Markets & Finance

European Movers: Xstrata, ING, Ericsson


Plus more European stocks making headlines in Friday's market

UK

ROYAL BANK SCOTLAND Up GBP0.19 to GBP3.65... Texas Pacific weighs up insurer risk - Texas Pacific Group is poised to bid for Co.'s GBP8bn insurance arm - a move which would dash fears that private equity players are struggling to finance major takeover deals, The Daily Telegraph writes.

BARCLAYS Up GBP0.09 to GBP4.74... COO Paul Idzik set to stand down - Chief Operating Office Paul Idzik is to announce his departure, according to The Times. Says he will leave this year and is not expected to be replaced.

HBOS Up GBP0.29 to GBP4.94... UK house prices down 1.3% m/m in April - UK house prices have fallen by 1.3% in April m/m, while were 0.9% lower on an annual basis, according to Halifax. Halifax expects a mid single digit percentage decline in UK house prices this year.

RIO TINTO Up GBP1.37 to GBP59.73... Split-up an option - Chairman Paul Skinner says splitting Co. up is an option to extract the best return for shareholders if BHP's offer stays too low, The Sydney Morning Herald reports.

CADBURY PLC Down GBP0.03 to GBP6.37... New shares start trading today - Cadbury plc, the standalone confectionary business that starts trading today. S&P Equity Research starts with sell and GBP5.50 price target. Says the confectionery arm has returned to the market at a valuation which is unjustifiably high, even given the potential for Co. to participate in future industry consolidation.

XSTRATA Up GBP1.60 to GBP41.92... Speculation of bid for Macarthur Coal - Shares in Macarthur rose today on the back of market speculation that Co. could make a bid for the company, The Sydney Morning Herald reports. Notes Macarthur recently appointed a new CFO - Ian Fuller - who was previously group financial controller at Xstrata Coal. Adds the company said on 21 April that it had received an approach from a third party, but that no formal written offer had been made. JP Morgan ups target to GBP46.47 from GBP39.35; lifts FY08 EPS to US$7.86 from US$$6.78. Broker does not see Vale's bid returning and believes that estimate of 5-year volume growth of 35% vs 25% for peers justifies an overweight rating even excluding any other bid.

FRANCE

RENAULT Up EUR 4.12 to EUR 70.17... France car sales up 7.7% in April - Co. enjoys France car sales up 7.7% in April, according to the French Automobile Constructors' Committee (CCFA). New car registrations in France, across the sector, rose 4.6%. CEO Jean-Marie Hurtiger of Co.'s South Korean unit Renault Samsung has told Reuters the business plans to sell over 200,000 vehicles in 2008 vs 172,175 units y/y.

BNP-PARIBAS Up EUR 2.07 to EUR 71.32... Credit Suisse cuts target - keeps outperform - Credit Suisse cuts target to EUR 88 from EUR 89, keeps outperform. Argues Co. has had the most resilient earnings amongst French bank due to near absence of exposure to US structured credits and diversified business mix. Nevertheless, given downgrades in the CIB division and greater reliance on the US, says Co. is now valued in line with the rest of the sector. With a 12-month view, Co. should belong to any portfolio of European stocks, in our view.

AIR FRANCE-KLM Up EUR 0.93 to EUR 20.90... Oil off highs / BA sparks excitement - Airline stocks trade higher across Europe as WTI trades lower at c.US$112/bbl. Yesterday saw excitement in the sector following reports British Airways is in talks with two US airlines over a possible alliance.

ARCELOR-MITTAL Up EUR 0.77 to EUR 57.56... China Oriental stake sale / Stock options /JPM ups tgt - Co. sells its 17.4% stake (509.8m shares) in China Oriental to ING Bank and Deutsche Bank at HK$5.7938 per share. Co. unveils plans to award stock options to 500-700 senior managers. Plans to establish an Employee Share Purchase Plan, which will include a maximum of 2.5m Co. shares, with a maximum of 200 shares per employee. A discount of 15% will be applied for the first 100 shares and a 10% discount for the second 100 shares. JP Morgan ups target to EUR 67 from EUR 55, maintains overweight rating in a note on European Steel. Sees European steelmakers passing on most of raw material costs in FY08 as solid supply fundamentals offset moderating demand growth.

GERMANY

BMW Up EUR 1.37 to EUR 36.62... April US vehicle sales up adj. 1.2% to 31,448 unit.

DAIMLER Up EUR 0.40 to EUR 50.33... Sales data out / Broker action - Co.'s US sales of Mercedes-Benz cars slipped 3% y/y last month to 20,271 vehicles. - Broker action, ABN Amro cuts target to EUR 55 from EUR 60, reiterating hold.

PRAKTIKER Up EUR 0.90 to EUR 14.83... Renewed talk of EUR 25 per share bid in the offing.

ITALY

PARMALAT Up EUR 0.04 to EUR 2.24... Reaches settlement in US class action suit - Co. has announced to have reached an agreement to settle an investor class action suit against it in the US Southern District Court of NY. Explains that as a result, Co. will cause 10.5m shares of stock to be issued in full satisfaction of any and all claim asserted against it in the class action worldwide. Adds that it will also pay EUR 1m of the cost for notifying class members of the settlement.

MONTE PASCHI Up EUR 0.04 to EUR 2.24... UBS upgrades to neutral from sell, following underperformance. Lifts target to EUR 2.20 from EUR 2.11 to reflect new estimates pro forma for the acquisition of Antonveneta and the EUR 1bn mandatory convertible and the EUR 5bn rights issue. Ahead of 1Q results due out on 14 May, expects Co. to confirm the ongoing operating trends characterised by double-digit growth in NII, light fees while costs and asset quality should be under control. Looks for 1Q profits of EUR 320m (including one-offs) and GOP of EUR 511m (+1.6% y/y). Citigroup lowers target to EUR 2.2 from EUR 2.31, updating model post rights issue adjustment. Keeps hold recommendation.

NETHERLANDS

ING GROEP Up EUR 0.63 to EUR 25.14... To buy CitiStreet for EUR 578m - Co. announces it will buy CitiStreet, a premier retirement plan service and administration organization in the US, for EUR 578m. Says the combined operations will make Co. the third-largest defined contribution business in the US based on assets under management and assets under administration with EUR 224bn and US$351bn, respectively.

ROYAL DUTCH SHELL (NL) Up EUR 0.10 to EUR 25.91... May sell stake in wind farm project - Co. may sell its 33% stake in the world's biggest offshore wind farm project as Co. is reviewing its strategy for renewable energy. Partners E.On and Dong Energy have expressed disappointment at the decision and made clear the project was now on a knife-edge, according to The Guardian.

NORDICS

ERICSSON Down SEK0.73 to SEK14.55... Falls on concerns margins overstated - Speculation circulates in the market regarding accounting errors at Co. amounting to SEK1bn. Co. strongly dismisses the rumours. One trader argues the speculations steam from what impact IPR sales had in the quarter and whether they made the 1Q stronger than it would have been excluding these high margin sales, stating this is not accounting errors per se but can alter the numbers q/q. According to Lehman's calculations, Co.'s 1Q gross margin increased 75bp not 250bp. The broker points out that additional analysis of Co.'s 1Q08 results suggests that intellectual property revenues may have driven 200bp of the 250bp sequential increase in gross margin seen in 1Q.

KAUPTHING BANK Down SEK2.00 to SEK68.50... 1Q disappoints on all levels - After yesterday's close Co. disclosed 1Q numbers below expectations. One trader stated, excluding a one-off gain at ISK15.9bn, Co. delivered a 'disastrous report', which on all levels came in less than expected. Co. said focus on liquidity is management's key priority. 1Q NII of ISK21.332bn vs consensus est at ISK23.947bn, total income of ISK45.901bn vs ISK42.900bn est, total costs of ISK21.562bn vs ISK20.387bn est, PTP at ISK20.280bn vs ISK23.705bn est and net profit of ISK18.700bn vs ISK20.135bn est.

S-E BANKEN Up SEK6.00 to SEK151.50... Looks east for acquisitions / Brokers cut TP - The current market situation, amid decreased prices, has lead Co. to being more positive towards acquisitions, CEO Falkengren says in an interview with Dagens Industri. She wants the bank to grow stronger within capital investment and is looking east for possible add-ons, and says a merger with Nordea is not in the cards at present. In other news: Co. is rumored to be interested in Germany's IKB. However, other speculation suggests Co. is looking to get out of Germany completely since Falkengren took over as CEO. Citigroup lowers target to SEK145 from SEK160, keeps hold; reflects weak 1Q08 update due to high costs, low fees. Reduces EPS est by 5% for FY08 and 6% for FY09. JP Morgan cuts target to SEK164 from SEK208, maintains underweight.

SPAIN

SANTANDER Up EUR 0.25 to EUR 14.10... Benefits from S&P upgrade of Brazil - S&P Ratings Services has upped Brazil's foreign currency bond rating to BBB- from BB+, taking the country to an investment grade rating. Co. has exposure to Brazil via its unit Banespa. ABN Amro cuts target to EUR 16 from EUR 17, buy. Lowers EPS forecasts to reflect rapidly rising LLPs. Co. and South Korean bank Hana Financial Group have signed a deal to co-operate on investment banking, La Gaceta reports. Says the agreement covers Europe, South America and Asia where the two groups will collaborate on M&A, project financing and real estate deals. Co. pays gross dividend today of EUR 0.28.

SWITZERLAND

GIVAUDAN Down CHF36.00 to CHF1016.00... Soft results from competitor IFF - Co.'s US competitor IFF saw its shares fall yesterday as it posted weaker-than-expected 1Q sales and profit.


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