From Standard & Poor's European MarketScope
European indexes fell in afternoon trading but still closed in the black after strong gains Thursday morning. Meanwhile, U.S. markets traded flat to higher following encouraging initial jobless claims data and advertising data that sent Google above the $400 mark.
United Kingdom: The FTSE (+0.55%) pared gains in late trading but still closed broadly higher on high crude and copper prices. BP (BP )(+1.19%) and Royal Dutch Shell (RDS )(+1.02%) rallied as energy prices rebounded. BHP Billiton (+2.57%), Xstrata (+3.82%) and Antofagasta (+2.61%) outperformed. BPB (+3.71%) jumped after agreeing to an improved offer from Saint Gobain at £7.75 per share. On the reporting front, GUS (+3.29%) unveiled first half figures in line with estimates and said the demerger of Burberry (-0.38%) will be carried out in December by way of a dividend in kind.
Man Group's (+4.76%) interim numbers beat estimates. The company will place the equivalent of 2.5% of its issued capital in new shares in a bid to raise £125 million net of expenses to fund the Refco acquisition. Reed Elsevier (-5.34%) plunged as the market focused on disappointing sales prospects for its Education unit. National Grid (+0.75%) revealed first half earnings ahead of estimates and said it is targeting a 7% increase in fiscal year dividend. Virgin Mobile (+4.75%) said it is on track to meet previous guidance, after reporting a 7% rise in first half revenues.
Germany: The Xetra Dax index ended higher, with 21-9 positive breadth, as Wall Street provided a good backdrop to an already enthusiastic local market. Germany had its own stars: Commerzbank (+3.00%) was the runaway best performer in the Dax after securing €1.35 billion fresh funds this morning via accelerated bookbuilding, helping it fund its €4.56 billion takeover of Eurohypo. This also boosted Linde (+2.30%), where Commerzbank controls 10% of capital, as the bank no longer needs to sell its stake to secure needed funds, as thought earlier this week.
In earnings results, Epcos (+3.41%) reported a fiscal fourth quarter loss before interest and tax (LBIT) of €62 million, in line with guidance delivered on October 19. The group anticipated a return to sales growth and positive EBIT as well as a positive net cash flow in fiscal 2006. Hochtief's (+1.73%) third quarter beat forecasts. Among fallers, VW (-0.29%) felt the pressure after yesterday's profit warning from Renault. The German carmaker was also lower as WSJ Europe reported on a criminal probe at the company. Metro (-0.99%) remained lower after reducing the price range for the IPO of Praktiker. TUI (-1.34%) was another faller as it announced it would raise more debt to finance its CP Ships deal.
France:The CAC 40 index (+0.23%) fell prey to profit-takers after a raft of blue chips reported in-line figures. But it still closed with a 24-13 positive breadth. In Paris, index heavyweight Total (TOT )(+0.99%) was underpinned by WTI trading around $57.50/bbl. Saint Gobain (+3.06%) rallied after the UK's BPB agreed to an improved bid at £7.75. Alstom (+7.44%) shot up as it raised its operating margin forecast to at least 5% for fiscal 2005/06. Vivendi (V )(+0.83) reassured investors by maintaining its fiscal 2006 EBITA margin at SFR and posting in-line third quarter figures. The index's worst performer was Renault (-4.61%), which received a round of downgrades after further cutting its fiscal year operating margin to 3% vs. 4%.
Strong results in financials prompted investors to cash in: SocGen (-0.65%) beat expectations with third quarter net profit up 40% to €1.13 billion; Credit Agricole (-2.14%) also posted nine months results ahead of consensus; Dexia (+0.05%) reported third quarter gross operating profit up 24.4%. Meanwhile, Technip (+5.47%) increased its fiscal year revenue target to €5.40 billion. Sodexho (-4.94%) suffered losses after reporting in-line fiscal year numbers but a disappointing outlook.
Elsewhere: Dutch stocks maintained gains in late trading. Oil-related stocks were among the top gainers today, ASML (-1.09%) was one of only a handful of large caps in the red, on the back of weak fourth quarter 2005 results from US peer Applied Materials. On a positive note, VNU (+2.47%) gained as it decided not to go ahead with the planned IMS acquisition.
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)