From Standard & Poor's European MarketScope
Risk aversion returned Thursday afternoon with European indexes closing in the red. Wall Street indexes pared losses but were trading negative after stronger-than-expected ISM manufacturing data. The US$ hit an 11M low vs. the JPY at 117. Oil was at US$62.14 a barrel.
UK: The FTSE 100 index closed in the red. With negative sentiment back in the market, strong corporate earnings figures failed to hold up the blue-chip index which crumbled by over 2% at one point. The VDAX-NEW volatility index hit its highest level since Aug. 10 before easing.
In earnings news, Europe's second-biggest bank, Royal Bank of Scotland (+4.18%), booked a 17% rise in fiscal year pretax profit and raised its DPS. The world's second-biggest cigarette maker, British American Tobacco (BTI) (+1.68%), posted a 10% rise in underlying earnings and increased its share buyback to £750 million.
News and information provider Reuters (-0.40%) reported an 8% fall in fiscal year trading profit, in line, and raised its share buyback program. Newspaper publisher Trinity Mirror (+0.82) published a fall in fiscal year profit and revenues, hit by a difficult ad market.
Insurer Aviva (-4.40%) tabled a 12% rise in fiscal 2006 op. profit. In other news, M&S (-0.74%) ruled out a Sainsbury (+2.10%) bid for now, but didn't rule out a counter offer should another bid emerge.
France: The CAC 40 index (-1.05%) ended lower on Thursday, although it did manage to scale back intraday losses. Total (TOT) (-1.51%) weighed heavily on the index, as did financials such as Axa (AXA) (-2.71%) and SocGen (-1.51%).
France Telecom (FTE) (-1.8%) fell after Deutsche Telekom (DT) reported a sharper than expected decline in 2006 net profit. EADS (-4.98%) tumbled. German labor union said it 'won't accept' Airbus job cuts. Alstom (-2.67%) may be forced to cut the size of its stake in China's Wuhan Boiler because of government intervention, the 21st Century Business Herald wrote.
Arcelor Mittal (+7.0%) gave up earlier gains. Its CEO said there is no weakness in raw material prices despite the Chinese stock market fall. The Bouygues's (-1.39%) CEO said a bid for Areva (-0.99%) is still possible if the government decides to sell, Le Figaro reported. Business Objects (-2.65%) dropped as Oracle's bid for Hyperion put paid to speculation the software maker would bid for the French group. In broker news, a number of brokers upgrade Publicis (+1.36%).
Germany: The Xetra-Dax index pared some losses but the index was still hit by another global sell-off, knocking off over 1%. Deutsche Telekom (DT) (-3.76%) reported a 43.4% decline in 2006 net profit to €3.165 billion, below expectations. The dividend payment is to be kept at €0.72 per share. The supervisory board okayed plans to move tens of thousands of employees to new service units in an effort to cut costs. Deutsche Telekom also wants to increase working hours per week to 38 from 34.
Beiersdorf (-1.58%) posted 2006 sales up 7.3% to €5.12 billion, higher than the 6% rise the consumer goods group had targeted. Merck (-3.36%) proposed a dividend of €0.90 per share and a €0.15 bonus dividend for 2006 to reflect the non-recurring exceptional gains reaped during the year, it said.
Numbers aside, SAP's (SAP) (+3.42%) arch rival Oracle (ORCL) is buying Hyperion Solutions for some US$3 billion, wrote The New York Times Online. Allianz (AZ) (-2.32%) plans to enter the Japanese life insurance market, according to the Nikkei business daily.
Elsewhere: The Nordic and Swiss bourses recovered somewhat in late trade but still closed lower.