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European Indexes Close Mixed

Continental indexes were flat Monday morning despite a wide variety of corporate news

From Standard & Poor's European MarketScope

European indexes closed mixed Monday. Oil stocks were lower as OPEC highlighted signs of a weaker market next year: BP (BP) (-0.78%), Royal Dutch Shell (RDS)(-0.93%). A flat to higher start on Wall Street did little to boost sentiment. The third quarter US current account deficit widened in line with expectations, to US$225.6 billion.

UK: The FTSE index ended slightly lower, with 6-4 negative breadth and very mixed newsflow. Smith & Nephew's early gains turned to a 8.2% rally thanks to an upgrade from Merrill Lynch. The shares also cheered news that the group had ended takeover talks with Biomet.

At the other extreme was Tate & Lyle (-5.5%) after saying that margins from ethanol will be substantially lower and sugar prices are unlikely to rise next year. BT (BT) (-1.3%) was the wrong call today after announcing that its pension deficit has been valued at £3.4 billion as at end-2005. Peer C&W (-0.6%) was also down on news that it is facing £22 million lawsuits in the Caribbean.

Unilever (UN) (+0.25%) cheered reports that Ericsson's Michael Treschow will be the new chairman. India's Tata is seen sticking with its offer for Corus (CGA) (-0.6%), according to the Daily Mail. National Express (+3.0%) said it is ending fiscal 2006 on a strong footing. BAE Systems (-1.4%) will enter the race for Devonport, according to the Sunday Telegraph.

France: The CAC 40 index (-0.2%) ended Monday's session a touch below the gain line with Total (TOT) (-1.26%) weighing amid a falling oil price. Schneider (+1.21%) outperformed as it signed a joint venture agreement in China with Delixi Group. Cap Gemini (+0.62%) has won a seven-year contract with Tetra Pak. Danone (DA) (-0.42%) will form a joint venture to make and sell yoghurt products in China with the country's largest producer of liquid milk, China Mengniu Dairy. Danone will hold 49% of the venture.

On the downside, FDA advisers urged Sanofi (SNY) (-0.57%) to stop selling Ketek to treat bronchitis and sinusitis in the US due to liver damage. France Telecom (FTE) (-0.19%) denied talks with Google (GOOG) about hosting Google's services on its mobile phones.

Germany wants a broader shareholder base at EADS (-0.29%). A number of banks are understood to have been asked in recent days if they would consider joining a consortium to buy part of the stake in the group held by Germany's DaimlerChrysler (DCX). Elsewhere, Areva (-0.44%) was marked lower as China picked Toshiba for a US$5.3 billion nuclear reactor contract. Vallourec (-0.41%) may make acquisitions, and is large enough to develop on a stand-alone basis, according to an interview with CEO Verluca in Le Journal des Finances.

Germany: The Xetra-Dax index (+0.13%) closed in the black. In local news, MAN (-0.27%) won a ruling to claim at least US$488 million from DaimlerChrysler (DCX) (+0.09%). Audi will achieve a return on investment of above 10% this year for the first time, Automobilwoche reported, citing information from VW (+1.70%). This compares to 9.7% last year. Consulting teams are to be sent to Porsche's (+0.83%) German and Spanish plants to undertake efficiency gains analysis.

Key for Deutsche Telekom (DT) (-0.86%): the No. 2 mobile phone services provider in Germany, Vodafone (VOD), reportedly won some 800,000 new subscribers in recent weeks. BASF (BF) (-0.01%) acquired Chinese chemicals company Hi Con Concrete Admixture for an undisclosed sum.

Fresenius AG's (FMS) (+2.75%) trifunctional antibody Removab showed encouraging results in malignant ascites in patients with ovarian cancer. Rhoen Klinikum (+1.42%) upped its 2006 earnings forecast as a result of one-off tax effect, to €106 million from €93 million.

Elsewhere: The Nordic bourses finished flat to higher, with Oslo rallying as M&A activity in the oil sector provided a massive boost to the index. The Spanish Ibex 35 index ended Monday's session lower with BBVA and Repsol (REP) responsible for the biggest points declines.

Alexander Wisch, Rocio Opazo-Aniotz, Claudia Perotti, Michael Sanderson, Emma Stevenson, Mariella Mongio, Pawan Girglani, Guarav Panchal, Julien Manrique, Isabell Witt, Sara Oscarsson, Ben Marino, John West

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