From Standard & Poor's European MarketScope
European indexes had a muted day Tuesday. U.S. retail sales data fell less than expected, boosting some stocks, while M&A activity and rumors moved the European indexes. Luxury stocks Bulgari and Burberry fell and investors remained cautious ahead of Fed nominee Ben Bernanke's confirmation hearing.
Germany: The Xetra-Dax index ended Tuesday's session higher. In Frankfurt, the November reading of the ZEW economic sentiment indicator unexpectedly showed a decline.
On the corporate news front, Altana (-6.74%) took a knock after it said it has withdrawn an EU MAA application for its key drug Daxas. Commerzbank (+1.79%) looked set to take control of Eurohypo, the property lender in which it already has a 31.8% stake and currently jointly owns with Allianz's (AZ )(+0.22%) Dresdner Bank and Deutsche Bank (DB )(+0.37%). In the event of success, Commerzbank would hold more than 98% of Eurohypo. Hypo Real Estate (+0.65%) seemed to be unwilling to make a counterbid.
The EC has opened an investigation into the proposed purchase of Austrian mobile operator Tele.ring by Deutsche Telekom's (DT )(-1.17%) Austrian subsidiary. Competition problems are a possibility if Tele.ring vanishes as a rival to the four remaining mobile phone companies in Austria. On the broker front, Infineon (-1.55%) was subject to a UBS downgrade to reduce. VW (-0.93%) was cut to reduce by DrKW, with the broker skeptical about whether the auto giant can reach its 2008 profit target. Looking ahead, RWE (+1.97%) announces nine months figures Wednesday. A consensus view puts revenues at €29.24 billion, the operating result at €4.65 billion and net income at €1.75 billion.
United Kingdom: The FTSE 100 closed in the red with Vodafone weighing down the index. In London, Vodafone (VOD )(-10.86%) plunged on disappointment over Japanese margins, despite first half revenues coming in ahead of forecasts and a higher share buyback. Diageo (-3.07%) retreated after warning that its rate of growth in the first half may be below the guidance for its fiscal year. Luxury group Burberry (-0.13%) unveiled in-line first half figures and said it is cautiously optimistic ahead of the key yearend period.
Media group Emap (+0.81%) said it is on track to meet fiscal year expectations after publishing first half results in line with analysts' forecasts. Northern Foods (+7.6%) jumped as it returned to profit, although the group warned that trading remains difficult. Pilkington (+2.51%) rallied on hopes of an improved offer from Nippon Sheet Glass. The Times said NSG could raise its offer to £1.62 a share. Oil stocks provided a fillip as WTI firmed to above US $58 barrel at the London close: BP (+0.96%); Royal Dutch Shell (+1.26%).
France: The CAC 40 index (-0.12%) slid at the close. The stronger dollar lifted greenback-earner L'Oreal (+0.9%), despite the cosmetics group being downgraded to neutral by Exane BNP-P. Alcatel (ALA )(+3.98%) rallied after winning a €2.18 billion five-year deal with Australia's Telstra. France Telecom (FTE )(-2.99%) remained today's biggest lagger on read-across from UK peer Vodafone. EADS (-1.04%) hit turbulence on news that rival Boeing is improving its 747 model to compete with Airbus's A380.
The reporting season failed to inspire investors. Euronext (+0.05%) posted in-line third-quarter revenues up 14.1%, noting good activity on the cash markets. Soitec (+0.65%) also reported interim sales in line with estimates. Unilog (unch.) unveiled nine months sales up 18.6%, driven by growth in Germany and France. Meanwhile, the financial sector remained in focus as SocGen (-0.45%), Credit Agricole (-0.84%), Dexia (+0.43%) release third-quarter results later this week.
Elsewhere: Scandinavian markets fell further in late trading to close in negative terrain across the board. Petroleum Geo-Services (+13.33%) soared after saying it may split into two separate entities in order to increase market valuations. Still on the M&A front, Copenhagen's TDC (+1.42%) was boosted by an article in the Wall Street Journal which said the group is only days away from receiving a takeover offer.
Prepared by Zaida Espana, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)