From Standard & Poor's European MarketScope
European indexes finished the week slightly below breakeven. Wall Street traded lower as US CPI and Industrial Production data hit chances of a near term Fed rate cut.
In London the FTSE 100 index (-0.04%) ended the session flat, as consolidation hopes in the tobacco industry and M&A speculation in the food retailer sector offset losses in energy, financials and pharma stocks. Imperial Tobacco (ITY) (+4.86%) extended gains on speculation that it could be the target of a bid by Altria (MO). The market is eyeing developments after Imperial launched a bid for Altadis, which is trading above the €45 offer price on speculation that KKR may enter the bidding. BATS (BTI) (+2.18%) also heated up.
Other potential takeover targets were well bid: Unilever (UL) (+2.76%); BT Group (BT) (+0.84%); Sainsbury (+2.44%). Wolseley (-1.88%) fell as its exposure to the US housing market made it vulnerable to a slowdown there.
Outside the FTSE, HMV (-1.99%) plunged after Morgan Stanley downgraded it to underweight, ABN Amro reiterated its sell rating, on a reduced target. EMI (+0.11%) and four other record companies have reached agreements with Sina.com to launch a digital music platform for online music services in China, a market where 80% of songs are pirated. Regus (+5.08%) rallied ahead of fiscal 2006 results on Monday, analysts expect revenues to top £680 million.
In Paris the CAC 40 index (-0.14%) closed in the red. Financials remained fragile: BNP (-0.52%), AXA (AXA) (-0.63%) and SocGen (-1.03%) fell. BNP is reportedly offering to buy a further 20% stake in India's Geojit Financial Services Ltd. The latter, today's biggest points loser, plans to sell US$215 million of bonds backed by Russian mortgages. Arcelor Mittal (-1.78%) may bid for Saar Ferngas AG after RWE's planned €400 million takeover of the regional gas group was rejected by Germany's antitrust authority, FT Deutschland reported.
Top blue chip percentage performer Thomson (+3.58%) surged as Merrill Lynch upgraded the company to buy from neutral, pleased with its focus on core business. Top points performer was Carrefour (+1.64%), up on a reported upgrade to accumulate from CIC Securities. Universal Music told Europe's top regulator that it is ready to divest a package of song rights to overcome reservations about Vivendi's (V) (+0.28%) €1.63 billion bid to take over BMG's music publishing business, the FT wrote.
EADS (+1.15%) and Thales (-0.28%) are about to win a contract worth €18.5 billion from the UK Royal Air Force, La Tribune said. Natixis (-0.44%) said it has moved fast to protect its €776 million exposure to US sub-prime lender New Century Financial, the FT wrote. Clarins (+1.09%) posted fiscal 2006 net profit of €223.3 million, up 130.8% year-over-year.
In Frankfurt the Xetra-Dax (-0.07%) closed flat on Friday, while Wall Street remained lower after inflation data showed the Fed may not cut interest rates soon, which would not help the mortgage market. Of local note, VW's (+1.35%) Spanish unit, SEAT, targeted 1,300 staff cuts by 2009, about 10% of its workforce. The cuts would be achieved by voluntary redundancy payouts and early retirements. India's Suzlon Energy may have lifted its offer for Repower (+2.51%) to about €160 per share, according to the Economic Times. Repower climbed in late trade.
Handelsblatt reported that E.On (EON) (+0.53%) met with Acciona, and offered to buy the Spanish construction group's 21% stake in power company Endesa. However, Spanish newspaper ABC said Acciona rejected E.On's offer. Arcelor may bid for Saar Ferngas AG after RWE's (+0.26%) planned €400 million takeover of the regional gas group was rejected by Germany's antitrust authority, FTD reported.
Karstadt (+4.49%) may sell 27 underperforming stores, the FT Deutschland wrote. Solar World (+0.44%) came off highs after proposing earlier a higher dividend of €0.20 per share. Key on the broker front was Rheinmetall (+4.03%), which was marked higher as Deutsche upgraded it to buy, with the broker envisaging strong years ahead.