A roundup of Tuesday's action on major European exchanges
The FTSE 100 closed sharply higher, tracking solid gains on Wall Street and by European equities, after Warren Buffett unveiled plans to rescue bond insurers, offering to reinsure US$800bn in municipal bonds. Good earnings news from GM, Monsanto and Schering-Plough boosted markets further. Datawise, Germany's ZEW index for February gained unexpectedly, while UK CPI was weaker than expected. WTI was above US$93/bbl. Copper climbed in anticipation of the start of Chinese trade tomorrow after the week-long holiday. In the sector, XSTRATA (+0.37%) has rejected an informal cash and share takeover approach from Brazilian group Vale pitched at just under GBP40/sh, the FT wrote. In M&A news, Pearl's GBP5bn takeover of RESOLUTION (+2.01%) was called into question last night after the FSA effectively imposed a 3-week delay on the deal between the UK's two biggest closed life fund operators, The Times reported. RAB Capital has reportedly bought a further 120,000 shares in NORTHERN ROCK (+8.25%) at GBP0.9619/sh share, taking its stake to 8.13%. BALFOUR BEATTY (+2.87%) said it will acquire GMH's military site in the US for US$350m in cash. In broker moves, Bernstein upgraded AB FOODS (+2.90%) to marketperform, arguing that after three troubled years performance should improve in 2008-09. In updates, 888 (+6.08%) said 4Q gaming revenues rose 55% and has made a strong start to 1Q08.
The CAC 40 (+3.37%) closed substantially higher, with Wall Street also in fine fettle. Warren Buffet said on CNBC that BERKSHIRE HATHAWAY has offered to take over bond insurers' liabilities. AXA (+3.19%) recovered earlier losses and ended comfortably in the black. GM's 4Q numbers beat estimates and the auto giant has also announced a pension and redundancies deal has been reached with the UAW union. Back home, auto stocks outperformed: MICHELIN (+4.71%), RENAULT (+5.63%), PSA (+5.21%). The latter posts FY07 results tomorrow, as do EDF (+4.83%) and ARCELOR MITTAL (+6.36%). With WTI at US$93.41/bbl, TOTAL (+2.97%) added 17.6 index points. Elsewhere, SANOFI (+1.92%) unveiled 4Q net profit up 6.2% to EUR 1.462bn - broadly in line with expectations. Sees FY08 EPS up 7% at constant fx. Airbus reportedly confirmed it won orders for 238 planes in January: EADS (+4.72%). Silvio Berlusconi has said his coalition, if elected in April, will not undo any deal struck between AIR FRANCE-KLM (+2.82%) and Alitalia. Among broker changes, UBS upgraded SOCGEN (+3.45%) to buy from neutral. In the wider market, KLEPIERRE (+7.46%) posted FY07 net income of EUR 197.7m, up 20.2% y/y, proposing a dividend of EUR 1.25, up 17.2% y/y. Said 2008 outlook 'remains positive'. VALEO (+7.77%) reports 4Q earnings after the close: a Bloomberg consensus looks for 4Q sales of EUR 26.5m, down 56%.
Xetra-Dax (+3.33%) closed with strong gains as stocks were rallying across the pond, sparked by Wall Street legend Warren Buffett's offer to bail out bond insurers. DAIMLER (+5.27%) closed firmly higher after rumours of a special dividend, although the company responded by saying that any excess liquidity would be used to buy back shares. ALLIANZ (+1.92%) bounced back from intra-day lows, having been under pressure following reports that auditors are forcing US insurer AIG to disclose market consistent valuation of all structured products. Landsbanki Kepler noted that there was a risk European auditors could apply similar rules to European companies and that this could lead to profit warnings. Meanwhile, troubled IKB (+12.15%) jumped on reports that government owned KfW was coming to the rescue. With a flurry of corporate results out today, BILFINGER (+10.62%) reported a higher-than-expected 2007 net profit of EUR 134m. RHEINMETALL (+4.28%) disclosed 2007 EBIT of EUR 270m, up 26% y/y. GILDEMEISTER (+2.67%) tabled a 85% rise in 2007 net profit to EUR 50.1m. QIAGEN's (+2.04%) 4Q net earnings slipped 23% to US$15m, but sales rose 67% to US$210.2m. PFEIFFER VACCUM (+4.90%) reported a 17.6% rise in 2007 core profit to EUR 52.8m. LEONI (+4.43%) saw its 2008 EBIT rise to about EUR 140m after reporting 2007 core earnings of EUR 129.6m.
Spanish shares ended with strong gains on Tuesday, with Wall Street also in upbeat mood. US shares gain on good results from GM and news that Warren Buffett's Berkshire Hathaway offered to take over liabilities for struggling monoline insurers. In Europe, the German ZEW survey of investor sentiment rose to -39.5 vs -41.6 in January. Locally, the FT writes that Spanish banks are increasingly reliant on the ECB for funding. Meanwhile, Chairman Emilio Botin has told SANTANDER's (+3.76%) directors that he wants the bank's share price to rise by 40% to EUR 16 this year, according to Cinco Dias. Away from banks, INDITEX (+6.13%) said it opened a total of 560 new stores in 2007 and plans to enter South Korea, Ukraine, Egypt and Montenegro in 2008. The Public Service Commission has asked a New York judge to delay IBERDROLA's (+2.35%) takeover of Energy East until possible interest in the utility from EDF and ACS (+3.45%) is clarified, according to the Spanish press. IBERDROLA RENOVABLES (+0.87%) is to acquire 1,600 MW of wind projects in Romania. FCC (+3.1%) confirmed that its Austrian unit Alpine will build the new HQ of German insurer Aachen Muenchener, in a contract worth EUR 100m.
Nordic bourses rallied in late trade and finished higher amid soaring indices on Wall Street where stocks got a boost as Warren Buffett said Berkshire Hathaway will offer to take over liabilities for struggling bond insurers. Of local note, NOKIA (+4.26%) and Google have signed a deal where Google's search engine will be integrated into a range of Nokia's phones. In earnings, RENEWABLE ENERGY (+12.73%) delivered 4Q topping expectations. However S&P Eq Res downgraded the stock to buy reflecting its more cautious approach. SAMPO's (+6.06%) 4Q combined ratio came in at 89.8% vs 90% forecast. Sampo said it will continue to invest excess capital in Nordea. ELISA (+6.97%) released 4Q earnings short of forecasts with EBITDA at EUR 126m vs EUR 129m. On the upside, however, proposed dividend of EUR 1.80/sh vs EUR 1.33/sh expected. TELE2 (-4.12%) remained a drag on the OMXS30 as it delivered weaker-than-forecast 4Q earnings with EBITDA at SEK1.56bn vs SEK1.70bn seen in a Reuters poll, corresponding to an EBITDA margin at 15% vs 16% forecast. Elsewhere, VW raised its voting stake to 38% in SCANIA (+4.72%), now controlling 55% of Scania's votes together with MAN. CARLSBERG (+2.74%) is to test the debt markets by seeking to syndicate the GBP2.57bn of loans taken out to finance the GBP10bn-plus bid for Scottish & Newcastle, The Times reported.