Broker action provided focus Wednesday
From Standard & Poor's European MarketScope
European indexes closed mixed Wednesday. Wall Street was mixed as caution prevailed before a rate decision due from the Fed. Crude was at US$59.50/bbl.
UK: The FTSE 100 index closed higher as interest rate hike expectations cooled following the BoE minutes. The MPC voted 8-1 to keep rates steady at 5.25%. Further support came as Chancellor of the Exchequer Gordon Brown, in his Budget speech, lowered corporation tax to 28% and basic income tax. Also, HSBC upgraded the European Oil Sector to overweight from neutral.
In the financial sector: Barclays BCS(+1.78%) moved a step forward in its merger talks with Dutch peer ABN Amro (ABN), saying the combined entity will have HQ in Amsterdam and a primary listing in London. The banks also agreed that the first chairman will be nominated by ABN and the first CEO by Barclays. Goldman upgraded European Banks to overweight.
Hammerson (+4.95%) was firm on talk of a private equity bid. The Sainsbury (-0.81%) chairman was willing to extend the deadline set for a bid from a private equity consortium, The Times reported. In earnings news, Kesa (-1.43%) put out a 15.4% rise in fiscal pretax profit, which however came in lower than forecasts. Security and medical equipment maker Smiths (unch.) posted a 6.47% rise in first half operating profit, slightly below estimates.
France: The CAC 40 index (-0.02%) closed the session barely unchanged as Wall Street traded flat ahead of the FOMC rate decision, widely tipped to stick at 5.25%. At home, Vallourec (+4.44%) topped the percentage gainers, whereas Alcatel Lucent (ALU) (-2.11%) dove as Cheuvreux downgraded the company to underperform from outperform and trimmed its target to €7.5. Spain's Banco Sabadell has said it will sell 100% of ExelBank to BNP Paribas (-0.80%) for €65 million, making a capital gain of €22 million.
Elsewhere, Eiffage (+7.02%) shares surged on rumors that Spain's Sacyr is selling shares in Repsol (REP) to fund the purchase of the minorities in Eiffage, market sources said. Technip (+4.65%) won a US$7 billion contract for a liquefied natural gas project in Nigeria, Bloomberg reported, citing a spokesman for Nigerian National Petroleum Corp. Repower said it prefers Areva's (+1.10%) takeover bid since it is higher than Suzlon's.
Among those reporting, CNP Assurances (+8.60%) posted net profit up 18% year-over-year. Ipsos (+3.78%) reported fiscal 2006 net income of €39.5 million vs. €30.4 million in 2005; revenue was €857.3 million vs. €717.9 million. Finally, Valeo (+0.92%) rejected a call by one of its largest stakeholders to make a full bid for US peer Visteon. Morgan Stanley upgraded Valeo to overweight from underweight and lifts target to €50.10 from €21.90.
Germany: The Xetra-Dax index traded slightly higher throughout the day and closed much the same, as carmakers added fuel to the German index; traders said BMW (+3.97%) having lagged the market recovery recently, appeared to be on fine form, topping the Dax winners. Oracle (ORCL) continued to inspire SAP (SAP) (+1.03%), which closed higher. Goldman noted that Oracle's results provided a neutral read-across to the Gemran peer, but said they indicated that business conditions in the broader software sector remained stable, alleviating some investor concerns of a slowdown.
Metro AG (-3.83%) fell deeply after its results, which were broadly in line with expectations. The group's EBIT outlook was seen as conservative. Patrizia Immobilien (-2.62%) said it will continue spending one quarter of its profits on dividends. Leoni (-4.22%) proposed a 2006 dividend of €0.80 per share and said that for 2008 it expects similar growth as in 2007.
GEA (unch.) recovered from earlier lows. Away from earnings, Germany's Custodia Holding had sold its entire 25.08% stake in Hochtief (-1.77%) to Spain's ACS for €72/share. Krones (+4.14%) plans to split shares 1:3 as it posted a 22.3% rise in 2006 net profit.
Elsewhere: The AEX index (+0.52%) closed higher, though down on highs. Arcelor-Mittal (+4.45%) pushed up the index, rebounding after recent falls. Royal Dutch (RDS) (+0.46%) provided support after news that it has produced the first fuel from its Pohokura gas project in New Zealand.
Oslo extended its lead in late trade as the rest of the Nordic equity markets held on to earlier gains, despite Wall Street trading flat.