European Indexes Fall

After a mixed morning, markets dipped after weakness on Wall Street

From Standard & Poor's European MarketScope

After stronger trading Wednesday morning, the major European indexes closed lower amid weak action in New York. US stocks edged lower on fears over inflation and the specter of higher interest rates. US oil inventories showed a 2.72 million barrel build in crude stocks, vs. forecasts for a 2 million draw so the price of crude fell.

Germany: The Xetra-Dax index closed lower. In Frankfurt, Munich Re (-2.99%) fell as HVB (-0.75%) cut its stake in the reinsurer to 4.9% from 7.89%, with Lehman Brothers placing 6.9 million shares, representing some 3% of Munich Re's share capital. BMW (-1.34%) group sales rose 10.8%, meaning the car maker is on-track to achieve its forecast for unit sales to rise at a high-single-digit rate this year. DaimlerChrysler (DCX )(-0.88%) will sell its engine-building unit MTU Friedrichshafen to Sweden's EQT Partners for between €1.5 billion and €1.7 billion, Handelsblatt said. The newspaper reckoned the deal will be closed next week.

Siemens (SI )(+0.96%) achieved a 15% rise in revenues in China and met its target of growing at double the rate of the country's GDP, the FT reported. Karstadt (-0.95%) may get a €300 million loan to secure liquidity for next year, and will pay between 14% and 15% interest on it, FTD said. At its annual earnings conference today, Porsche (-5.5%) said unit sales are likely to increase in the 2005/06 fiscal year to end-July, but sales of the Cayenne SUV model will slide markedly. ProSiebenSat1 (+2.04%) moved up on a Le Monde report that TF1 is eyeing the group again.

United Kingdom: The FTSE 100 index closed lower as a fall in crude prices hit the UK's heavyweight oil stocks: Royal Dutch Shell (RDS )(-1.36%), BP (BP )(-1.97%). Elsewhere, Vodafone (VOD )(+2.58%) jumped after reporting 57,000 net new adds for November in Japan. Bradford & Bingley (+1.71%) gained on talk Santander could be mulling a bid. Santander declined to comment. HBOS (+1.71%) extended yesterday's advance and Northern Rock (+1.6%) was lifted by a Lehman Brothers upgrade.

On the downside, Standard Chartered (-3.11%) dropped as it said second half income would be in line with first half. Barclays (BCS )(-0.17%) slipped on news that the head of its UK banking has stepped down. Russian copper group Kazakhmys (+1.1%) is expected to be confirmed as a new FTSE 100 entrant with Persimmon (+0.09%), replacing Whitbread (+0.11%) and William Hill (+0.57%). Carillion (-5.06%) agreed to buy Mowlem (unch.) for £290 million, in a cash and share deal. easyJet (+1.92%) reported an 8.3% rise passenger numbers in November and reiterated its target of high single digit percentage profit growth in the calendar year.

France:The CAC 40 index (-0.43%) closed the day in negative territory. In Paris, Total (TOT )(-0.82%) fell with oil prices. Automotive stocks Peugeot (-1.92%) and Michelin (-1.85%) also put pressure on the index. Michelin fell following a CSFB note reiterating its underweight stance, on fears of a tough trading environment and further negative news to come. Gemplus (-0.87%) and Axalto (+5.59%) said they were merging to become the market leader on smart cards. Analysts commented the terms of the deal were less favorable to Gemplus shareholders. They added Oberthur (unch) might benefit from telecom operators redirecting their orders to smaller players to avoid a too large exposure to the new group.

Air France (AKH )(+1.26%) and Neopost (-0.24%) made fresh year highs on strong November traffic figures and third quarter results respectively. Hermes' (+2.69%) controlling family denied they had received an approach for their stake. Finally, NRJ (-1.32%) reports fiscal year results Wednesday night. Operating profit estimates range between €112 and €122 million, while analysts will look for clarification of the CEO's sudden exit last Monday. Remy Cointreau (+3.58%) reports first half results Thursday before the open.

Elsewhere: The AEX ended a predominantly positive session in the red. ABN Amro (-0.69%) slipped further amid profit-taking after yesterday's rally. Philips' (PHG )(-0.36%) initially strong session declined in late trade following news it has been fined €16 million by the French competition regulator for price fixing. On positive note, TNT (+1.84%) led the AEX gainers for a second session as brokers rushed to raise targets and estimates following yesterday's Logistics sale and buyback announcement.

In the Nordics, Wednesday's session ended with positive performances across the board, and stellar displays from Helsinki and Oslo. Helsinki's OMX closed around the 8,050 mark: its highest level in almost four years. In Oslo, an unexpected build in crude oil stocks, and a subsequent fall in WTI below US$60.00/bbl, came too late to affect local oil stocks. Statoil (+1.92%) and Norsk Hydro (+1.31%) ended in fine fettle as oil prices hovered around US$60.50/bbl at the time of the Norwegian close. Back in Finland, Nokia (NOK )(+2.08%) added over 55 points to the index after JP Morgan raised estimates following the mobile giant's upbeat CMD. Swedish peer Ericsson (+0.36%) was also in the black as Citigroup upped estimates on the back of the group's seven-year deal with 3 in the UK.

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)

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