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European Indexes Pare Losses

A roundup of Thursday's action on major European exchanges


The FTSE 100 closed lower paring earlier losses after the BoE cut interest rates by 25bps to 5% citing tightening credit conditions and deteriorating outlook for global growth. The bank said inflation would rise further this year. ECB kept rates on hold at 4%. GBP = US$1.9741. Wall Street traded higher on a rally in tech shares. At home, banking and mining stocks were weak. However, WTI at US$110.34/bbl kept energy shares fired up: BP (+0.92%). BHP BILLITON (-2.11%) said it was not aware of a proposed acquisition by China of a substantial stake. Further in M&A talk, BRITISH ENERGY (+4.99%) jumped on talk of a GBP8/sh bid from CENTRICA (+1.04%) on hopes of a bidding war. Morning papers reported RWE had made all-cash offer for British Energy at GBP7/sh. CVC and Blackstone have submitted a joint proposal to acquire 29.9% of MITCHELLS & BUTLERS (+5.57%), according to The Times. In earnings, DSG (-7.69%) plunged after warning that FY PTP will be 13% lower than previous guidance. THOMAS COOK (-2.69%) said it will meet current expectations for FY. HAYS (+1.40%) reported a 17% increase in 3Q LFL and said growth in UK has slowed but is good. ENODIS (+51.82%) rallied on news it had received an indicative cash offer from The Manitowoc Company at GBP2.60/sh.


The CAC 40 (-0.32%) closed the session in the red but off lows as Wall Street trades higher amid upbeat 1Q08 guidance for Wal-Mart and Intel. At home, retail stocks fell after Kingfisher said the UK market will be 'difficult' and DSG International, the UK consumer electronics retailer, cut its earnings forecast. CARREFOUR (-3.06%) fell as well as luxury goods stocks PPR (-2.63%) and LVMH (-2.14%). LAGARDERE (-1.99%) bought UK's web site for an undisclosed amount. DANONE (-0.81%) may receive between EUR 800m and EUR 1.7bn when it exits ventures with China's Hangzhou Wahaha Group, Challenges magazine reported. ARCELOR MITTAL (-0.48%) has completed the acquisition of three coal mines and associated assets in Russia for a total of US$718m. ACCOR (+0.17%) has signed a partnership agreement with Brazil's Walter Torre to develop a network of 20 Formule 1 and Ibis hotels in Brazil by 2010 for a total investment of about EUR 200m. Two Russian regions are seeking as much as US$170bn in damages from TOTAL (+0.21%) after it didn't exploit their oil fields under contracts signed in 1993, Le Figaro reported. AREVA (+0.44) wins contracts in Japan worth a total of EUR 2bn. Albert Frere's investment firm, CNP, bought EUR 34.7m of shares in M6 (+0.48%), raising its stake to nearly 7%, according to regulatory filings.


At the closing bell, Xetra-Dax (-0.24%) managed to climb from intraday lows but remained below breakeven, while Wall Street was making gains. In Europe, central bank rate decisions took centre stage today, with the BoE cutting its key borrowing rate by 25bps to 5.00% and the ECB once again staying the course at 4.00%. Russian news agency Interfax reported, quoting sources, that Russia's Sberbank considered acquiring the investment branch of ALLIANZ's (+0.62%) Dresdner Bank unit. RWE (-2.84%) made an indicative all-cash offer of close to GBP7.00 per share a few weeks ago for British Energy in a potential deal that values the nuclear operator at about GBP11bn, the FT reported. RWE declined to comment on the matter. In other news: FAZ reported that Warren Buffett's Berkshire Hathaway bought 1m of MUNICH RE's (+3.31%) shares. Swedish authorities said that MAN (+1.7%) was not required to launch a bid for Scania. Boerse-Online reported that POSTBANK (+0.16%) was interested in MLP (+2.36%). Trading ex dividend, DAIMLER (-3.23%) was lower after its AGM okayed the payment proposal of EUR 2.00 per share and approved a share buyback. ESCADA (-22.3%) tumbled on a profit warning. Key on the broker front, ABN Amro downgraded AIR BERLIN (-6.7%) to sell, Cr. Suisse cut HANOVER RE (-3.01%) to underperform, while BMW (+0.08%) was upgraded to buy at Natixis.


The SLI (-1.14%) fell for a third session in a row as crude remained around US$109/bbl. This especially weighed on chemical stocks CIBA (-2.96%) and CLARIANT (-4.25%). Meanwhile, dental implant makers NOBEL BIOCARE (-5.45%) and STRAUMANN (-5.00%) fell on the back of downgrades at Goldman Sachs. The broker put the latter on its conviction sell list. There was also a downgrade by Exane BNP Paribas to underperform on the same stock. LOGITECH (-2.42%) fell sharply, enhancing the shoddy ytd performance of the stock, down some 40%. ROCHE (-0.99%) was eyed as Genentech, the majority of which it owns, reports after the US close today. Ahead of the results, Helvea said not to expect any major surprises. Separately, the FDA is reviewing a possible central nervous disorder with use of Roche's Cellcept and NOVARTIS's (-2.82%) Myfortic. Earlier today, MF Global downgraded Novartis to sell and slashed its target to CHF40 on the back of the recent Alcon buy. In the broader market, Heineken announced its intention to buy EICHHOF's (+10.8%) beverage division in Switzerland. EDIPRESSE (+1.79%) reported a 7.3% rise in 2007 net profit to CHF32.28m on sales down 8.1% y/y.


Spanish shares ended in the red on Thursday, while Wall Street trades higher at European market close lifted by positive quarterly guidances from Wal-Mart and Intel. The BoE cut rates by 25 bps, as expected. Of local note, IBERDROLA RENOVABLES (+2.63%) was one of a handful of Ibex gainers after reporting 1Q production figures that brokers say are in line with forecasts. Credit Suisse thinks the data could increase investor confidence. IBERDROLA (+1.28%) said total electricity production rose 43.2% y/y in 1Q08. Meanwhile, the Spanish government wants a solid nucleus of shareholders in any merged GAS NATURAL (+0.7%)-Iberdrola entity so as to guard against foreign bidders, Expansion reported. Elsewhere, COLONIAL (-4.26%) said its creditor banks may allow it to renegotiate the conditions of a EUR 1.55bn debt packet linked to the acquisition of a stake in FCC (-3.19%). FCC was in further focus as it says its orderbook rose 3.2% at end of Feb, with declines in services and real estate. VOCENTO (-0.51%) could be on the point of selling its 13% stake in TELECINCO (-2.51%), La Gaceta reported. In broker moves, JP Morgan cut target prices for BANESTO (-2.05%) and TELEFONICA (-0.31%).

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