M&A was in focus but the major indexes lacked momentum
From Standard & Poor's European MarketScope
European indexes were mixed at midday Friday. Wall Street was set for a mixed start to trading amid weak IBM (IBM) results and record Citigroup (C) fourth quarter revenues. Crude recovers to US$50.64/bbl after Thursday's fall on a large stock build.
UK: The FTSE 100 index slipped further at mid-session as miners fell on weak commodity prices. Pharma stocks caught a cold following Bernanke's comments that drugs should be made cheaper in the US. However, M&A talk provided a ray of sunshine on a gloomy day, with flight cancellations hitting airline and insurance stocks after some of the worst storms since 1990 battered Britain. The December retail sales data come in stronger than expected.
M&A talk kept investors busy. Intercontinental Hotels (IHG) (+5.26%) surged on talk of a bid from Starwood Capital. Tate & Lyle (+1.11%) sweetened up on reports of a private equity bid. The Independent reported that the sugar producer could receive an offer at £10.00/sh.
Steelmaker Corus (CGA) (+0.84%) also gained after The Economic Times reported that Tata Steel may offer as much as £6.00/sh. Among broker action: Credit Suisse raised its target on Pearson (PSO) (+1.56%) to £9.00. HSBC (+1.31%) reportedly gained on a bullish Morgan Stanley note, while Carnival (+1.49%) shares cruised on a Panmure Gordon target upgrade.
Across the Atlantic, futures pointed lower with techs likely to come under further pressure after IBM revealed disappointing computer hardware sales.
France: The CAC 40 index (-0.05%) bounced back from earlier losses to trade flat at mid-session, paced by Vinci (+5.17%), Schneider (+3.46%) and Saint Gobain (+2.56%). At home, the latest news in the Suez (-0.86) drama is that Francois Pinault's Artemis is still considering an offer for Suez (SZE), saying that it has the financing and restating that an alternative to the GDF merger could be found. However, news that Pinault has purchased a 5.1% stake in Vinci (+5.17%) for €1 billion weighed on Suez.
Schneider (+3.52%) posted better-than-expected fourth quarter sales of €3.66 billion, up 12.3%. Saint-Gobain (+2.70%) also jumped as Credit Suisse upgraded the company to neutral from outperform. Vivendi (V) (+0.91%) outperformed as it said a ruling by Poland's Supreme Court means Vivendi is the rightful owner of a 48% stake in the Polish mobile-phone network PTC, a holding also claimed by Deutsche Telekom (DT).
STM (STM) (-0.97%) fell after IBM shares slipped in after-hours trade as hardware sales came in on the soft side. Also, US peer Xilinx issued downside guidance for the fourth quarter. Arcelor Mittal (-1.87%) sold Polish subsidiary Huta Bankowa. In broker news, Goldman Sachs and JP Morgan lifted their Credit Agricole (+1.21%) and Accor (+1.97%) targets.
Germany: The Dax index remained lower. Pressure clearly fell on the tech sector after the Philadelphia Semiconductor index fell almost 4% yesterday: Infineon (IFX) (-3.16%), SAP (SAP) (-1.21%). Infineon was also lower as brokers forecasted a drop in DRAM prices in the first quarter.
In earnings, Thyssen Krupp's (-1.82%) first quarter pretax profit beat expectations, coming in at €1 billion vs. €425.1 million year-over-year. Order intake rose to €13 billion from €11.6 billion year-over-year, while sales rose to €12.2 billion from €10.9 billion. Deutsche Boerse (+3.22%) led the gainers on news that the exchange would split up management, making it easier to break-up the company at a later point, according to the WSJ.
Meanwhile, Gas Natural was set to drop its bid for Endesa next week, reported El Mundo in Spain. Repsol's (REP) chairman was reported elsewhere as saying that it will be difficult for Gas Natural to increase its bid to compete with E.On, which was down 0.57%. DaimlerChrysler (DCX) (+2.19%) will reportedly discuss its Chrysler revamp at the Feb. 13 board meeting. The carmaker also saw an upgrade to overweight at Morgan Stanley.
A WestLB downgrade hit Balda (-2.48%), while target increases by the same broker gave Bilfinger (+2.13%) and Hochtief (+4.97%) a push. Porsche (-1.03%) hit the brakes after a UBS downgrade. Finally, MTU Aero Engines (-2.39%) said group pretax profit will be reduced by €0.1 million.
Elsewhere: Spanish shares pared losses at midday amid gains for Sacyr-Vallehermoso and the major banks.
Oslo was the best performing European bourse at mid-session, with DNB NOR (+1.56%) and Telenor (+1.20%) boosting sentiment, while Helsinki was the worst performer as Nokia (NOK) (-0.92%) and Fortum (-0.72%) dragged the index lower.