A roundup of Monday's action on major European stock markets
FTSE 100 closed in the red as Wall Street traded lower. Crude was at US$40.98, keeping energy stocks in the red. Volumes remain thin in the run up to Christmas. In the news BARCLAYS (-1.89%) is said to be carrying out a review of its private equity business that could lead to a management buyout of the unit and the accelerated sale of about half its investments, The Times wrote. Retailers slumped amid fear of dismal Christmas sales. MARKS & SPENCER (-2.1%), HOME RETAIL (-12.37%), NEXT (-0.72%) retreated. BSKYB (-3.16%) is said to have balked at the potential price of Tiscali's UK arm and a deal is reportedly off.
ELECTROCOMPONENTS (-2.24%) plunged as demand weakened further and sales fall by around 5%. Irish banks were in focus after they agreed bailout terms with the government. BANK OF IRELAND (+31.82%) said the Irish govt will subscribe EUR 2bn of 8% core tier 1 pref shares, ANGLO IRISH BANK (+9.09%) will receive EUR 1.5bn from the Irish government and ALLIED IRISH BANK (+1.96%) will obtain EUR 2bn. TAYLOR WIMPEY (+13.73%) should update the market this week on the progress of its negotiations with lenders.
The CAC 40 (-2.31%) closed firmly lower, with Wall Street also unfestively negative. Autos were back in focus today as Toyota slashed its outlook, impacting on RENAULT (-1.45%) and alliance partner Nissan. Meanwhile, MICHELIN (-3.13%) unveiled it has 'cut back significantly' on operations, highlighting exceptional costs due to under-utilisation will be EUR 150m in 4Q. Staying in the sector, PSA (-3.9%) Chairman Christian Streiff will temporarily take on a role as Exec VP of its Citroen marque after the brand's MD Gilles Michel was appointed head of French sovereign wealth fund FSI.
In other news, BNP PARIBAS (-2.34%) CEO Baudouin Prot has told Les Echos a failure to secure the Fortis deal 'would be a missed opportunity, but without a negative impact'. He added BNP will not need a capital increase in the event a deal cannot be struck. Fellow financial blue chip DEXIA (-8.3%) was hit by a downgrade to hold from by at WestLB. Among utilities, EDF (-1.92%) has won conditional EU regulatory approval for its GBP12.4bn takeover of British Energy. Also in energy news, on Friday nuclear mid-cap AREVA (-5.03%) announced it expects FY08 operating income to be lower than that achieved in FY07. A host of brokers cut target prices on the stock. Finally, GE has shed its 17% stake in THEOLIA (-13.33%), according to an AMF filing.
The Dax (-1.23%) closed lower as Wall Street failed to inspire amid disappointing results from Walgreen and a profit warning from Manpower. Auto stocks weighed in Frankfurt following profit warnings from Bridgestone and Toyota, and as Michelin cut production. VW (-5.91%), DAIMLER (-4.55%), BMW (-3.93%) and CONTINENTAL (-13.86%) all hit the brakes. BMW won't rule out further production cuts and efficiency measures for '09, according to German magazine Auto Motor und Sport. The EC has given Schaeffler the green-light regarding its bid for Continental. Continental's CONC and COND tendered shares jumped on the news.
Elsewhere, INFINEON's (+6.06%) struggling Qimonda unit has received a EUR 325m cash injection from major stakeholders and an unnamed Portuguese bank, which should enable it to operate into next year. Deutsche upgrades Infineon to hold from sell. MUNICH RE (+0.19%) is buying AIG's Hartford Steam Boiler unit for more than US$700m. COMMERZBANK (-3.69%) will have to pay more than expected for the EUR 8.2bn state bail out. The bank will initially pay 9% interest rather than the 8.5% envisioned earlier. Hedge Fund Blacksmith now holds 3.01% of IVG (+7.74%) and may increase this stake to 5-10% in the short term, FAZ reports.
Like Santa's outfit and Rudolph's nose, there was plenty of red in the markets today, sending the S&P 500 and the SLI (-1.78%) firmly lower. Among the Swiss fallers was ADECCO (-3.03%) after a profit warning from US peer Manpower. Pharmas managed to buck the negative trend. There was market speculation that ROCHE (+1.88%) has secured financing for its takeover of Genentech. Meanwhile, NOVARTIS (+0.67%) said the FDA has approved Glivec as the first treatment to reduce risk returning in patients with gastrointestinal stromal tumors. BASILEA (+17.34%) soared on continued M&A speculation but a spokesperson refused to comment on the matter. UBS (-5.32%) slumped following reports that a UBS-run fund invested US$1.4bn with Madoff. ABB (-3.75%) weighed as caution prevailed among cyclical stocks. Brokers such as Merrill Lynch and Deutsche Bank put notes out today on the capital goods sector, and they certainly did not make for joyful reading. They both suggested that 2009 was going to be far from a happy new year for the capital goods sector.
Spanish shares closed in the red as Wall Street traded lower. Newsflow has been light today with Christmas around the corner. WTI is at US$40.98/bbl. Of local note, FERROVIAL (-1.03%) would merge with CINTRA (-7.42%) via a share swap rather than a buyout, Cinco Dias reported. Meanwhile, the Spanish government is considering injecting c.EUR 2bn into the highways sector, in order to offset a court ruling on land use, Expansion wrote. Lukoil has agreed a loan with banks that will allow it to purchase a significant stake in REPSOL (-0.67%), Reuters wrote citing government and industry sources. El Mundo reported that GAS NATURAL (-1.34%) will next year sell most of UNION FENOSA's (-0.45%) LatAm assets in order to help finance the EUR 19bn deal. The Spanish government would not oppose Enel buying ACCIONA's (-0.75%) 25% stake in ENDESA (-2.42%), Expansion reported. Finally, broker action centred on the media sector as Cheuvreux downgraded PRISA (-7.56%) while Caja Madrid reinitiated TELECINCO (-0.77%) with hold and ANTENA 3 (-2.93%) with sell.