From Standard & Poor's European MarketScope
European indexes traded mixed Wednesday morning. Oil traded over US$59 a barrel ahead of the weekly US oil inventory data. Wall Street looked set to open broadly flat, though techs may be lifted by Cisco's strong fiscal second quarter results.
UK: The FTSE 100 index slipped below the gain line at mid-session weighed down by weak pharmas, banks and energy stocks. Caution prevailed as the BoE's two-day interest rate meeting gets underway. Sectorwise: Pharmas were hit after Roche's outlook failed to impress the market. Glaxo (GSK) (-1.07%) and Reckitt (-0.60%) fell ahead of their figures Thursday.
In company updates: the world's largest miner BHP Billiton (BHP) (+3.45%) announced an extra US$10 billion buyback and reported a 41% surge in first half profit - a shade below market expectations. The miner also said that CEO Chip Goodyear is to stand down at the end of 2007.
Insurer Standard Life (+1.81%) said 2006 worldwide insurance sales on an APE basis rose 39%, but markets remain challenging in Canada. Media group EMAP (-5.88%) expects its fiscal year outcome to be at the lower end of market expectations.
Newspaper distributor Smiths News (+0.86%) said it is trading in line with expectations. EasyJet (-2.32%) said January passenger traffic rose 11.1%, with first quarter revenue up 15%. In broker action: British Airways (BAB) (+3.83%) shares flew on a Merrill Lynch upgrade to buy from neutral.
Germany: The Xetra-Dax index (+0.30%) was comfortably higher at mid-session Wednesday after Wall Street's marginally positive performance on Tuesday. Allianz (AZ) (-0.13%) has placed 16.1 million BMW (-1.91%) shares for €45.55 apiece. BMW, meanwhile, saw its sales rise 0.5% in January. Sector-wise, the European Commission has proposed a strategy to curb carbon dioxide emissions from cars as a way to combat global warming. Hardest hit will be the likes of Porsche (-1.52%) whose models have the highest average CO2 output among the major auto brands.
Endesa's board gave the thumbs-up to E.On's (EON) (+1.95%) US$53 billion offer, clearing the way for the largest ever European cross-border energy merger. Infineon (IFX) (+8.15%) gained after it announced that it has won a deal to supply Nokia (NOK) with its single-chip solution for low-end mobile phones. Bayer's (BAY) (-0.91%) aprotinin drug, made under the brand name Traysol and used to limit blood loss while patients undergo bypass surgery, carried a higher five-year risk of death than cheaper generic alternatives, according to a study by the Ischemia Research and Education Foundation in California. Bayer disputed the analysis.
Q-Cells (-3.04%) plans to sell convertible bonds to the tune of €350 million. Altira traded at €36.70 on its first day of trading, having sold up to 380,000 shares for €28.50 apiece.
France: The CAC 40 index (+0.20%) stayed in the black at mid-session. Alstom (+2.98%), the best percentage performer on the CAC 40, received a target price increase from HSBC on fundamentals, but hypothesises on a buy-out scenario involving Bouygues (-0.57%). PSA (-0.48%) came off earlier highs on profit-taking after posting fiscal 2006 net sales of €56.594, up 0.58%.
Publicis (+4.07%) posted a 4.8% rise in fourth quarter revenue to €1.251 billion, with positive 2007 outlook. STM (STM) (+1.73%) outperformed after a local broker upgraded the company to buy and raised its target by 14% to €16.5, seeing the talked-of disposal of its flash memory unit as offering potential for returns.
US-based Northrop Grumman Corporation and EADS (+0.48%) are expected to remain in the US$40 billion contract race against Boeing (BA) for new aerial refueling tanks. Airbus is confident that some 20 new orders of the A380 civil carrier are expected in 2007. Air France (AKH) (-0.73%) said January traffic rose 2.3%.
In broker news, JP Morgan upgraded Total (TOT) (+0.38% - boosting the CAC 40 3.2pts) to overweight from neutral and Morgan Stanley downgraded Vivendi (-0.98% - weighing the CAC 40 2.0pts) to underweight from equal weight and trimmed its target to €29.50 from €30.50.
Elsewhere: The Ibex 35 index built on morning gains, buoyed by corporate rumors in the utilities sector.
Some say 'selling on good news' while some say 'conservative guidance'; either way Roche shares are certainly feeling the pressure, down 2.35% and knocking 30 points off an otherwise positive SMI index.