBP4.15/sh from GBP4/sh, along with FY08 EPS estimates on currency moves. In M&A news, FRIENDS PROVIDENT (+0.53%) reportedly rejected a new approach from JC Flowers. In company news, BRITISH ENERGY (-1.42%) may shock the market with a drastic cut in its production target when it publishes a trading update next Wednesday, The Times wrote. PENNON (+0.83%) said turnover, operating profit and PTP are in line with expectations. GCAP MEDIA (-2.90%) said it will target u/l op profit margin in the range of 12-14% for year ending March 2009. SMITHS GROUP (-1.48%) said will post sales and profit growth for 1H in line with management expectations.
The CAC 40 (-0.57%) closed in the red, with Wall Street also losing ground. Locally, SOCGEN (-4.03%) was the main loser after Reuters reports BNP PARIBAS (-1.02%) is not planning a hostile takeover bid on its rival. Separately, SocGen has announced the terms and conditions of its EUR 5.5bn capital increase. Says the subscription will be EUR 47.50 on the basis of one new share for four existing shares - a discount of some 39% vs Friday’s close. SocGen also announced its subprime-related write-downs are EUR 2.6bn - some EUR 550m above its previously stated position. SAINT GOBAIN (-0.48%) has stepped up the pressure on its biggest shareholder, agreeing to offer WENDEL (-0.85%) three board seats only if it backs a proposal to abolish double voting rights at the next annual meeting, the FT.com reported. TOTAL (-0.08%) will receive US$834m in oil shipments from Venezuela as payment for shares of a j/v project to pump tar-like oil and convert it to light, sweet crude for export. AIR FRANCE-KLM (+0.28%) may not be interested in a proposed three-year moratorium on flight cancellations at Milan’s Malpensa airport, La Repubblica wrote. In broker news, UBS downgraded SCHNEIDER (-2.25%) and LEGRAND (-5.65%) to sell from neutral.
With Wall Street trading mixed, Xetra-Dax (-0.35%) ended in the red amid renewed worries about the global credit crunch spreading. Of local note, BASF (+0.15%) CEO Juergen Hambrecht told the FT that the US is unlikely to suffer a recession this year. He accuses the financial industry of ‘panicking’ about the economic impact of the credit crunch. A decision on the sale of POSTBANK (+1.0%) will be made this spring, according to Tagesspiegel. The newspaper reckons German politicians will support a potential takeover of the savings bank by DEUTSCHE BANK (-0.88%), because such a tie-up would put pressure on Germany’s regional state banks to consolidate. Meanwhile, several banks met at the weekend to negotiate a rescue package for IKB (-20.48%), but so far no solution has been found. IKB is understood to be searching for up to EUR 2bn to stay afloat. BAYER (+0.66%) gained on talk it could spin off CropSciences. BALDA (-3.64%) came under pressure amid speculation that KS Plastic Solutions, which took over Balda’s mobile covers unit at the end of last year, is in financial difficulties. SOFTWARE AG (-3.9%) has approached Ireland’s Iona Technologies, according to the Sunday Times. Earnings-wise, NORDEX (-0.08%) reported fiscal 2007 sales up 45% at EUR 747m. LEONI (-2.77%) was under the cosh amid rumours of an imminent profit warning.
The AEX (-1.01%) closed the first day of the trading week on a gloomy note with Wall Street trading mixed, lacking firm direction as reporting and macro updates were few and far between. At the Damrak, financials weighed heavily: ING (-2.85%), FORTIS (-3.88%), AEGON (-4.44%). The former announced it bought 6.77m of its own shares from 4 February to 11 February as part of its EUR 5.0bn buyback programme. ROYAL DUTCH SHELL (-0.17%) outperformed, with WTI at US$91.86. The oil major annnounced that it had sold its stake in Australia’s North West Shelf venture to Woodside Petroleum for US$398.5m. In other news, ARCELOR-MITTAL (+0.48%) has been allotted 7,000 acres of land in India’s eastern state of Orissa to build a steel plant. In the wider market, OPG GROEP (-0.27%) reported 4Q07 results better than expected, while 2008 outlook is slightly below expectations. In M&A news, VASTNED RETAIL (unch) received an undisclosed number of separate offers. In November, the company rejected a EUR 1.14bn offer from IEF Capital as it was too low. AALBERTS (-1.15%) bought Duralloy Sd GmbH in Germany and Duralloy AG in Switzerland, a leading provider of thin dense chromium surface treatment. Key on the broker front: Morgan Stanley cut its target price for EUROCASTLE (-0.71%) but remained bullish on the outlook.
The SLI (-1.27%) closed in the red as Wall Street trades flat-to-lower. Over the weekend, the Finance ministers and Central bank governors of the G7 countries sounded a generally negative tone, warning on several ‘downside risks’ to the global economy. Back in Zurich, shares in NOBEL BIOCARE (-8.31%) plummeted after disappointing 2007 results. The dental implant maker’s FY net profit came in at EUR 166m on sales 11% higher y/y at EUR 666m. It proposed a conversion to registered shares and a 1:5 share split. Nobel said that for 2008, it sees organic revenue growth in the mid-teens with an EBIT margin of approximately 34%. The targets for 2010 are more aggressive - it forecasts revenue growth of CAGR greater than 18% and an EBIT margin of approximately 36%. Elsewhere, CREDIT SUISSE (-1.67%) made a profit of CHF8.2bn last year and was profitable in the final quarter, according to Sonntag online. Official results are due out tomorrow. Among key broker changes, Goldman downgraded HOLCIM (-1.86%) to neutral. Deutsche downgraded JULIUS BAER (-1.01%) to sell, while Credit Suisse upgraded to outperform. Both have differing views regarding the valuation. In other news, UBS (-3.07%) and Abu Dhabi Investment Co will reportedly set up a j/v firm to develop funds to invest in infrastructure projects in the Middle East, North Africa and Turkey.