From Standard & Poor's European MarketScope
Major European equity indexes closed with losses in Thursday's session. Investors eyed weakness on Wall Street. Sentiment was dampened by news that General Motors (GM) received subpoenas from the SEC as part of an investigation of the carmaker's pension obligations and business dealings with bankrupt Delphi. Economic data was unsupportive, with September U.S. durable goods orders down more than expected, namely by 2.1%, after a revised 3.8% in August.
Germany: The Xetra-Dax index ended Thursday's session markedly below breakeven. The German government has completed the sale of its 18.2% stake in Fraport (+1.52%). Meanwhile, Lufthansa (-3.17%), according to FAZ, may be interested in acquiring a 10% stake in the airport operator. HVB's (-2.89%) supervisory board chairman, Albrecht Schmidt, has resigned and may be replaced by UniCredito CEO Profumo. Other members of the supervisory board who had opposed the takeover may also step down, which, observers say, should smooth the integration process of HVB within the UniCredito group.
On the earnings front, MorphoSys (+3.69%) has raised its 2005 full-year profit forecast to €2 million from €1 million previously, helped by lower expenses. The biotech group's nine months net income nearly quadrupled to €3.9 million on 52% higher sales. Wincor Nixdorf (-2.21%) expects its operating profit to rise 10% and sales to increase by 8% in 2005/06 after EBITA rose to €137 million in the 12 months through September, a touch ahead of expectations. Funkwerk's (-8.72%) third quarter operating profit of €5.8 million clearly disappointed investors. Looking ahead, Deutsche Bank's (DB) (-1.38%) third quarter results are due out Friday. A consensus view puts net income at €831 million.
UK: The FTSE 100 index closed deep the red Thursday, after a batch of mixed earnings results. Royal Dutch Shell (RD) (+0.9%) gained after beating analysts' forecasts. GlaxoSmithKline (GSK) (+3.66%) rallied after beating third quarter expectations and raising fiscal year guidance. Rival AstraZeneca (AZN) (-3.63%) also exceeded forecasts but brokers highlight concerns over its long-term prospects. Tobacco group BAT's (BTI) (+0.75) nine months figures come ahead of estimates and the company says it is on track for a satisfactory year.
Shares in Reuters (RTRSY) (-3.96%) fell despite reporting its third consecutive quarter of growth as the group reiterated its second half guidance of underlying recurring revenue growth of 1%-2%. Aviva (-0.54%) slipped after reporting nine months sales at the low end of forecasts. The insurer says in the UK, momentum is building for the rest of the year and into 2006. Smith & Nephew (+3.65%) unveiled a 10% increase in third quarter revenues, in line with consensus forecasts.
France: The CAC 40 (-1.73%) ended Thursday's session firmly lower, trading on a negative breadth of 32-8. WTI crude oil stayed higher, trading at around US$61.2 per barrel. In Paris, a deluge of lackluster reports failed to inspire investors. France Telecom (FTE) (-6.21%) was pummeled after trimming its fiscal 2005 sales outlook to nearly 3% from 5% before. Peer Alcatel (ALA) (-9.01%) also fell as mobile business grows at the expense of fixed lines. Accor (-0.7%) slipped into the red despite posting nine months total LFL sales up 7.2%, with upscale and midscale hotels revenues growing 3.5% in third quarter.
Renault (-0.9%) was negative on disappointing third quarter sales, looking for support in the fourth quarter from the new Clio. PPR (+2.56%) reported strong sales numbers driven by luxury goods. Casino (-1.84%) posted in-line third quarter numbers, with organic growth at 3.5%. Vallourec (-4.56%) fell despite reporting third quarter sales up 40%. Investors will eye TF1 (-1.08%), Business Objects (BOBJ) (-2.8%), and M6 (-0.68%) as they post third quarter sales Thursday. Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)