From Standard & Poor's European MarketScope
European indexes closed higher as energy stocks provided support. Meanwhile, Wall Street was trading mixed ahead of the Federal Reserve's decision on interest rates at 19:15 GMT. A 25bp hike is widely expected but the focus was on signals that policy going forward is no longer accommodative.
Germany: The Xetra-Dax index closed higher as the ZEW index jumped to 61.6 in December from 38.7 in November. The economic expectations indicator was seen coming in at 39.3. On the corporate front, Siemens (SI )(+2.02%) was the top Dax gainer after Deutsche Bank upgraded the stock to buy from hold and lifted the target price to €85 from €65. Deutsche Telekom (DT )(+0.14%) approved plans to cut 32,000 jobs in Germany by the end of 2008, with the supervisory board outvoting the employee representatives.
Bayer's (BAY )(-0.44%) once-daily 59-7939 saw good results in a Phase II study, with effectiveness shown compared to enoxaparin, the current standard treatment for the prevention of venous thromboembolism in patients undergoing hip replacement surgery. Continental (+0.76%) reportedly may end tire production in Charlotte, North Carolina, if workers fail to agree to a 35% cut in personnel costs.
TUI (-1.04%) took a knock as Goldman Sachs trimmed its EPS estimates on the group following the purchase of CP Ships. Epcos (+1.61%) is selling its Tantalum Capacitor business to Kemet for €86.5 million. Fraport's (+0.24%) November traffic rose 2.5% year-over-year to 3.9 million passengers.
United Kingdom:The FTSE 100 index closed a touch higher. In London, Royal Dutch Shell (RDS )(+0.86%) announced an increased investment program for 2006 of US$19 billion. Vodafone (VOD )(-2.73%) won the race to buy Turkish mobile operator Telsim for US$4.55 billion.
Cadbury Schweppes (-1.45%) melted after announcing that margins will increase year-over-year but not enough to be within goal range. Johnston Press (-4.19%) slumped after reporting a 6.7% like-for-like drop in advertising revenues. First Group (+3.80%) rallied after winning two rail franchises worth over £1 billion in revenue per annum. Go-Ahead (-1.00%) went back after it said cost pressures continue to have an impact on the bus division, particularly outside London.
Bodycote (-4.70%) saw fiscal year numbers in line with consensus forecasts, with sales growth year to date at 9%. On the broker front, PartyGaming (-5.54%) plunged after Lehman Brothers said the shares are overbought, while Rentokil (-2.25%) was hit on reports that Morgan Stanley placed 14 million shares at £1.635.
France:The CAC 40 index (+0.43%) closed higher. In Paris, heavyweight Total (TOT )(+1.82%) rallied on the high price of crude. Media and auto stocks were also in focus. CSFB upgraded the auto sector to overweight from neutral, while Renault (+1.42%) was fuelled by a target hike.
Michelin (+0.83%) weathered news that rubber prices might reach a 21-year high as violence threatened production in Thailand. In other news, Vivendi (V )(+1.04%) was strong as an agreement on pay-TV merger talks between Canal+ and TPS could be reached in eight days, according to Les Echos. M6 (-0.17%) and TF1 (-0.13%) ran into the profit-takers; while Bouygues (-1.33%) was eyed ahead of nine months results, due out tomorrow.
Havas (-5.64%) took a knock after Bollore said fiscal 2005 operating margin will be close to 10%, below last year's 11.5%. Meanwhile, Elior (-2.86%) disappointed on fiscal year operating margin guidance of growth between 0-10bp. Analysts remained cautious on Club Med (-0.26%) despite a return to profit, with fiscal 2005 net income totaling €4 million vs. a €44 million loss in fiscal 2004.
Elsewhere:Nordic markets ended mixed. Oslo was the top-performer, fuelled by strong local oil stocks and a stellar performance from Smedvig (+14.95%). The latter surged after Noble agreed to buy a 29% stake in the offshore oil driller for NOK4.6 billion from Chairman Peter Smedvig and family. Meanwhile, oil groups Statoil (+1.59%) and Norsk Hydro (+1.10%) buoyed the OSE Benchmark. In Stockholm, the OMX ended slightly lower, weighed down by Ericsson (-0.37%). The telecoms group declined after the Swedish National Economic Crimes Bureau added to the indictment made earlier this year against some of the mobile giant's employees for tax evasion.
Spain's Ibex-35 index ended barely changed. Gamesa (+2.23%) remained the stand-out performer, propelled higher by news the Spanish government has said it will not cut subsidies to the wind power sector, according to El Mundo. Inditex (-0.50%) posted stronger-than-expected nine months results. The Zara owner added that current sales are in line with expectations. Meanwhile, Inditex Chairman Amancio Ortega has taken a 4.95% stake in Banco Pastor (+0.54%).
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)