From Standard & Poor's European MarketScope
Major European stock indexes ended Wednesday's session solidly lower. U.S. markets traded marginally lower amid disappointing news from Intel (INTC) overnight. However, the Dow pared losses as higher crude oil supplies soothed jittery nerves. In the U.S., eyes were on the Fed's Beige Book report, with expectations for more signals of continued growth in all major U.S. regions.
Germany's Xetra-Dax index came off lows but still ended Wednesday's session with marked losses. Among stocks on the move in Frankfurt, Epcos (-1.82%) said it expects a loss of €55-65 million for its fourth quarter. It had stated in August that it would be profitable for this period. Chip stocks were generally lower because Intel's sales outlook disappointed overnight; Infineon fell 3.21%. SAP (SAP) (-1.39%) joined the melee of sliding stocks ahead of its third quarter figures Thursday. Consensus estimates are for license growth of 12.4%. UniCredito is aiming to become the biggest retail bank in Germany by 2008 with the acquisition of HVB (-2.22%) and significant investment. The acquisition got EU approval Tuesday night.
Auto stocks were also out of favor Wednesday despite positive musings emanating from the Tokyo Motor Show. DaimlerChrysler (DCX) (-2.94%) is to start a joint venture in China to launch a commercial vehicle business. VW's (-1.65%) Audi unit could increase sales by 10% in China with the introduction of the new A4.
More than 66% of CP Ships shareholders have accepted TUI's (-3.1%) takeover offer. MAN (-3.32%) may be interested in buying RWE's (-0.89%) paper and cellulose unit, with sales of about €230 million a year.
In the UK, the FTSE 100 index lost a massive 1.83% as the market had "correction" written across the board. Only four blue chips rose, while 96 fell and two were unchanged. The FTSE slumped to its lowest levels since early July, after minutes from the Bank of England's policy meeting showed a unanimous decision to keep interest rates unchanged, dashing hopes of an early change in monetary policy. The news hit a market already concerned about inflationary pressures on both sides of the Atlantic.
On the trading floor, GlaxoSmithKline (GSK) (-0.27%) escaped the sell-off with only minor pain thanks to hopes its Relenza anti-flu drug could be used as a backup for Roche's Tamiflu in preparations for a possible avian flu pandemic. Miners plunged, hurt by a profit warning from Australia's Newcrest. BHP Billiton (BHP) (-4.03%), Xstrata (-3.47%), and Antofagasta (-1.83%) were among the losers. Rio Tinto (RTP) (-3.83%) says the strong operational performance seen in the first half has continued into the third quarter. DSG International (-1.58%), the old Dixons, is entering the Polish market with the opening of the first Electro World store, and says it will launch an accelerated store opening program in Central Europe.
The CAC 40 index in France fell into the close of trading Wednedsay, posting a loss of 2.05%rading on negative breadth of 39-1. Total (TOT) (-2.17%) slipped further as crude oil prices traded around US$62.10 per barrel. U.S. crude oil inventory data showed an impressive build, up 5.6 million barrels, vs. a consensus estimate of a gain of 2.25 million.
For other French outfits, sales updates provided abundant newsflow. Danone (DA) (-2.38%) sank as third quarter organic growth of 7.1% failed to impress investors. Analysts are concerned Danone's stock price has been sustained by speculation of a takeover bid, rather than fundamentals. Spir Communications (-16.36%) was shellacked after issuing a profit warning on operating margin, seen down to 14.5%, vs. 16.5% before.
Remy Cointreau (-2.1%) unveiled first half sales of €415.1 million. Oberthur (-6.52%) suffered, despite better-than-expected third quarter sales up 15.8% year-over-year, driven by microprocessor cards. Fashion house LVMH (-2.12%) was down with the trend despite showing third quarter sales growth of 12% after Tuesday's close, driven by good performances in the U.S. and Asia. In the defense sector, Thales (-1.78%) was moderately positive after becoming the sole owner of TDA Armement, after acquiring a 50% stake from EADS (-2.63%). Investors will eye results from Valeo, Lafarge, APRR, and Essilor on Thursday.
Elsewhere, stocks finshed solidly lower in Scandinavian markets, while Dutch equities endured their sharpest one-day fall since May,