London: The FTSE 100 recouped most of its intraday losses but still ended slightly lower Tuesday. Across the Atlantic, Wall Street traded higher, after US producer prices declined by 0.2% in June, compared to expectations of a rise, while second quarter profit at Merrill Lynch and at Coca-Cola exceeded forecasts.
At home, UK CPI showed core inflation at its highest since March 1997, pushing sterling to 26-year highs, on interest rates fears, while the German ZEW sentiment survey fell more than expected.
On the trading floor, Barclays (+0.48%) pared earlier losses. The bank is coming under pressure to add cash to its offer for ABN Amro. Rival RBS fell by 1.81%. Still in the banking sector, HSBC (-0.44%) is said to be looking to acquire Korea Exchange Bank (KEB) from Lone Star. Publisher Reed Elsevier (-2.81%) sold Harcourt, its US educational business for US$4 billion. The brokers said the price was better than expected.
British Airways (-0.57%) came off its early lows after saying it will re-start dividend payments. On the broker front, Tate & Lyle (+4.9%) soared as Goldman Sachs upgraded to buy, but Rolls Royce (-2.83%) plunged after a downgrade by Credit Suisse.
Paris: The CAC 40 (-0.43%) closed the session in the red, dragged down by Total (-1.09%). The oil giant has been downgraded to hold from buy by ING. Conversely, SocGen (+0.75%) was the leading points gainer. A market source has reported ongoing talk that a merger between SocGen and Italy's Unicredit could be on the agenda next year, following the latter's integration with Capitalia.
Also among financials, BNP (-0.67%) has taken a 33.4% stake in SLIB, a Natixis (-2.19%) subsidiary. Credit Agricole (-0.20%) is set to take a 70% stake in French property developer Monne-Decroix, reported La Tribune. Elsewhere, Vallourec (+0.92%) climbed amid revived rumour Arcelor Mittal (-0.56%) is to bid at €280 per share. PPR (+0.20%) said it now holds 62.1% of Puma. Germany has proposed creating golden shares in EADS (-1.04%) to give Paris and Berlin a veto over strategic decisions by EADS, the FT reported.
Air France-KLM (unch) said it intends to take an active part in airline consolidation and that it is examining Iberia, among other possibilities. Soitec (-1.22%) reported a 20% fall in first quarter sales, in line with guidance. Rhodia (+1.68%) outperformed after Deutsche Bank publishes a positive note following an analyst meeting. Market sources noted rumour that Spain's Sacyr could sell its 33% stake in Eiffage (-1.54%) to the Benetton family's Edizione Holding.
Frankfurt: Xetra-Dax (-0.83%) closed firmly in the red after the ZEW indicator for July fell more than expected to 10.4 vs 19 in June. In the US, DJIA reached an all time record at 14,000 supported by strong results from Coca-Cola and Merrill Lynch.
In Frankfurt, TUI (+3.02%) was a standout gainer on market rumours that Sol Melia was looking to bid €7.5 billion for the company. Deutsche Bank (-0.86%) was off lows after investors shrugged off earlier rumours that it may issue a profit warning. Continental AG (-0.04%) turned flat as the group said it is sticking to its guidance and not raising it as traders had rumoured earlier.
Air Berlin (-3.99%) remained in the red as Morgan Stanley reportedly placed 1.25 million shares at €15.95-€16.05 per share. Fresenius AG (+3.39%) was one of the best performers as phase II/III of its removab antibody trial for treating patients with malignant ascites has shown positive data.
In other news, the High Court in London granted an interim injunction yesterday, which forced Deutsche Telekom's (-0.59%) T-Mobile to put calls made to Truphone numbers through. Truphone accused T-Mobile of abusing its position of market dominance by hindering its service and blocking calls made to numbers owned by the company. ProSieben (-1.39%) plans to cut some 250 jobs in its TV news segment, according to unions. The broadcaster's shareholders are due to meet in Munich today for an annual meeting.