Markets & Finance

European Stocks Rise


LONDON

The FTSE 100 closed firmly higher powered by firm resource stocks amid mixed trading Wall Street. WTI was US$42.57/bbl. UK LFL retail sales fell 2.6% in November, the BRC says. UK October industrial output dropped 1.7% m/m vs forecast of a 0.5% drop. GBP = US$1.4697. In big ticket news, Qantas has told BRITISH AIRWAYS (-1.97%) to choose between it and Iberia as a merger partner, The Times reports.

In M&A news, IMPERIAL ENERGY (+20%) confirms India's ONGC is offering a takeover price of GBP12.50/sh. VODAFONE (-0.44%) is to buy Wayfinder Systems for SEK239m. UBM (+2.8%) goes on a shopping spree - buys Buys Global Games Media for EUR 1.5m and China's Sanguine Microelectronics for in initial consideration of US$8m.

In broker action, STAGECOACH (+11.06%) tops the leaderboard after Deutsche says the share fall is overdone. In updates, GREGGS (+3.87%) dishes out a 3.8% rise in 25-week LFL sales and says it will leave Belgium as part of a review of the business. ASHTEAD (+12.9%) says 1H u/l PTP rose 7% adding it will benefit from lower interest costs and a strong US$ in 2H. PZ CUSSONS (+5.3%) says 1H is in line and is cautiously optimistic for FY. NORTHGATE's (-24.77%) 1H u/l PTP falls 40%, with FY profit expected to halve. -Gaurav Panchal - S&P MarketScope

PARIS

The CAC 40 (+1.55%) finished higher, shrugging off mixed trading stateside. Meanwhile, hopes of an imminent auto bailout grew. WTI was a touch higher at US$42.57/bbl. In corporate news, Constellation Energy announced after yesterday's European close that its board has authorised immediate discussions with EDF (+1.24%) with relation to the latter's offer to buy nuclear assets from the US player. However, GDF SUEZ (-2.66%) lost ground as the ruling UMP party calls on the government to freeze gas tariffs.

Luxury stocks PPR (+11.50%) and LVMH (+6.57%) were major gainers - the JPY appreciated vs the EUR. Among broker changes, JP Morgan initiated coverage on the European auto sector, initiating RENAULT (+2.16%) and PSA (-3.46%) with underweight. The broker also cut its target on ALSTOM (+5.02%) but affirmed its overweight stance. Meanwhile, Morgan Stanley downgraded FRANCE TELECOM (-0.35%) to underperform from outperform.

In financials, NATIXIS (-1.89%) CEO Dominique Ferrero told Le Figaro the bank 'closed the dossier' on a potential sale of its Assurances arm to CNP ASSURANCES (+6.66%) due to 'disagreement over its valuation'. However, Natixis remains interested in selling its 50% stake in investment services player Caceis. There was talk over the last month that CREDIT AGRICOLE (+3.10%), which owns the other 50%

of Caceis, may be interested. - John West - S&P MarketScope

FRANKFURT

As the ZEW sentiment index unexpectedly improved in December and Wall Street traded mixed after yesterday's rally, Xetra-Dax (+1.34%) finished a volatile session with firm gains. Locally, the solar sector took centre stage.

Due to delayed deliveries from suppliers and some postponed orders from clients, Q-CELLS (-18.61%) cut its 2008 forecast for sales from EUR 1.35bn to EUR 1.225bn and for net income from EUR 215m to EUR 185m. Industry peer SOLARWORLD (-5.18%) and sector-linked WACKER CHEMIE (-4.24%)

suffered despite reassuring on forecasts and orders. Elsewhere, DEUTSCHE POST (+3.44%) reiterated its outlook for its US express business. INFINEON (-10.80%) was lower after bearish comments from Texas Instruments and National Semiconductor. Of interest to MERCK (+0.86%), Samsung said it is having difficulties making a profit at its liquid crystal display division.

DEUTSCHE BOERSE (+2.41%) cut its 2008 cost outlook and expects a 'record result' this year. FUCHS PETROLEUM (-6.11%) adjusted its 2008 forecasts as November sales were noticeably below expectations. ESCADA (-9.55%) isn't facing insolvency, the fashion group told Focus magazine.

On the current earnings front, CARL ZEISS MEDITEC (-3.14%) saw its FY core earnings slip 3.7% to EUR 67.8m, while net profit improved 13% to EUR 54m. Key on the broker front, Morgan Stanley downgraded DEUTSCHE TELEKOM (+0.13%) to underperform and UBS cut NORDEX (-2.88%) to sell. -MS

ZURICH

The SLI (+1.07%) managed to clock up a third session of gains even though the S&P 500 and DJIA didn't quite manage to do the same. The October reading of US pending home sales was not as bad as expected, only at -0.7% vs the -3% consensus. Elsewhere on the macro front, the German ZEW economic sentiment survey came in better than expected.

Of local note, Switzerland's unemployment rate unexpectedly rose to 2.7%. Sticking with employment news, a Swiss-based analyst commented that data from the Manpower survey released today point to a stabilisation of employment sentiment in the US, even though the net trend is still negative. ADECCO (+5.49%) was up following the survey. Luxury goods stocks rose across the board following news that

Bernard Arnault bought stock options in Christian Dior, boosting confidence in the sector. Stocks such as HOLCIM (+7.43%) and ABB (+6.58%) continued to advance on the back of President-elect Obama's plan to boost infrastructure spending.

In the broader market, RIETER (-0.53%) slumped as it warned on full-year sales and profits, saying they will be below forecasts because of the economic crisis having a severe effect on the textile and auto sectors.

A dire automotive sector also seemed to affect the likes of KOMAX (-8.61%), which said it has since November experienced a sharp drop in the number of orders for new machines. -Pawan Girglani - S&P MarketScope

NORDIC

Nordic bourses recovered opening losses to close in the black but Wall Street was in the red after a two-day rally. Macrowise in the U.S. today, pending home sales came in better than expected.

Of local note in the pharma sector, GENMAB (+7.32%) jumped after it and GSK announced positive results from a pivotal trial of ofatumumab in the treatment of leukemia. The two drug companies will seek approval for ofatumumab in the US in January, 2009. Meanwhile, ASTRAZENECA (+0.46%) and Targacept will not progress with a Phase III trial for its schizophrenia drug AZD3480 after a Phase IIb clinical study did not meet the criteria. YARA (+9.17%), which was holding a CMD today, said its fertiliser deliveries fell in October and November, but maintained it would achieve strong 2008 results. AKER SOLUTIONS (-1.06%), also hosting a CMD today, said 2009 operating revenue guidance is likely to be reduced, adding that long-term fundamentals appear attractive, while short-term activity levels are uncertain.

BOLIDEN (-1.63%) announced it will cuts zinc production by 60,000 tonnes annually. FINNAIR (-0.44%) stated that traffic in November rose 3.7% y/y. In brokerage focus, JPM upgraded SKF (+1.87%) and ASSA ABLOY (+3.4%) to neutral, while Goldman upgraded NOKIA (+2.69%) to neutral. -Sara Oscarsson - S&P MarketScope


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