From Standard & Poor's European MarketScope
European markets advanced Thursday,taking cues from strength in U.S. stocks. Wall Street was cheered by news productivity rose at a higher-than-anticipated 4.1% annual rate and labor costs unexpectedly fell 0.5%. Federal Reserve Chairman Alan Greenspan tempered the news with a warning about inflation and the ECB left its key interest rate unchanged at 2%.
Germany: The Xetra-Dax index ended Thursday's session markedly higher, boosted by the good mood on Wall Street. As expected, Federal Reserve Chairman Alan Greenspan's testimony to Congress underlined the uncertainty surrounding the outlook for inflation.
Among German stocks on the move, VW's (+0.77%) core brand posted a loss in the third quarter of 2005, but will make a profit in fiscal 2005. The car maker posted nine months operating profit of €1.96 billion, lower than expected. BMW's (-1.79%) third quarter pretax profit slid more than expected to €647 million on quarterly sales a bit higher than forecast at €11.72 billion. The luxury car maker reiterated that it sees 2005 profit roughly flat year-over-year. Adidas's (+1.7%) third quarter net income beat forecasts, rising 28% to €209 million when adjusted for the sale of the Salomon unit. A capital hike announcement is expected this evening from the company to finance the planned US$3.8 billion acquisition of Reebok (RBK), according to market talk.
Commerzbank's (+2.14%) third quarter net earnings topped forecasts. Karstadt (+9.98%) reported a rise in core nine months earnings to €158 million, a touch below expectations, on sales 7.8% lower at €8.1 billion. Supporting the stock was the announcement that no capital hike will be undertaken in the short term. Quarterly order intake fell 12% at Aixtron (AIXG) (-6.34%) to €24.9 million, at the bottom end of a wide range of forecasts. The chip equipment maker now sees fiscal year 2005 sales closer to €140 million rather than the €150-160 million previously predicted.
United Kingdom:The FTSE 100 index ended Thursday's session comfortably higher. In London, ICI (+6.55%) rallied after reporting third quarter sales ahead of forecasts and saying sales growth had been maintained by ongoing progress in increasing prices to recover raw material cost rises. Rentokil (+4.5%) also gained after saying the rate of profit deterioration is slowing and expects to see a continuation of encouraging trends in the remainder of the year and into the first half of 2006. Unilever (UL) (-3.45%) disappointed after failing to pass on price increases.
Pilkington (+0.17%) rejected a preliminary £1.50 offer from Nippon Sheet Glass, saying it fell materially short of a price which the board is prepared to recommend. The group reported a 22% rise in first half pre-tax profits, in line with guidance. Sugar group Tate & Lyle (+6.1%) climbed after beating analysts' forecasts at first half. The LSE (+0.8%) posted a 15% increase in first half turnover and said it intends to return £250 million to shareholders. Signet (-4.9%) retreated after saying fiscal year profit will not beat last year's.
France:The CAC 40 index(+1.63%) also added gains at the close. In Paris, rising financials and robust quarterly sales numbers from media plays drove the market. HSBC initiated coverage of French banks, starting SocGen (+1.87%) with neutral and BNP Paribas (+2.75%) with overweight ratings. In media, Vivendi Universal (V)(+2.3%) posted strong third quarter sales of €4.87 billion, largely thanks to the success of its World of Witchcraft video game. Publicis (PUB)(+0.33%) announced third quarter sales up 7.4% year-over-year to €1.00 billion, and maintained an optimistic outlook for fiscal year 2005 of organic growth of at least 6%. Broader market-listed street furniture group JC Decaux (+3.37%) was higher after signing a 30-year joint venture contract with Beijing's Behua Cultural Development for outdoor advertising ahead of the 2008 Olympic Games. Construction group Lafarge (+0.59%) remained in focus after agreeing to terminate its joint venture with CEMEX in Spain and Portugal.
Elsewhere:Scandinavian stocks closed in high spirits on Thursday, clocking up overall index gains ranging from +1.00% to +3.50%. In Stockholm, Skanska (+7.49%) jumped after posting net profit roughly in line with expectations in third quarter 2005, while sales beat forecasts, landing at SEK32.2 billion. The group remains cautiously positive in its outlook for the Nordic market. In Amsterdam Pharming (+9.28%) ended on a high after its net loss widened to a less-than-expected €12.7 million in the first nine months of 2005. Prepared by Zaida Espana, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)