A roundup of Monday's action on major European exchanges
The FTSE 100 closed in the red as Wall Street traded lower. Credit worries coupled with Citigroup's warning of further write-downs lingered on investor' minds. Citigroup CEO Charles Prince became the latest casualty of the sub-prime crisis. SAINSBURY (-20.72%) shares tumbled after Delta Two pulled its £10.6 billion bid blaming credit conditions. Banks and food retailers sank. Datawise, US non-manufacturing ISM figures came in stronger than expected. In the commodity sector, a falling copper price hit mining stocks. Gold traded above US$800. WTI moved above US$95/bbl. Back to equities: LOGICACMG (-2.57%) said it expects fiscal revenue growth to be lower, at around 3%, and anticipates the second half adjusted operating margin to be slightly below 9%. RYANAIR (-4.26%) lifted its fiscal guidance as second quarter net rises 26% to €268.7 million, in line with expectations. In other news: VODAFONE (+2.28%) is the frontrunner to buy a 25% stake in the mobile phone unit of Telekom Malaysia, the Sunday Times reported. The stake may cost as much as US$3 billion. However, the mobile giant's shares gained on a Lehman target price upgrade and a bullish note. Apax is stalking ITV (-0.94%) again after the broadcaster's share price drifted, the Mail on Sunday reported.
The CAC 40 (-0.63%) closed the session in negative territory while Wall Street trades lower amid fears that further big losses may hit western banks. News that Citigroup may have up to US$11 billion in sub-prime related write-downs weighed heavily on sentiment. At home, financials dragged the index down: BNP PARIBAS (-1.64%) AXA (-1.73%) and SOCGEN (-2.13%) erased 25 index points. The latter saw Bear Sterns downgrading it to peer perform from outperform. According to the Sunday Express, AXA has bought the Health Insurance Group from its managers for about £40 million. DEXIA (-3.58%) and CREDIT AGRICOLE (-0.77%) also fell. Elsewhere, EADS (-3.84%) reportedly believes it will now need to expense between €1.2 billion and €1.4 billion, with more than €1 billion of this for Airbus. Maroc Telecom, which is 53% owned by VIVENDI (-0.63%), posted third quarter07 consolidated operating profit of 3.5 billion dirhams, +13%. On the upside, STM (+1.46%) closed agreement with Nokia in 3G chipsets. La Lettre de l'Expansion reported that the French govt may order up to €15 billion of trains for 2008-2009 (deliveries in 2012-2015). The company says ALSTOM (+0.70%) and Bombardier would be the big winners. SOPRA (+2.25%) posted third quarter revenues of €229.7 million, up 11.9%. Sees fiscal revenues at €1 billion.
Xetra-Dax (-0.53%) closed lower on Monday as US subprime woes continued to weigh on global equities. Banking stocks were a drag on the Dax: DEUTSCHE BANK (-2.11%); COMMERZBANK (-1.16%); POSTBANK (-4.77%). MUNICH RE (-1.84%) reported higher-than-expected third quarter income before minorities of €1.216 billion, supported by a one-off tax gain. Subprime exposure gave rise to an expense of around €115 million. The reinsurer said it can beat its fiscal 2007 forecast as long as capital markets and claims burden develop normally until the end of the year. ALTANA (+1.57%) bucked the negative trend after posting nine months EBITDA of €192.1 million and expecting clear double-digit growth for the year as a whole. SYMRISE (-3.91%) tabled nine months net profit of €84.3 million and said it is optimistic for the year as a whole. SOLAR WORLD's (-4.4%) third quarter net profit came in at €30.6 million, down from €63.3 million a year ago when one-offs provided support. A slightly negative conference call weighed on LEONI (-0.51%) after third quarter EBIT came in at €34.6 million. Earnings aside, BAYER (+1.64%) is temporarily pulling Trasylol from markets worldwide until final results from a Canadian trial can be evaluated. The pharma group said it believes totality of available data will continue to support a favorable risk benefit profile when used according to labelling. Finally, talk of a slow seasonal shopping period that could lead to a profit warning weighed on ARCANDOR (-2.27%).
Nordic bourses shift positions at the close with Stockholm ending higher, followed by Copenhagen flat, while Oslo and Helsinki finished lower. Wall Street traded firmly lower as credit worries hit again, following Citigroup's announcement it would have to write down up to US$11 billion more of risky securities than previously estimated. Financial stocks underperformed: SHB (-1.71%), NORDEA (-0.46%), SWEDBANK (-0.78%), DANSKE BANK (-0.34%), SAMPO (-1.32%) and DNB NOR (-0.68%). Also in the sector, TOPDANMARK (-0.36%) reiterated its earnings forecast for profit after taxes of DKK1.200 billion to DKK1.300 billion in 2007. During the group's CMD last Friday, shares fell 4.97% amid fears of write-downs. Moving on, VESTAS WIND (-1.11%) fell with the market, despite landing an order of 67 turbines from Horizon Wind Energy. In Stockholm, ASTRAZENECA (-1.46%) underperformed as a US court ordered charges of US$12.9 million amid overpricing. Meanwhile INVESTOR (-0.32%) could theoretically be able to invest SEK60 billion and is now looking for new investments, wrote Dagens Industri. In Helsinki, YIT (+1.39%) was the bright spot of the day as it said it is on track for 50% sales growth in Russia in 2007. In key broker action, SCHIBSTED (+1.85%), narrowing some of Friday's 9.7% losses, was downgraded at Carnegie and saw its target cut at S&P Equity Research.
Switzerland's SLI (-0.99%) ended Monday's session on a low note as financials were punished by the latest banking update which came from Citigroup. The diversified financial group said it estimates the reduction in its revenues related to sub-prime related direct exposures ranges from US$8 billion to US$11 billion. UBS (-3.7%) and CREDIT SUISSE (-1.66%) are both sent reeling by the Citi news which combined with a downgrade of banks at Morgan Stanley and a specific downgrade of Credit Suisse shares by Bear Stearns takes its toll on the Swiss banking giants. Separately, the Sunday press reported that UBS may oust chairman Marcel Ospel if subprime-related losses increase. Meanwhile, Switzerland's banking watchdog, EBK, reportedly said it is unlikely that UBS will need to write down its entire US$39 billion exposure to the US subprime residential mortgage market. Elsewhere, GEBERIT (-3.38%) slipped after Dutch peer Wavin reported nine months numbers below expectations and also lowered its fiscal outlook. Goldman put ROCHE (-0.15%) on its conviction buy list, but the stock failed to maintain its composure and yielded at the close. NESTLE (+0.47%) was among the few advancers after Sanford Bernstein hiked its target to CHF620.