Markets & Finance

European Stocks Rise


LONDON

The FTSE 100 ended the day higher, with Wall Street trading in the black as Goldman Sachs posted 4Q loss smaller than some had feared. At home, safe bets such as pharmas, telecoms, tobacco and utilities led the advance. However, focus was firmly on the FOMC decision after the close - consensus looks for a 50bp rate cut. UK November CPI at 4.1% was higher than the 3.9% expected.

In updates, CADBURY (-1.71%) said performance as a whole has been in line and confirmed revenue and margin guidance, although it forecast a 6%-8% rise in input costs for 2009 and weakening economic conditions. TULLOW OIL (+8.22%) said the Buffalo-1 exploration well in Uganda was potentially the largest find in the Butiaba Area to date. DRAX (+4.26%) said it is trading in line with expectations for the current year and fuel costs for 2009 to be at a similar level to those for the current year.

In the broader market, KESA (-13.73%) said 1H retail profit plunged 71.17% and LFL sales were down 5.5%, with trading, particularly in the UK and Spain, extremely difficult. CARPETRIGHT (-12.75%) rolled out worse than expected 1H figures and warned FY will be significantly below consensus. PARTY GAMING (+26.49%) said it is close to agreeing a settlement with the US DoJ but any payment would be significantly lower than that reported to be paid by co-founder Anurag Dikshit in the FT. LAIRD (+0.68%) will cut jobs and downsize US operations. -Gaurav Panchal - S&P MarketScope

PARIS

The CAC 40 (+2.07%) closed in the black with Wall Street firmly higher. Expectations the Fed will cut rates by at least 50bp after the European close are high. Goldman Sachs' 4Q missed estimates, but it trades higher, buoyed by brave investors.

Back home, BNP PARIBAS (+4.95%) remained in focus after the Belgian govt said it will continue with the sale of Fortis

assets to the French bank, appealing a court ruling yesterday. Among carmakers, ACEA released November registration figures. European new passenger car registrations fell 25.8% y/y, declining for the seventh month in succession. RENAULT's (+3.15%) fall of 21.8% comes in better than the European average, while its market share improved to 9.6% vs 9.1% y/y.

However, PSA's (+1.71%) fall of 26.9% came in worse than the European average and market share declined to 12.3% vs 12.5% y/y.

Elsewhere, ALSTOM (-0.97%) CEO Patrick Kron once again affirmed interest in a tie-up with AREVA (+0.09%) in an interview with Reuters, but admitted 'nothing's moving and nothing will move' while the economic crisis continues. Meanwhile, EDF (+3.14%) has awarded Areva a EUR 200m steam generator contract. Among broker changes, Exane BNP Paribas downgraded SAINT GOBAIN (-2.19%) to neutral. New ATOS (+4.11%) CEO Thierry Breton hoped to improve operating

profit in 2009, wrote Les Echos. -John West - S&P MarketScope

FRANKFURT

Xetra-Dax (+1.61%) finished as one of the better performing indices in Europe, as Wall Street also traded firmly in the black. The FOMC's decision on interest rates will be due later today. Of note to carmakers, ACEA released November car registration figures, and they made grim reading.

European new passenger car registrations fell 25.8% y/y, declining for the seventh month in succession. DAIMLER's (+1.80%) were down 24.5%, BMW's (+0.84%) down 31% and VW's (+0.26%) down 17%. FAZ reported that

negotiations on the future for INFINEON's (+3.01%) Qimonda division will be finalised within the next 48 hours. Meanwhile, solar stocks were eyed as JP Morgan initiated coverage on Q-CELLS (+6.93%) and SOLARWORLD (+3.14%) with

underweight. Suzlon set a new payment schedule for a 22.4% stake in REPOWER (+13.18%) held by Martifer. In key broker action, Jefferies initiated on ALLIANZ (+4.24%) with underweight. -PG - S&P MarketScope, ems@sandp.com

NORDIC

Nordic bourses closed mixed, with Wall Street trading higher. The FOMC's decision on interest rates is due at 19:15 GMT. 4Q results from Goldman Sachs are in focus, alongside worse-than-expected US housing starts and building permits. Locally, VOLVO's (+4.96%) November truck deliveries fell 21% y/y to 19,326 vehicles. The company said it is continually forced to

stop production in 4Q and plans to stop for 20-25 days in 1Q09. DANISCO (-6.84%) posted lower-than-expected 1H EBIT of DKK727m and cut FY08/09 outlook. HUHTAMAKI (-6.09%) issued a profit warning. The company will book

restructuring and impairment charges of EUR 159m in 4Q08 and has downgraded its FY EBIT target to c.EUR 90m vs EUR 136m. It will cut 170 jobs during 1H09, which will reduce the annual cost base by EUR 8m.

In contrast, BAVARIAN NORDIC (+3.31%) upgraded its FY08 guidance for revenue, result before tax and net free liquidity at year-end. In other news, TELENOR (+8.54%) said at the Kyvistar (in which it holds 56.5%) EGM held today

amendments were made to the board of directors. The board now consists of five Telenor companies and four companies from Alfa's (which holds 43.5%) affiliate Storm.

In broker news, ERICSSON (+1.51%) saw a downgrade at Deutsche Bank. Goldman Sachs issued a note on Paper & Forest Products saying that weak demand will offset near-term positives, and making several changes to ratings and target prices. -MES - S&P MarketScope, ems@sandp.com

ZURICH

The SLI (+0.72%) closed broadly higher on Tuesday as Wall Street extended advances ahead of the FOMC's interest rate decision, due at 19:15 GMT. The 4Q results from Goldman Sachs are in focus, which although coming in lower

than forecast, were not as low as some had feared.

Of local note, Morgan Stanley downgrades CREDIT SUISSE (+1.81%) to equal weight from overweight and resumes coverage on UBS (+1.76%) with equal weight. The broker reiterates an overweight on J BAER (+2.3%), as it gives exposure to similar private banking theme without the investment banking risks. Comments on exposures to Madoff continue. According to Reuters, BALOISE (+0.38%) said on Monday it will have to write down US$13m as a result of the alleged multi-billion-dollar fraud at Madoff, while PARTNERS GROUP (unch) says it is not affected. VETROPACK (-12.82%) loses shine after a fx-related profit warning. HOLCIM (-2.34%) slumps after disappointing guidance from Cemex. SGS (+5.16%) rises as RBS upgrades the stock to buy from sell. -PG - S&P MarketScope, ems@sandp.com


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