Markets & Finance

European Indexes Finish Mixed


A roundup of Thursday's action on major European exchanges

LONDON

The FTSE 100 closed higher, while Wall Street traded flat on weak macro data. At home, BARCLAYS (-1.99%) reported net losses of GBP1bn relating to credit market turbulence and falls amid fears of a rights issue. DSG INTL (-7.58%) plunged after the group announced a 50% dividend cut as well as plans to reduce costs by GBP50m next year, including the closure of 77 Currys.digital stores and 43 stores in Italy. SABMILLER (+3.91%) beat estimates with FY adjusted EPS up 19%, but warned that 1H pressure on input costs will continue to increase. CADBURY (+3.86%) said it sees 1H revenues at top end of range and trading margins around 150bp ahead. BT (+5.38%) rang up a 3% rise in 4Q PTP with revenue of GBP5.422bn, ahead of estimates. BALFOUR BEATTY (-3.03%) said trading performance in 2008 to date has been strong, and 2008 will be at top end of current expectations but shares were under pressure as the group unveiled a GBP180m share placing. Among miners, BHP (+2.64%) gained on a report that China is looking for a parter for a multi-billion dollar swoop on 9% of the miner. RIO TINTO (+2.06%) said it was very concerned about the Chinese opposition to spot iron ore trade. VEDANTA's (+0.36%) FY earnings fell 7.1%. NATIONAL GRID (-1.17%) said is interested in bidding for E.On's power grid.

PARIS

The CAC 40 (+0.04%) closed the session flat while Wall Street trades mixed following a worse-than-expected Empire State survey reading. Back home, earnings continued to flow. VIVENDI (+5.20%) gained after reporting a narrower-than-expected fall in 1Q adjusted net income and confirming FY08 targets. BOUYGUES (+4.10%) also rose on above-consensus 1Q sales. CREDIT AGRICOLE (-1.33%) confirmed 1Q net attributable profit of EUR 892m, down 66%, and its launch of a EUR 5.90bn rights issue. Also among financials, NATIXIS (+17.14%) zoomed higher after reporting 1Q gross op. income of EUR 108m, down 84%, with a net banking income of EUR 1.366bn, ahead of consensus. In other news, Goldman downgraded ACCOR (-1.82%) to neutral. EADS (+1.14%) expected to complete the sale of a large part of its Airbus site at Filton in the UK in the next few weeks to GKN, the FT reported. In the wider market, TF1's (-3.62%) 1Q net income fell below forecast to EUR 70.4m and warned that FY08 sales will drop 3% vs a previous forecast of a 2.4% increase. Deutsche and Cheuvreux downgraded to hold and underperform, respectively. TECHNIP (+1.11%) beat estimates of 1Q revenue and net income but reduced FY08 revenue guidance. ILIAD (+1.00%) reported 1Q sales of EUR 340m, up 22.3%. Confirmed FY08 objectives. LATECOERE (+0.07%) posted 1Q sales up 17% to EUR 135.1m. Confirmed FY08 sales growth target of 10%.

FRANKFURT

Xetra-Dax (-0.03%) finished the penultimate day of the trading week flat, just a touch below break even. Wall Street also appeared little moved, though in the black, as investors digested rising initial claims and a weak NY Fed manufacturing report but a better-than-expected Philly Fed index. In Germany, earnings reports dominated the newsflow. RWE (-0.41%) reported 1Q operating profit of EUR 2.5bn - down 10% y/y and slightly weaker than expected - on in-line quarterly sales of EUR 13.4bn. The power group confirmed its outlook for 2008. HOCHTIEF (+6.66%) posted quarterly net income of EUR 32.1m, up from EUR 9.6m for the same period a year ago. SALZGITTER's (-3.11%) 1Q PTP of EUR 291.9m was lower than expected. KLOECKNER & CO. (-1.48%) tabled 1Q net profit of EUR 52m and said it is very satisfied with its start to the year. SOLARWORLD (-1.1%) disclosed 1Q net profit of EUR 34.7m. PREMIERE (+1.64%) unveiled a 1Q net loss of EUR 28.1m. The TV group had 4.24m subscribers at the end of March, of which 3.62m are direct customers, in line with expectations. QSC (-0.78%) sees 2008 revenues and EBITDA at the upper end of previously given guidance. On the M&A front, DEUTSCHE TELEKOM (+0.25%) bought 25% of Greece's OTE for EUR 3.2bn to strengthen its presence in southeastern Europe. Russia's Sistema is interested in INFINEON (+0.59%), especially its R&D division, according to Handelsblatt.

ZURICH

The SLI (+0.99%) closed firmly higher today, while Wall Street was trading mixed. The NY manufacturing index was worse than expected, while the Philly Fed survey was better than expected. Both readings of manufacturing activity signalled contraction. Furthermore, US industrial production declined 0.7% in April. Among US stocks on the move was Tiffany as it said 1Q earnings will top expectations. This gave SWATCH (+2.68%) and RICHEMONT (+1.55%) something to smile about. Elsewhere, PETROPLUS (+2.61%) was in demand after peer ERG reported strong 1Q numbers, thanks to refining. Helvea met with ROCHE's (+2.48%) management, and said it had a very compelling set of discussions. The broker thinks the group is best positioned amongst peers in terms of patent exposure and with strong potential pipeline news, particularly at ADA (6-10 June). Meanwhile, NOVARTIS (+1.7%) has had its price target upped at SocGen, with the broker welcoming the Alcon acquisition. Don't forget, yesterday Dresdner Kleinwort upgraded the EU large cap Pharma sector. Apart from the pharmas, ZURICH FINANCIAL (+3.27%) was higher on the back of stronger-than-expected 1Q numbers. The insurance group reported a 3% rise in quarterly net earnings to US$1.4bn. The combined ratio was strong at 94.6%.

NORDICS

The OMXC20 (+2.98%) closed firmly in the black, positioned as Europe's top performer after solid results from MOELLER MAERSK (+8.75%). 1Q net profit nearly tripled y/y, and beat forecast. Runner-up OSE (+1.99%) was boosted by STATOILHYDRO (+4.49%) as the Norwegian Finance Ministry revised its oil and gas production forecast for 2008. In Sweden, H&M (-0.29%) disclosed disappointing April sales this morning, falling 1% y/y vs a Reuters forecast of a 6.6% rise. LFL fell 10% vs a forecast 4.8% fall. In Helsinki, STORA ENSO (-0.12%) said it may have to shut down further capacity in Russia if export taxes are increased. In other news, NORSKE SKOG (+0.82%) may divest valuable energy contracts amounting to NOK5bn, Dagens Naeringsliv reported. ERICSSON (+4.09%) reached a yearly high today says it will invest US$25bn over five years in research and development (R&D), saying it should be able to improve margins over time, however no specific targets were presented.


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