From Standard & Poor's European MarketScope
Strong trading continued into the afternoon Tuesday with the European indexes chalking up big gains. The action mirrored Wall Street which traded higher as oil prices fell below US$60 per barrel and a US productivity report showed a better than expected 4.7% rise in the third quarter.
Germany:The Xetra-Dax index ended just above the 5,300 mark on Tuesday. In Frankfurt, Deutsche Bank DB(+0.86%) is taking full control of United Financial Group, the Russian investment bank in which it already has a 40% stake. The terms of the deal were not disclosed. Bayer (BAY )(-0.37%) is making tax deductible provisions of €275 million in fourth quarter for civil antitrust actions pending against it in the US, but said the cartel case may demand further charges. Lanxess's (+0.18%) fourth quarter results will be burdened by a €61 million provision related to Bayer's polymer settlement agreement.
Deutsche Boerse (+1.57%) is looking for a partner for the unprofitable US arm of its Eurex derivative exchange. An international buyout firm is in talks to buy Degussa (-1.24%) completely, Westdeutsche Allgemeine Zeitung reported, without citing sources. Fraport (-0.96%) confirmed its 2005 outlook and said November traffic figures increased against October. Meanwhile, it is no longer seen in the running to buy a stake in Budapest airport. Hypo Real Estate (+0.07%) will replace HVB (-0.28%) in the Top-30 Dax index after the market closes on December 19. Finally, Evotec (+3.49%) has reached a first milestone in its Takeda collaboration for which it is entitled to a payment.
United Kingdom: The FTSE 100 sustained gains in mid-afternoon trading. At home, HBOS (+4.44%) remained the biggest riser after it said it expects fiscal 2005 performance to exceed market expectations. Strong UK retail data for November also provided support, with Next (+2.54%) leading the way, helped also by a positive broker comment. Water group Severn Trent (+1.18%) reported that first half earnings in line with forecasts and the company raised its dividend by 5.2%.
Rank (-1.05%) warned that pretax profit for 2005 will be lower than the previous year as operating costs mount. Pub group Greene King (-0.91%) said progress has been in line with expectations, with first half turnover up 19%. Morgan Crucible (-2.87%) disclosed that fiscal year profit will be in line with consensus. Northgate (-5.68%) unveiled interim figures ahead of market expectations and says the outlook for the year is good. BP (BP )(-0.61%) is to buy a 20% stake in China Aviation Oil as part of a US$44 million rescue of the Singapore-based company. Singapore state investment company, Temasek refused to rule out a bid for P&O (+3.39%). Whittard (+16.78%) surged on a bid approach.
France: The CAC 40 index (+0.43%) closed near a fresh year high, lifted by financials. In Paris, Total (TOT )(-0.50%) fell on oil prices. Credit Agricole (+4.69%) led the index higher. Deutsche Bank said the group's targets, to be unveiled at the investor day on December 15, could trigger a raft of earnings revisions. A Lehman note on French banks boosted top pick SocGen (+1.08%) and BNP Paribas (+1.26%).
Tech stocks also provided focus. STM (STM )(+1.35%) heard that the International Trade Commission has ruled in its favor over a patent dispute with SanDisk of the US. Cap Gemini (+1.33%) and Thomson (+0.38%) were higher. On the research front, Citigroup initiated coverage of LVMH (+1.89%) with a buy rating and €84 target. The broker also upped Saint-Gobain (+0.79%) to buy from hold, lifting its target price to €56. The stock weathered the news well that rating agencies have downgraded its debt following the BPB deal. Alstom (+3.25%) won a €450 million contract for two power plants in Spain. Among the fallers, EADS (-1.83%) hit turbulence after yesterday's strong run, despite news that Philippine Airlines will purchase five extra A320s in addition to the nine previously ordered.
Elsewhere:The AEX (+0.89%) ended the session higher, with 18-5 positive breadth. The top performer was TNT (+6.34%) which announced a €1 billion share buyback program. The company plans to sell its logistics unit in the second half of 2006 and it intends to buy China's Hoau Logistics. Petercam subsequently upgraded the stock to buy from add.
Nordic markets ended Tuesday's session markedly higher. In Scandinavia, Ericsson (+3.73%) was the dish of the day, and Stockholm's main support. The mobile phone giant announced the signing of its largest managed services partnership contract to date, and the largest ever signed in the industry, with 3 in the UK. No financial details were disclosed. Other Swedish gainers included Eniro (+6.25%) and SCA (+1.22%), both up thanks to broker changes.
Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)