M&A in the banking sector led the news Monday
From Standard & Poor's European MarketScope
European indexes yawned Monday as Wall Street was flat. The Dow Jones Industrial Average traded near the psychologically important 13,000 mark.
UK: The FTSE 100 index closed just below breakeven, weighed down by weakness in banks and pharma. However, with oil at US$64.77/bbl, energy stocks limited the losses. The pound crept back above US$2, after briefly slipping below the mark. Banks were in focus after Barclays (BCS) (-2.40%) agreed to buy ABN Amro (ABN), valuing the Dutch bank at €36.25/sh. The two banks will sell ABN's LaSalle to Bank of America (BAC) for US$21 billion and Barclays CEO John Varley will continue in the same position in the merged entity. However, analysts are expecting the Royal Bank of Scotland (+0.25%) consortium to put in a higher bid, although the RBS group postponed its meeting with ABN Amro.
Further in M&A news, British Airways (-0.39%) said it has approached a number of private equity companies about making a consortium offer for Iberia. Investors cheered Scottish & Newcastle (+2.71%), which was the top gainer on the Footsie all day, on an FT report that Diageo (+0.38%) and SABMiller (-0.09%) have held talks with a view to breaking up the company.
In updates: AstraZeneca (AZN) (-4.03%) posted a just-above-forecast 11% rise in first quarter pretax profit, saying it will be dropping development of AtheroGenics' heart drug. The drugmaker said it would buy US biotech firm MedImmune for US$15.2 billion, which analysts felt is a high price.
France: The CAC 40 index (-0.36%) closed in the red as Wall Street continued to trade flat. SocGen (-3.04%) weighed heaviest, by some 11.3 index points: it denied being in talks with Italy's Unicredit after the close on Friday. However, the two banks may announce a merger after a new French president is elected on May 6, Il Sole 24 Ore reported. Separately, the FT wrote that Unicredit has admitted to conducting talks with SocGen.
Arcelor Mittal (-0.57%) has acquired Mexico's Sicartsa for US$1.439 billion. PSA (-0.19%) has denied a plan to cut 10,000 jobs in Europe, a rumor reported in Capital Magazine. On the upside, Danone (DA) (+1.09%) gained ahead of first quarter sales tomorrow and on strong results posted by Nestle. Cheuvreux forecasted strong full sales of €3.7 billion, up 4.1% year-over-year.
Carrefour (+0.28%) was being cautious when it suggested that its property portfolio could be worth between €15-€20 billion, the FT reported, citing an interview with CEO Jose Luis Duran. Separately, Carrefour has acquired Brazil's Atacadao for €825 million.
Eiffage (-0.01%) has reportedly rejected Sacyr's all-share offer. Finally, Biomerieux (+1.94%) beat the consensus with first quarter net sales at €255.3 million, down 0.1% year-over-year; +6.8% like-for-like.
Germany: The Xetra-Dax index (-0.09%) continued to trade flat until the close, with Wall Street trading mixed. Deutsche Telekom (DT) (-1.19%) lost 600,000 fixed-line customers in the first quarter of 2007, but said improving sales of high-speed Internet access would help it meet its profit targets.
Representatives of billionaire investor Kirk Kerkorian were reportedly seeking a meeting with a group of Chrysler workers proposing an employee-led buyout of the DCX (DCX) (-1.2%) unit to consider some form of cooperation. VW (-0.63%) Chairman Ferdinand Piech will be elected to head the supervisory board of MAN (+0.83%), Focus magazine said, citing an unidentified workers rep. at the truck maker.
On the earnings front, MTU's (+1.04%) first quarter adjusted net income topped expectations. Key on the broker front, JP Morgan upgraded BMW (+2.66%), which closed as one of the leading Dax gainers, to overweight. The broker said two changes marked a turning point in BMW's stock after three years of disappointing performance.
Elsewhere: Italian equity indexes were unable to muster enough momentum to rise off earlier losses, while investors focused on M&A talk and first quarter results.
The Ibex 35 index(-0.62%) ended the session lower with Iberdrola, Telefonica (TEF) and banks the biggest points losers.