Markets & Finance

European Indexes Finish Higher


A roundup of Monday's action on major European stock exchanges

LONDON

The FTSE 100 closed firmly higher with support from oil and miners. WTI was at US$126.15/bbl. An extra boost came from positive trading on Wall Street following a rise in leading indicators, better than expected. Locally, among miners, KAZAKHMYS (+5.95%) clocked up gains on a Credit Suisse target hike. ANGLO AMERICAN (+3.36%) and VEDANTA (+8.16%) jumped as Citi upgraded to buy. Further in broker action, WOLSELY (-3.89%) slid on a Merrill downgrade to sell. Among financials, BRADFORD & BINGLEY (-16.73%) suffered on concerns over its GBP300m share issue and the housing market outlook. BARCLAYS (unch) was dowgraded at S&P Equity Research and SocGen. Among big ticket movers: BRITISH ENERGY (+0.42%) shareholders reportedly said they will reject any takeover offer unless it has a significant premium to the share price. BAE SYSTEMS (-1.71%) CEO Mike Turner was reportedly detained in the US last week by officials probing corruption allegations about Co.'s business dealing in Saudi Arabia. BRITISH AIRWAYS (-4.51%) plans to ground part of its fleet from October to cut costs. An ABN cut to sell adds to the pressure. In M&A news, Manitowoc raised its offer for ENODIS (+2.52%) to GBP2.94/sh. In updates, SEGRO (-0.86%) said continuing market weakness has led to downward pressure on property values. DERWENT LONDON (-1.14%) said it saw a rise in demand despite tougher conditions.

PARIS

The CAC 40 (+1.26%) closed firmly higher, with Wall Street in the black following a better-than-expected leading indicators reading of +0.1%. Microsoft has proposed an alternative deal to Yahoo, though details are thin on the ground. WTI was at EUR 126.06/bbl - TOTAL (+3.12%). Back home, SCHNEIDER (+4.4%) gained as Goldman Sachs added the stock to its Conviction Buy List. STM (+2.44%) was lifted by a report from tech researcher iSuppli that it was the No.3 mobile chip player in 2007 vs No.5 in 2006. The stock traded ex-div. Elsewhere, SUEZ (+3.11%) made a preliminary approach to British Energy, The Times wrote. Added EDF (+3.67%) is in the running. LAGARDERE (+0.55%) bought 70% of Singapore-based World Sport Group (WSG), based on an EV for the stake of US$125m. Elsewhere, EADS's (-0.35%) executive committee will likely consider a rival bid for US firm DRS Technologies, Reuters reported. Finmeccanica has a US$3.94bn offer on the table. PPR (+0.13%) is issuing EUR 400m in bonds with redemption amounts indexed to the price of its own shares. In broker news, Merrill Lynch initiated the stock with neutral. VIVENDI (+0.09%) suffered a target cut to EUR 38.50 from HSBC, though the broker maintained its overweight rating. In the wider market, THOMSON (+6.37%) was boosted by rumour of interest from Siemens.

FRANKFURT

Xetra-Dax (+0.97%) extended its gains towards the end of the trading day, finishing firmly higher. Wall Street also turned into the black as leading indicators came in better than expected. Of local note, there were rumours doing the rounds that SIEMENS (+0.64%) was interested in bidding for France's Thomson. According to Der Spiegel, ex-Siemens executive Klaus Wucherer would become interim CEO at INFINEON (+3.04%). Reports had it that HENKEL (+1.82%) expected an agreement on the sale of its just under 30% stake in Ecolab this year. DEUTSCHE POST (+1.47%) is eyeing FedEx as a partner for its loss-making US express delivery business, Euro am Sonntag reported. VW (-0.28%) said it could sell its Brazilian heavy truck unit to MAN (+5.03%). METRO (-0.95%) said it plans to open up to 10 Cash & Carry wholesale outlets in Egypt. EPCOS (+6.49%) was strong on CEO comments that new orders are developing positively and that talks to find a strategic investor in Asia were at an advanced stage. STADA (+0.53%) doesn't want to be acquired and is, instead, looking for takeovers itself, CEO Retzlaff told Frankfurter Allgemeine Sonntagszeitung. Of interest maybe to LUFTHANSA (+0.12%), Austrian Airlines is open to a majority takeover, its CEO told Der Standard. Finally, MORPHOSYS's (+4.76%) antibody alliance with Schering-Plough was extended by one year.

ZURICH

The SLI (+1.3%) closed in the black as US Stocks were trading higher after April leading indicators made investors think the US economy is weak, but not in a recession. Of interest, Warren Buffett is in Europe this week seeking deals and will reportedly be making his way to Lausanne tomorrow. Back in the Swiss markets, ABB (+3.73%) was in focus following a positive article in Barron's, which says the shares could reach US$50 by end of 2009, quoting an analyst at Sterne Agee. Meanwhile, SWISS LIFE (-1.46%) got downgraded at UBS due to a higher risk profile, especially in Germany. The broker sees increasing acquisition risk, with the Swiss insurer reported to be interested in Lombard and in an early stage of an auction to acquire the offshore insurance branch of Friends Provident. Moving on, NOVARTIS (+3.16%) said new data show RAD001 (everolimus) may provide an important new treatment option for patients with advanced kidney cancer who have failed standard therapies. ROCHE (+1.91%) was also higher today. ORIDION (-4.28%), a specialist in respiratory patient monitoring, posted 1Q net income of US$1.31m, keeping its 2008 guidance despite a weak US$ and strong Israeli Shekel resulting in significantly higher operating costs than planned.

NORDICS

Nordic indices closed comfortably higher while Wall Street was also in the black following better-than-expected leading indicators. Locally, SCHIBSTED (+7.65%) was among the best performers on news it will acquire 35% of METRO INTERNATIONAL's (+5.04%) freesheet Metro Sweden and form a j/v with Metro Sweden through Aftonbladet for collaboration within advertisement sales. Meanwhile, Aftonbladet has decided to close down its loss-making free paper Punkt SE. In telecoms, NOKIA (+4.1%) added to earlier gains as Brightpoint, the world's No.1 handset wholesaler forecasts global deliveries of handsets in 2008 at 1.25-1.35bn. If the upper range of estimates is reached, deliveries will see a 20% increase y/y vs manufacturers' indications of 10%, Kauppalehti reports. Meanwhile, head of ERICSSON's (+2.45%) China operations forecasts 10% sales growth in China in 2008 and expects the company to land 3G licences in the country before the year end. In earnings, TOPDANMARK (-2.7%) disclosed an unexpected net loss of DKK234m, amid losses on its securities portfolio. In other news, SEADRILL (+6.43%) surged after saying it will sell its West Polaris ship to US listed company Ship Finance International for US$850m, and lease it back for 15 years. On the broker front, MARINE HARVEST (+2.25%) saw an upgrade at UBS, while JP Morgan cut target for H&M (unch).


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