From Standard & Poor's European MarketScope
After lackluster morning trading, the major European indexes climbed Thursday afternoon, with Germany and France ending in the black. Wall Street edged higher after Texas Instruments (TXN ) lifted its fourth-quarter guidance. Meanwhile, West Texas Intermediate crude oil traded at $59.95 a barrel, boosting oil stocks.
Germany: The Xetra-Dax index ended Thursday's session with gains as German industry output rose a seasonally adjusted 1.1% month-to-month in October, better than expected. On the corporate news front, Karstadt's (+13.25%) planned divestments are expected to be concluded earlier than scheduled, with net debt predicted to be reduced to less than €2.8 billion by yearend. Also, the company's statements on its latest sales developments were positive.
Bayer (BAY )(+0.88%) said it will spend €1.9 billion on R&D this year. Upbeat, the drug giant predicted peak sales of more than €1 billion for its lung cancer drug Nexavar, €1 billion-plus for blood drug Kogenate and sales potential of more than €500 million for Trasylol.
Siemens' (SI )(+0.6%) earnings may be hundreds of millions euros lower than expected because of a revision to assumptions about returns on its pension fund investments, Handelsblatt reported. Lufthansa (+2.38%) is buying 12 short-haul Bombardier CRJ-900s to boost the capacity and cost efficiency of its regional fleet. The Hungarian government said the UK's BAA has won the tender for Budapest Airport, with an offer of £1.22 billion, beating Hochtief (-1.88%) and Fraport (-0.76%). Morphosys (+7.59%) has lifted its revenue and earnings forecast for 2005. On the broker front, JP Morgan downgraded Munich Re (-0.43%) to neutral, saying 2006 renewals in Europe could be merely flat.
Karstadt's (+8.29%) planned divestments are expected to be concluded earlier than scheduled, with net debt predicted to be reduced to less than €2.8 billion by year-end. Also, the company's statements on its latest sales developments were positive. The Hungarian government said the UK's BAA has won the tender for Budapest Airport, with an offer of £1.22 billion, beating Hochtief (-1.55%) and Fraport (-0.36%). Morphosys (+5.54%) has lifted its revenue and earnings forecast for 2005. On the broker front, JP Morgan downgraded Munich Re (-1.37%) to neutral, saying 2006 renewals in Europe could be merely flat.
France: The CAC 40 (+0.20%) closed above breakeven, with an equal breadth of 20-20. Total (TOT )(+1.1%) was the French index's main gainer. Sanofi (SNY )(+0.92%) also rallied in late trade on news that the combination of breast cancer drug Taxotere-Herceptin improves the chances of disease-free survival.
Banks and financials pared earlier losses but remained the main laggards. Axa (AXA )(-0.82%) was in the red after JP Morgan downgraded the stock to neutral following its recent performance. BNP-Paribas (-0.59%), SocGen (-0.39%), and Credit Agricole (-0.63%) consolidated recent gains. Oberthur (+0.9%) benefited as brokers gave mixed reviews to the proposed merger between Axalto (-2.36%) and Gemplus (+5.77%). Strong earnings reports lifted Remy Cointreau (+5.97%), NRJ (+2.29%) and Pierre & Vacances (+2.42%).
Air France (AKH )(+3.55%) reached a fresh year high on yesterday's solid November traffic figures. Suitors were circling Pernod Ricard (+0.21%) ahead of the sale of Dunkin' Donuts. Alcatel (ALA )(+1.05%) edged higher on read-across from U.S. peer TI, and ahead of Intel's (INTC ) mid-quarter update tonight. Ubi Soft (-2.18%) was in focus ahead of first half results due Thursday after the close.
United Kingdom: The FTSE 100 index narrowed losses in afternoon trading to close flat benefiting from a late boost from rebounding oil stocks. Banks retreated after an uninspiring update from the Royal Bank of Scotland (-1.11%). The bank said it expects 2005 numbers to be in line with market expectations, but investors were disappointed that no buyback was included. BT (BT ) (unch.) announced licensing agreements with Paramount, BBC Worldwide and Warner Music, to provide content for its new pay-per-view broadband TV service. PartyGaming (+16.45%) soared after it said fiscal year revenues and EBITDA should beat consensus expectations.
Pennon (-0.35%) reported first half results ahead of forecasts and is planning a £200 million capital return. BAA (-0.31%) presented the top bid for Budapest Airport. First Choice Holidays (-1.57%) said it is confident about the coming year as it reported a record fiscal year pretax profit of £114.0 million, +16%. SkyePharma (+0.47%) has received a number of expressions of interest, for both individual assets as well as potential cash offers for the company as a whole.
Virgin Mobile (+2.75%) rejected ntl's bid as insufficient. On the broker front, Tate & Lyle (-2.07%) fell after an underweight recommendation from Morgan Stanley. British Airways (BAB )(+1.05%) shrugged off a downgrade from Merrill Lynch after a court ruled against DVT victims seeking compensation.
Elsewhere: A relatively uneventful Nordic session ended much as it had started on Thursday, with Danish and Norwegian markets in the red and Sweden and Finland's OMXs in the black. Both Copenhagen and Oslo's bourses were held under by downward pressure on oil stocks amid a broad sell-off: Moeller Maersk (-2.01%); Statoil (-1.26%); Norsk Hydro (-1.02%).
On a positive note, Stockholm was kept above ground by several upbeat stocks. Hennes & Mauritz (+3.15%) repaired yesterday's damage, when Dresdner KW recommended investors switch into Inditex from the Swedish clothes retailer. In Helsinki, a strong performance from index heavyweight Nokia (+1.72%) kept the OMX above water throughout the session. The mobile phone giant was fuelled by higher target prices from UBS and Merrill Lynch.
The SMI (-0.38%) ended Thursday's session in the red, but off intra-day lows. Profit taking was the name of the game in Switzerland among insurers. Swiss Life (-1.77%), Swiss Re (-1.79%), ZFS (-1.19%) all took a knock. Swiss Re was also in further focus as it launched a CHF1 billion convertible bond to help fund the purchase of GE Insurance Solutions.
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)