From Standard & Poor's European MarketScope
European trading was relatively flat Monday afternoon as the Dow edged higher. Pharmaceutical stocks gained after a favorable court ruling for Pfizer (PFE) protected the company's intellectual property for blockbuster cholesterol drug Lipitor. Oil prices fell, hitting the energy sector.
Germany:The Xetra-Dax index ended Monday's session barely changed. Munich Re (+0.21%) will reportedly pay a significantly higher dividend for 2005 than it did for 2004. DaimlerChrysler (DCX)(+0.63%) may cut about 16,000 jobs, including 8,500 cuts already announced, to increase operating profit within three years. VW (+0.58%) will pay dealers in Germany bonuses of up to €2,500 on sales of certain models in a program to cut inventory and boost sales before the end of the year. In another development, VW will sell its IT systems unit Gedas to Deutsche Telekom (DT)(-1.29%), with the price tag understood to be just under €450 million.
Bayer (BAY)(-0.72%) has EU regulators planning to fine it over price fixing. Metro (-0.43%) and Karstadt (-0.59%) underperformed as German retail sales fell slightly on Fourth Advent below the year earlier level, Germany retail group HDE disclosed. Jenoptik (+2.5%) is selling its M+W Zander unit to Springwater Capital in a transaction that will raise more than €100 million in cash.
The UK's BAA has agreed to buy Budapest Airport for US$2.2 billion, beating bids from Fraport (-0.67%) and Hochtief (+0.83%). A relief rally pushed Premiere (+4.65%) higher as a speculated placing did not occur. HVB (+0.36%) left the DAX Monday and was replaced in Germany's benchmark index by Hypo Real Estate (-0.02%), the property lender.
United Kingdom:The FTSE 100 index closed barely altered amid strength in the pharma sector and weak oil stocks. Glaxo (GSK)(+1.64%) and AstraZeneca (AZN)(+2.88%) benefited from the news. Lower oil prices sent Royal Dutch Shell (RDS)(-0.27%) and BP (BP)(-0.64%) lower.
Rio Tinto (+1.29%) was said to have won the auction for Peru's La Granja copper project with an US$82 million bid. Anglo American (+0.21%) was higher after a price target upgrade from UBS. BAA (-0.54%) signed a definitive agreement to acquire control of the Budapest Airport for £1.255 billion. Carphone Warehouse (+8.23%) climbed after announcing that it is buying Tele2's UK and Irish CPS businesses and Onetel from Centrica. Housebuilder McCarthy & Stone (-0.08%) said this will be another testing year.
On the M&A front, The Sunday Times reported the board of William Hill (+0.49%) blocked a potential merger with Rank (-0.9%). First Technology (+29.44%) rallied, despite poor results, after agreeing to a takeover bid from Honeywell (HON) at £2.75 per share. Dairy Crest (+8.39%) jumped despite denying having received a formal bid approach or indicative offer from France's Lactalis.
The CAC 40 (-0.2%) closed with a small loss. Breadth was negative at 29-8 as energy stocks weighed on the index: Total (TOT) (-0.70%). Faurecia (-4.98%) slipped after announcing it will miss second half 2005 profitability targets in its car interior business. It cut its second half profit margin to 1.7-2% from 3% last year. Majority owner Peugeot (-2.20%) also headed lower, with DrKW cutting its fiscal 2005 EPS forecasts to 11.5% to reflect Faurecia's news.
Gaz de France (-3.92%) slid on news that Bercy had blocked tariff increases due January 1. Ixis and Citigroup consequently downgraded the stock and cut their targets. Bucking the trend, Sanofi (SNY)(+2.79%) hit a fresh year-high of €74.65 on the Pfizer news. Sanofi is awaiting a verdict in a similar case involving its drug Plavix.
Euronext (+1.12%) was up on renewed consolidation talk linking it to London SE and Deutsche Boerse. Finally, media players Vivendi (V)(-0.56%), TF1 (+0.55%) and M6 (-0.38%) unveiled the terms of the Canal+/TPS tie-up. Fitch Ratings revised Vivendi's outlook to positive, while S&P Ratings Services left its ratings on Vivendi and TF1 unchanged.
Elsewhere:Piazza Affari ended Monday's session a fraction higher as banking plays offset losses in the energy sector. Late news that Antonio Fazio had resigned from his post as governor of the Bank of Italy gave the banking sector a boost. Eight of the top 10 percentage gainers in Italy's SP/MIB were banks, swept higher by hopes that Fazio's departure would restore calm to the system.
Oslo's OBX ended Monday's negative session 1.17% lower, leading the European losers, while the other Nordic markets closed around breakeven. The Norwegian bourse was hit hard by low oil prices: Statoil (-1.63%), Norsk Hydro (-1.94%) and Helsinki's Neste Oil (-3.16%). Schibsted (-2.89%) added to the negative sentiment in Norway after offering NOK145 million for Basefarm.
Copenhagen's index was the top performing Nordic market, although still only 0.21% higher. This was partly thanks to Moeller Maersk (+0.48%), which announced it is investing in a 32% stake in the second stage of Shanghai's Yangshan Port. Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)