Markets & Finance

European Indexes Fall


A roundup of Wednesday's action on major European exchanges

London

The FTSE 100 closed lower hit by falling banking, energy and mining stocks. Wall Street was lower, following an initial opening boost after the regulator of Freddie Mac and Fannie Mae eased capital limits. Morgan Stanley turned in better than expected numbers. In the news, HBOS (-7.08%) fell despite denying reports that it went to the BoE asking for funding. The FSA said is to investigate trading in banking stocks. IMPERIAL TOBACCO (+2.03%) said trading remained in line and expects the rights issue for the acquisition of Altadis to be no more than GBP5bn. NEXT (-6.02%) posted FY numbers in line with forecasts, but saw tough trading this year. KESA's (-1.77%) FY report beat forecasts, but the company saw difficult trading conditions ahead. EASYJET (-9.53%) slumped after warning on fuel costs. Lehman Brothers cut MITCHELLS & BUTLERS (-3.55%) target price on concerns about refinancing needs. Media group AEGIS's (+4.09%) FY numbers topped estimates, but the 2008 outlook was cautious. PREMIER FARNELL (+13.18%) jumped on FY after profits top expectations. ICAP (+0.36%) said trading in 2H has been strong and FY will be above current consensus. NORTHGATE (-5.45%) said it is on track to achieve its financial objectives for CY. DE LA RUE (+0.47%) said 4Q trading is in line.

Paris

The CAC 40 (-0.58%) closed in the red following a jittery session in the face of market rumour and widespread uncertainty. Wall Street was in negative territory. Morgan Stanley reported better-than-expected 1Q numbers, though it sees challenging market conditions in the months ahead. Financials made the headlines at home, with BNP PARIBAS (+4.65%) ruling out a bid for SOC GEN (-7.07%), saying the conditions are not right to create value for shareholders. In other news, ARCELOR MITTAL (+0.38%) will invest US$1bn in its Brazil plant to double output. SAINT GOBAIN (+0.56%) has reached a deal with 18% stake holder WENDEL (-1.27%) that will see the latter take three board seats, Les Echos reported. Italy's right wing opposition party, leading in opinion polls ahead of April's elections, has said it opposes Alitalia's takeover by AIR FRANCE-KLM (+1.0%). VEOLIA (-5.16%) fell on market rumour SUEZ (-1.72%) is set to list its Environment unit at a discount. FRANCE TELECOM (-2.56%) suffered fallout from Deutsche Telekom's weak outlook statement, though it reiterated its FY08 fixed guidance. In wider market results, IPSOS (-1.39%) posted attributable net profit of EUR 46.7m, up 19.9% y/y, seeing growth in 2008. SCOR (+3.0%) reported 2007 net profit of EUR 407m, up 62% y/y, fuelled by the Converium acquisition, maintaining its medium-term objectives.

Frankfurt

Xetra-Dax (-0.50%) closed lower, tracking losses on Wall Street, where investors took a breather after yesterday's rate cut. Locally, auto stocks were among the best performers amid positive newsflow in the sector. Goldman Sachs lifted target for BMW (+3.43%) and reiterated its buy recommendation. Among financials, DEUTSCHE BANK (+1.69%) was the subject of a rumour. This time in the form of it or Credit Suisse showing an interest in UBS. But there seemed to be little substance to this speculation. Meanwhile, Deutsche Bank is raising its stake in China's Huaxia to 13.7% from 9.9%, paying US$552m for the move. Away from banks, DEUTSCHE TELEKOM (-6.94%) was the biggest blue-chip decliner, weighed down by its outlook statement for its fixed-line unit. On the earnings front, GAGFAH (+0.62%) reported 2007 funds from operations, which included rental income, 19.4% higher y/y at EUR 197.4m. RHEINMETALL (-2.23%) sees 2008 EBIT at EUR 280-290m. The defence group intends to hit the acquisitions trail again after saying a merger with Krauss-Maffei Wegmann is not on the agenda. KUKA (-1.49%) made a net profit of EUR 117.9m for 2007 after EUR 64.8m in the red in 2006 and reiterated its 2008 EBIT margin target of at least 5.5%. Weighing on the stock was the stated intention to go on an add-ons shopping spree.

Milan

Milan ended Wednesday's session sharply lower, with Wall Street in the red. Morgan Stanley reported better-than-expected 1Q numbers, though it sees challenging market conditions in the months ahead. Back home, ALITALIA's (+11.96%) shares were suspended most of the day as Italy's opposition party, leading in opinion polls ahead of April's elections, has said that it is opposed to a takeover by Air France-KLM. The French carrier's CEO said that the takeover was 'at risk', after unions and politicians raised objections to the offer. In further M&A news, INTESA SANPAOLO (-4.07%) is offering some US$5.5bn to take over Julius Baer's hedge fund unit GAM, according to Swiss newspaper Handelszeitung. Meanwhile, Il Messaggero wrote that talks between the two groups were suspended due to difficut market conditions. Neuf Cegetel, Free and Numericable made indicative offers for TELECOM ITALIA's (-5.39%) French internet provider Alice, Les Echos wrote, citing a Dow Jones report. On the earnings front, SEAT PG (-20.04%) plunged after it said that FY net profit rose 23% to EUR 98.4m on lower interest payments, adding that net financial debt was EUR 3.27bn. In other news, JUVENTUS (-3.14%) will invest EUR 105m in a new stadium. GENERALI's (-0.04%) Co-CEO, Giovanni Perissinotto, said that the insurer sees no changes to its financial targets after reporting a cautious outlook.

Spain

The Ibex 35 (-0.50%) closed in the red following a very volatile session, while Wall Street traded lower. Morgan Stanley unveiled better-than-expected 1Q figures. The American bank, however, still sees 'challenging market conditions in months ahead'. Locally, according to a regulatory filing, the Indian investor Ram Bhavnani has acquired a 3.3% stake in BANCO POPULAR (+1.72). Cinco Dias reported that he has also bought about 2% of BANCO SABADELL (+0.47%). SANTANDER (+1.38%), BBVA (+0.45%) also traded higher. Elsewhere, British Airways has increased its shareholding in IBERIA (+3.71%) to 13.15%. ENDESA (+0.42%) and France's Suez lead a group working on electricity projects that will boost Peru's total generating capacity by 11% in 2009, according to state news agency Andina. IBERDROLA (-2.30) has filed a complaint with the European Union, claiming EDF illegally received state grants of EUR 5bn conceded through the special retirement regime to electric and gas sector workers in France, Cinco Dias reported. ARCELOR MITTAL (+1.82%) plans to invest US$1bn in a plant in Brazil to double output. Boeing would not consider partnering with EADS (-1.38%) to supply refuelling tankers to the US Air Force, the FT reports, quoting Boeing VP Mark McGraw. In broker news, Morgan Stanley trims its BME (-5.01%) target to EUR 32.9 from EUR 40.4. Keeps equal weight.


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