Markets were weighed down by data reports pointing to a slowing U.S. economy
In London, the FTSE 100 index closed in the red on Friday, Dec. 1, tracking a falling Wall Street following weaker-than-expected US ISM manufacturing data. The data raised concerns of a slowing US economy. The pound climbed vs. the US$ to $1.9847. Analysts expect the U.K. currency to cross the psychological US$2-mark anytime now. The weak US$ also hit exporters and almost half of FTSE companies that report in US$.
In company news, Prudential (+0.15%) survived after saying it expected Asia life sales to double profit from new business by 2009. Resolution (+2.99%), Friends Provident (+2.28%) rose. Also, sector consolidation talk did the rounds helping insurers. International Power (+3.98%) was helped by a Morgan Stanley price target hike and M&A talk. BP (-0.44%) has inked a deal with Rosneft to look at opportunities for finding oil and gas in the Russian Arctic, the FT reported. BSkyB (-0.66%) is moving its main £60 million creative advertising account from WPP's (-0.59%) United agency to WCRS, part of the Engine marketing group, the FT said.
In earnings, Wolverhampton and Dudley's (+4.36%) fiscal year underlying pretax profit climbed 13.2% and the pub operator said trading in the new financial year had been strong, due to good weather.
Frankfurt's Xetra-Dax index turned lower in afternoon trade to end the day down 1%, as a weaker-than-expected reading of ISM manufacturing in the US sent the DJIA lower at the start, and weakened the US$ further.
The foreign influence outweighed local news. ThyssenKrupp (-1.37%) fell, despite reporting 2005/06 pretax profit of €2.62 billion versus €1.68 billion last time, in line with expectations. The steel group said it was confident that 2006/07 pretax profit will exceed €2.5 billion. Previously, it talked of a roughly flat result. T-Mobile board member Timotheus Hoettges, responsible for sales and service operations in Europe, will become head of Deutsche Telekom's (-2.02%) T-Com division, reported Handelsblatt. Private equity group Blackstone is considering taking a 10% stake in Endesa to help Acciona fend off E.On's (-2.58%) takeover bid, reported Cinco Dias. According to Le Figaro, DaimlerChrysler (-0.87%) wants to sell its 22.5% stake in EADS, starting with offloading a 7.5% stake. This came as no surprise.
Press reports have it that Deutsche Post's (-0.04%) package shipping business will be integrated into the letter delivering division. Lufthansa (+3.46%) was a striking outperformer after a target hike at Morgan Stanley and industry consolidation: Alitalia jumped more than 10% as the Italian govt put up its controlling stake up for grabs.
In Paris, the CAC 40 index turned dramatically lower in late afternoon after the US ISM manufacturing reading came in below 50.0, indicating contraction, and sending the DJIA down 0.3% at the start. This morning in Europe, the manufacturing PMI came in at 56.6, a tad lower than in October. The US$ weakened further, past 20-month lows against the euro.
In the CAC 40, breadth was 36-4 negative, with a few key stocks preventing a ruthless slide in the index. EdF (+5.27%) was one of them, buoyant after France's Constitutional Court yesterday ruled that regulated power prices would be incompatible with EU objectives for competitive power markets starting July 2007. EADS (+2.97%) also took off as shareholders have reached an agreement on a €10 billion financing package for the A350. BNP-Paribas (-1.78%) raised the synergy target from its acquisition of Italy's BNL by 20% to €480 million.
GdF (-2.67%) was amongst the biggest decliners on news it will not be able to complete its merger with Suez (-0.97%) before the energy market is fully open to competition in July 2007, according to a ruling by France's High Court. Renault (-2.38%) went into reverse after its French sales slid 26% in November