The Royal Bank of Scotland-led counter-bid for ABN AMRO dominated investor attention Wednesday
In London, the FTSE 100 (+0.29%)continues to stay higher in late-session trading, helped by energy and mining stocks. UK first quarter GDP rises 0.7% vs expectations of 0.6%. £ is at US$2.0043. Oil inches up to US$64.90/bbl as traders await US data, expected to show an 11th consecutive weekly fall in gasoline stocks.
In M&A news, the consortium comprising Royal Bank of Scotland (-1.64%), Fortis and Santander unveils a €39/share offer for ABN Amro. Sainsbury (+6.89%) is the top gainer on talk of a dawn raid from an investment fund Three Delta, backed by the Qatar Investment Authority, after a block of about 250 million shares was traded at £5.75/sh this morning. Morrison (+1.15%) gains. Among pharma stocks, GlaxoSmithKline (-0.48%) sees its first quarter pretax profit fall 1% hit by a stronger US$/£ exchange rate. However, Shire (+5.98%) raises its fiscal revenue forecast as first quarter sales rise 33%.
Reuters (+0.10%) posts a forecast-beating 6.5% rise in first quarter underlying revenue. However, actual revenue at the financial information and news provider falls 1.1% due to a weaker US$. Lonmin's (-0.12%) first half refined metal sales drop 27.8%, hit by furnace closure. Stocks trading ex-dividend are: Cadbury Schweppes (-0.74%), Centrica (-0.32%), Drax (-1.10%), Northern Rock (-2.36%), Xstrata (-0.44%).
In Paris, the CAC 40 (+0.94%) stays firmly in the black late in the session, with Wall Street expected to open higher ahead of durable goods orders data, following stellar profits from Amazon. SocGen (+2.69%) and BNP Paribas (+0.64%) add 13 index points on news RBS, Fortis and Santander have indicated a price of €39/sh for ABN Amro, some 13% higher than the Barclays offer as of market close yesterday. Michelin (+5.32%) tables first quarter sales of €4.20 billion, +5.5% and above analysts' estimate of €4.15 billion. LVMH (+1.79%) posts better-than-expected first quarter sales of €3.804 billion, +7%.
In broker action, Morgan Stanley upgrades Alstom (+5.46%) to overweight from equal weight. Goldman Sachs upgrades Alcatel Lucent (+1.56%) to buy from neutral - the telecom equipment manufacturer today winning a contract to build Nigeria's first 3G network. Results hurt two blue chip stocks: Air Liquide (-1.85%) reports first quarter revenue of €2.791 billion, up 5.2% year-over-year but below consensus; STM's (-0.66%) first quarter 2007 revenues came in at US$2.28 billion, down 3.7% year-over-year, also below expectations.
Valeo (+2.25%) saw first quarter sales of €2.640 billion, -0.5%; net income of €33 million, +43.5%. Business Objects (-0.57%) posts first quarter sales of US$334 million (+20%) and net income of US$5.58 million vs analysts estimate of US$17.4 million.
In Frankfurt, the Xetra-Dax (+0.75%) remains comfortably above breakeven in late trading Wednesday as bid talk surrounding ABN Amro lifts the European banking sector higher, with Commerzbank (+1.33%) still a prime suspect when it comes to other takeover targets. On the local earnings front, Siemens' (+0.8%) fiscal second quarter numbers topped expectations as Klaus Kleinfeld's future at the helm hangs in the balance as the board votes today on whether to renew his contract amid a widening corruption scandal. Preliminary results show group profit from operations 9% ahead year-over-year at €1.96 billion and net income 12% ahead at €1.26 billion.
Elsewhere, Merck (+3.58%) reported first quarter operating profit of €321.3 million, a touch above expectations, on in-line sales at €2.17 billion. The pharma group expects to markedly reduce its net debt, which stood at €5.5 billion at the end of last quarter, but gave no details as to how exactly. Schwarz Pharma (-0.27%) tabled first quarter net earnings of €3.2 million on sales at €232.1 million.
Wincor Nixdorf (+2.6%) posted first half EBITA of €90 million, up 20% year-over-year, with interim sales at €1.09 billion. The cash machines maker raised its 2006/07 EBITA growth forecast to 15% from 8% and sales forecast to 9% from 6%.
SGL Carbon's (+5.77%) first quarter EBIT beat estimates, coming in 73% higher year-over-year at €57.3 million. The graphite electrodes maker plans to restructure its financing, but rules out a capital hike. Epcos (+7.19%) says its second quarter was better than expected, with sales up 9% q/q and order intake stable.