From Standard & Poor's European MarketScope
European indexes closed mixed on the last trading day of 2006. The mood has now been set for 2007: M&A is set to remain the driving theme for equities, with the new year predicted to match if not exceed 2006 for sheer volume of deals which in turn should help to propel European indices higher.
France: The CAC 40 index closed the last trading session of the year a shade higher, with upside generated by an early dose of M&A speculation in the utilities sector. Suez (SZE) (+2.56%), GDF (+2.8%) and Veolia (VE) (+8.96% hitting a year high) were given a shot in the arm by a media report that Francois Pinault is preparing to launch a hostile bid for Suez.
The French financier and reference shareholder of Suez has plans to launch a €70 billion takeover bid for the energy group, having received a nod of approval from President Jacques Chirac to proceed with the offer, according to French monthly magazine Capital. GDF was said to be at the head of the queue for the energy assets and Veolia would be interested in the water and environment assets.
This news helped the blue chip index to a new peak. The CAC 40 showed an increase of 17.53% on the year.
UK: The FTSE 100 index lost 0.32% on its last day of trading this year, but closed 2006 with a comfortable 10.7% advance. 2006 was the FTSE's fourth straight year of gains, following a 16.7% advance in 2005, and gains of 7.5% and 13.6% in 2004 and 2003, respectively.
Friday’s session was a non-event as investors were either away on holidays or had closed their books for the year.
Glaxo (GSK)(+0.30%) managed a small gain after a study showed its experimental drug Tykerb to treat late-stage breast cancer has also shown promise in treating early stages of the disease. Vodafone (VOD) (-0.35%) lost some shine after Anil Ambani, the Indian telco tycoon, yesterday entered the race for control of Hutchison Essar.
Peer BT (BT) (-1.63%) also has Indian ambitions: the group received a letter of intent from India's DOT for licenses in national and international long distance services. Energy shares were lower on easing crude prices after Thursday's US inventories. Also, the FT reported that RDS (RDS) (-0.39%) and its two Japanese partners are to be made to share the burden of the huge cost overruns of Sakhalin-2.
The Daily Telegraph reported that Tata Steel's CEO indicated that he may raise its offer for Corus (CGA) (+0.09%). PartyGaming (-0.78%) gave up some of yesterday's gains after confirming acquisitions.
Germany: The Xetra-Dax index (-0.23%) ended the last session of 2006 below breakeven, but up some 22% year-over-year. In Frankfurt, Continental's (+0.11%) CEO ruled out a share buyback, reported Die Welt. According to preliminary figures from Deutsche Boerse (+0.24%), trading on the German stock markets rose 32% this year, driven by an increase in turnover for stocks, warrants and exchange-traded funds. The Krupp Stiftung has lifted its stake in ThyssenKrupp (+0.76%) to 25.1% from 23.71%, and now holds a blocking minority.
A probe has been launched for a suspected breach of international trade law by Linde (-1.58%), wrote Focus, with the magazine noting that the group's Munich office was searched last month. Key for traditional purveyors of holidays, discount supermarket Aldi will offer customers from Jan. 5 onwards the possibility to book vacations in its stores, according to Manager Magazin Online.
The German Football Association reportedly said the €500 million sponsorship package offered by Adidas's (+0.13%) arch rival Nike (NKE) to Germany's national football team is an 'alluring offer'. A target hike at Citigroup pushed Lufthansa (unch.) higher. Press reports have it that broader market-listed Sixt (unch.) will establish a car leasing company together with TV Rheinland.
Elsewhere: The SMI index ended its last trading sessions this year with a marginal drop of 0.2%, although for the whole of 2006 the index clocked a decent 15.84% advance, its fourth straight year of gains (+33.21% last year, +3.74% in 2004 and +18.54% in 2003.
The AEX index ended its last day of the year in the red, while rising for the forth consecutive year as the index posted a 13% gain for fiscal 2006.