A roundup of Friday's action on major European stock exchanges
The FTSE 100 closed in positive territory tracking Wall Street, which was off earlier lows, after Goldman Sachs raised its debt recommendation on Citigroup to 'outperform', offsetting higher-than-expected November CPI data. Local data showed euro-zone harmonised CPI rose 3.1% year-over-year in November vs 2.6% in October. WTI fell to US$91.45 a barrel. Among financials, Virgin Group was stripped of its preferred bidder status in the battle for NORTHERN ROCK (+7.09%) after rival Olivant threatened to walk away unless it was put on an equal footing with Sir Richard Branson's company, The Times wrote. HSBC (+0.48%) bought The Chinese Bank in Taiwan. Among top risers, RENTOKIL INITIAL (+3.76%) jumped on an Exane upgrade to outperform. In trading updates, CENTRICA (+1.51%) said market conditions have become more challenging in recent months as wholesale gas prices have risen. The energy company added that underlying pretax profit will be in line with expectations, but with a slightly increased effective tax rate. NORTHERN FOODS (+7.78%) said it will buy back up to 5% of its ordinary shares. 3I (-0.30%) said it has made a £2.25/sh recommended cash offer for Inspicio. YULE CATTO (+3.57%) said trading conditions in second half remain unchanged and expects results to meet market expectations.
The CAC 40 (+0.26%) bounced back in the black to close the session modestly higher, erasing yesterday's heavy losses. Meanwhile Wall Street trades lower after CPI came in higher than expected, fanning inflation fears. At home, SUEZ (+2.01%) led the gainers. GDF (+1.34%) asked the French government for it to be allowed to raise gas prices by 6.1% at the beginning of 2008, Les Echos reported. On the downside, AIR FRANCE-KLM (-0.58%) is bidding €0.35 per Alitalia share, while Air One is offering €0.01 apiece, Reuters reported, citing a source close to the talks. MICHELIN (-0.56%) said the modernisation and reorganisation of production designed to improve the competitiveness of its Spanish plants are expected to amount to some €143 million. China's Laiwu Steel Corp. has decided not to proceed with selling its stake to ARCELOR MITTAL (-0.36%), the South China Morning Post reported. Arcelor had been seeking to buy 38% of Laiwu. In the broader market, UBISOFT (+10.41%) soared its sales target for 2007-08 to more than €840 million vs a previous forecast of €825 million. SocGen downgrades KAUFMAN & BROAD (-4.51%) to sell from buy, cutting the target to €31 from €58. GECINA (-1.11%) is reportedly in talks with Spanish property group Colonial about merging to create Europe's second largest real-estate player.
Xetra-Dax (+0.25%) closed in positive territory tracking Wall Street, which was off earlier lows, after Goldman Sachs raised its debt recommendation on Citigroup to 'outperform', offsetting higher-than-expected November CPI
data. Of local note, LUFTHANSA (-0.33%) reportedly plans to take a 19% stake in JetBlue, the US budget airline, in a deal worth US$300 million. The move could be a precursor to an eventual takeover, if US laws are changed. In other M&A news, there was unconfirmed talk ALLIANZ (+0.45%) could be interested in Wiener Staedtische Versicherung AG, an Austrian insurance group. Auto data from the German car association VDA showed European new car registrations fell 1% in November to around 1.2 million units. Stock-specific, DAIMLER (-1.02%) agreed to sell property in Berlin to SEB. Without saying where it got the information from, Bild Zeitung said Daimler could make at least €1.2 billion from the sale. In other news pertaining to Daimler, it named former Nokia executive Sari Baldauf and BASF CEO Juergen Hambrecht as members of its supervisory board, replacing as of next month Earl Graves and Peter Magowan. In broker action, Citigroup lifted its target on the car maker to €80 from €72, reiterating buy. Other news: THYSSENKRUPP (+0.73%) saw another fire at a plant in Italy. There were no casualties. Further broker action saw Credit Suisse lift its target on DEUTSCHE TELEKOM (unch).
Solid gains for banking heavyweights BBVA (+1.42%) and SANTANDER (+0.41%) saw the Ibex 35 close higher. Wall Street was trading in the red after stronger-than-expected November CPI data cast doubt on the prospect of further rate cuts. On this side of the pond, data showed euro-zone harmonised CPI rose 3.1% year-over-year in November vs 2.6% in October. Of local note, defensive plays such as utilities were favored: ENAGAS (+2.47%), UNION FENOSA (+0.76%). COLONIAL (unch) said it has not made any agreement to merge with Gecina, but preliminary talks have taken place. This followed press reports that the two groups are in talks about merging to create Europe's second largest real-estate group. Meanwhile, Expansion reports that Colonial is undertaking several property sales in an effort to reduce debt. IBERIA (+1.29%) last night said November load factor rose 1.4pp year-over-year to 79.5%. 3i will in the next few days make an offer for DERMOESTETICA (+5.79%) at €10/sh, according to Negocio's rumour column. In broker moves, ABN Amro upgraded REPSOL (+0.6%) to hold from sell. Property firm Tremon has called off its IPO; the shares were due to list next Wednesday.
Milan ended Friday's session flat-to-higher while Wall Street trades lower following higher-than-expected November CPI data. Back home, ALITALIA (-12.97%) plunged without braking after Reuters reported that Air France-KLM could bid €0.35/sh while Air One could bid €0.01/sh. The airline highlighted that these are only a first reference point and correspond to non-binding offers. According to local press, Chairman Maurizio Prato could resign if there are further delays in the sale. Besides, unions threatened a wildcat strike if government chooses a partner without consulting them. Also on the downside, UNIPOL (-2.6%) fell as managing director Carlo Cimbri reportedly said he expects fiscal 2007 net profits in line with recent estimates. Staying with the sector, MEDIOBANCA's (-1.52%) shareholder pact approved the sale by UNICREDIT (-0.69%) of a 7.37% stake in the bank for €1.2 billion or €15.85/sh to seven investors that include Mediolanum, Sal Oppenheim, Benetton and Fininvest. GENERALI (-0.35%) announced it will keep its governance structure, after board agreed unanimously to do so. FIAT (-1.37%) was in focus as ACEA the European car association said its market share rose to 7.9% from 7.4% over the 11 months. In broker news, UBS cut ITALCEMENTI's (+1.85%) target to €16.4 from €19.1; kept neutral.