A look at Monday's action in major bourses
The FTSE 100 closed higher Monday, helped by positive news from mining giant BHP BILLITON (+5.68%) and strength in commodity prices. BHP is to release an update on its reserves this week. Renewed bid talk that XSTRATA (+4.64%) may take a second look at LONMIN (+1.99%) also helped. Gold hit a 28-year high on weak US dollar. Copper and lead gained on the back of the weakened US currency. £ was at US$2.0219. However, banking stocks continued to be at the receiving end of some sell orders on a report Deutsche Bank's debt bill may hit €1.7 billion. WTI slipped to US$81.14/bbl, taking down energy stocks. Wall Street cut gains after GM workers went on strike. In company results, WOLSELEY (-4.71%) slumped after reporting a 7.3% fall in fiscal year pretax profit before amortization - below estimates - on weak US housing. In further US-centric news, HSBC (-0.44%) is to close its US subprime unit, cutting 750 jobs and taking US$954 million in charges and write-downs. NORTHERN ROCK (-10.24%) fell on news that it is taking legal advice on its £59 million dividend payout and uncertainty over whether there will be a buyer for the troubled mortgage lender. In banking news, BARCLAYS (-3.24%) is preparing to sell one of its subprime consumer loan businesses at a loss, The Sunday Telegraph wrote. Among other stocks, MARKS & SPENCER (+4.50%) benefited after Deutsche Bank reiterated buy.
The CAC 40 (-0.14%) closed flat-to-lower, as Wall Street traded higher. At home, EDF (+2.86%) was the standout gainer as rumours gathered momentum that the French government may sell a 5% stake. MICHELIN (+1.73%) also picked up after Les Echos reported that the tyremaker plans to replace roughly one worker for every two that leave. La Lettre de l'Expansion reported that EIFFAGE's (+2.05%) APRR tollway unit has been granted a 1% tariff hike. VINCI's (+1.57%) ASF can expect a similar rise from 1 February 2008. DANONE (+1.88%) was in fine fettle as Credit Suisse upgraded to outperform from neutral. The European Commission on Friday gave the nod to France
TELECOM (+0.4%) and private equity firm Mid Europa Partners' proposed €1.4 billion acquisition of Austrian mobile operator One. On the downside, BNP PARIBAS (-2.27%) and SOCGEN (-1.35%) fell as reports Deutsche Bank could be facing €1.7 billion of losses on a non-performing loan revived subprime fears. SCHNEIDER (-3.59%) was hit by a downgrade to hold from buy by Citigroup. AIR France
-KLM (-1.46%) and Alitalia have had talks since Friday, without their bank advisers, over the future of Alitalia, Il Messaggero wrote, adding a 'low-level' merger could be a possibility. Elsewhere, REXEL (-4.49%) is 'cautious' about the US market, CEO Jean-Charles Pauze told weekly Investir.
Xetra-Dax was flat at Monday's close but with breadth on the negative side (2-1), while Wall St was higher. Among the 10 stocks that moved ahead in Frankfurt were those buoyed by stakebuilding rumours. DAIMLER (+1.28%) rose on speculation that BMW's (+3.6%) Quandt family is looking to take a 3% stake, while there was unsubstantiated talk of US-based Nucor having bought 10% of THYSSENKRUPP (+0.82%). Separately, media reports had it that Daimler plans a two-day meeting, starting on Wednesday, to examine the strategy of all business units. BMW stepped on the gas as Barron's reckons shares are set to rise 20% or more if second half margins expand on easing costs and easy comps. DEUTSCHE BOERSE (+3.67%) was prominent on the gainers list as it expects a 'very good' third quarter as volatility has boosted trading revenues. Banks were on the losing side after reports that DEUTSCHE BANK's (-1.8%) profit could take a hit of up to €1.7 billion in third quarter from revaluing of leveraged debt commitments. HYPO REAL ESTATE (-1.09%) saw proceedings started against its takeover of DEPFA (-0.21%) by a German shareholder. But, generally, Depfa shareholders have okayed the US$7 billion cash and share bid. UNITED INTERNET (+2.37%) and DRILLISH (+5.31%) have announced a joint venture aiming for consolidation of FREENET (+11.36%).
The Ibex 35 closed moderately higher, with Wall Street in similar territory. The index came of highs, however, as IMF Managing Director Rodrigo Rato reportedly said the forecast of 3.3% GDP growth for Spain is no longer valid and will be revised downwards. In corporate news, IBERDROLA (+1.04%) gained on reports it is to undertake a stock split, offering four shares for every one currently held, according to Expansion. El Economista reported that Sonatrach is willing to pay €5.7 billion for SANTANDER's (+0.22%) stake in CEPSA (+0.14%). Meanwhile, market rumours suggested that Santander could be interested in Barclays, though sources are sceptical. Spanish press reports had FERROVIAL (-2.26%) this week taking a 20% stake in real-estate firm Habitat, which is undertaking a capital increase. SEPI is set to sell its 2.95% stake in ENDESA (+0.10%) to ACCIONA (+2.7%) and Enel, according to the press. British Airways and TPG are due to meet with IBERIA's (+2.13%) core shareholders this week to discuss the upcoming bid, wrote website El Confidencial. In the wider market, MECALUX (+6.56%) is planning to build two plants in China by 2010, investing €125 million, reported Expansion. In broker moves, Caja Madrid upgraded DERMOESTETICA (+4.62%) to buy.
Stockholm ended Monday's session lower, Copenhagen and Oslo in the black, while Helsinki finished flat. Wall Street trades higher at European close. WTI hovered around US$81.19/bbl. Back in the Nordic region, VOLVO (-2.48%) fell as heavy truck deliveries declined by 4% year-over-year in January to August, in North America truck deliveries fell 59% for the same period, while European heavy truck deliveries rose 4% year-over-year. The latest news in the OMX (-0.37%) saga suggested NORDEA (-1.90%) and INVESTOR (+0.93%) may be offered up to SEK300 per share for their stakes in the Nordic exchange operator by Borse Dubai and and QIA, The Sunday Times reports. Moving on, PROSAFE (+6.71%) soared on news its Board of Directors will evaluate the possible effects of a split of the group into two separately listed companies; Oil Production and Accommodation. TELIASONERA (-0.44%) will establish a new fully-owned telecom infrastructure subsidiary in Sweden. SAAB's (-1.69%) deputy CEO will leave the group following differences with CEO. In broker action, Bear Stearns re-initiated coverage of DSV (+0.81%) with outperform. Credit Suisse and Cheuvreux took a positive stance on STORA ENSO's (-0.58%) divestment of its North American paper operations, with Credit Suisse raising its target.