M&A speculation was not enough to keep the FTSE 100 from slipping into the red after a key gauge of US manufacturing activity contracted in December. This side of the Atlantic, M&A hopes in the banking sector boosted trade. High crude and copper prices lifted heavyweight oil stocks. On the trading floor, ALLIANCE & LEICESTER (+16.36%) soared on news that it had held takeover talks with Spain's Santander last month. The Spaniards have not ruled out resuming negotiations. BP (+0.24%) has agreed to pay Alaska US$379 million to settle a dispute over income tax liabilities for 2000-02, according to the FT. Retailers were in focus following the key Christmas period. DSGI (+8.06%), NEXT (+2.59%) gained on hopes of positive Christmas trading. In the broader market, mail-order catalog specialist N BROWN (+3.91%) also advanced. STANDARD LIFE (-0.4%) has raised its stake in an Indian life assurance j/v to 26% ahead of a proposed flotation of the business in 2009, the FT wrote. REED ELSEVIER (-1.18%) reiterated its target of a minimum 10% annual EPS growth. FORTH PORTS (+0.21%) edged up on vague speculation of Aussie interest. Bear Stearns said INFORMA (+3.36%) is its top pick in the Advertising and Publishing sector for 2008.
The CAC 40 (-1.14%) fell into the red and closed the first session of the year firmly lower as Wall Street trades also in the red after the ISM manufacturing data came in below 50, indicating contraction. Locally, Goldman Sachs initiated THOMSON (-5.24%) with neutral and a €11 target. VINCI (-4.24%) bought 3.3% of ADP (+10.30%). STM (-1.63%) fell after Banc of America Securities cut sales growth forecast for US semiconductor producers and downgraded Intel Corp. CREDIT AGRICOLE (-1.13%) has abandoned the shareholders pact on EURAZEO (-3.02%) stake, Les Echos reported. PSA's (-1.14%) French 2007 sales rose 2%. Germany and the UK are divided over the future maintenance of Airbus's A400M military-transport airplane, whose delays resulted in a charge of €1.4 billion for EADS (-2.20), Les Echos reported. GDF (-0.85%) will earn €90 million less in first quarter08 following the French government's decision to approve an increase in gas prices of €0.173/kilowatt hour, less than expected. GDF will not be able to pass on the increased supply costs.
The festive spirit swiftly fizzled out after the US ISM manufacturing index came in at 47.7 for December, lower than expected and indicating a contraction in activity. The US data clearly pushed all markets firmly into the red and the DAX ended the first session of the year below the 8,000 level. A few German blue chips kept their head above water, nevertheless, including INFINEON (+1.12%). Global semiconductor sales rose 2.3% year-over-year in November as consumers bought liquid crystal display TVs and digital music players, according to SIA. DEUTSCHE POSTBANK (+1.5%) topped the leaderboard on ongoing M&A speculation. BMW's (+0.71%) Rolls Royce unit is likely to have increased sales by 25% in 2007 amid increased demand for the Phantom, UK's Times reported. In other news: DEUTSCHE BANK (-1.44%) today started operating in China through a locally incorporated unit in Beijing. COMMERZBANK (-1.29%) has dismissed the head of its US division, Hans Joachim Doepp, and another top manager because of losses caused by US subprime mortgages. LUFTHANSA (+1.1%) plans to hire some 4,300 new employees in Germany this year as it adds planes and destinations. SALZGITTER (-1.44%) has landed a pipeline deal from the UAE together with Japan's Sumitomo and India's Jindal Steel. Quoting CFO Hans-Juergen Thaus, Euro am Sonntag wrote that KRONES (+2.55%) expects a 20-30% increase in fiscal 2008 net earnings.
Nordic indices closed flat-to-lower: S30 (-2.13%), HPI (-1.18%), C20 (-0.78%) and OSEBX (+0.1%). Wall Street traded lower as weak ISM data weighed on the market. The figure came in at 47.7 for December, lower than expected and indicating a contraction in manufacturing activity. In energy and commodities, WTI traded at US$98.50/bbl and gold at US$856. ACERGY (+2.47%) landed a US$700 million contract in Angola from French group Total to develop the Pazflor offshore field. STATOILHYDRO (+0.06%) sold assets for US$243 million in the Gulf of Mexico to US group Mariner Energy. In M&A, the merger between OMX (+0.38%) and Nasdaq is now a step closer as the US government gave Borse Dubai the green light to become a minority shareholder in the US stock exchange. Meanwhile, the board of OMX recommended the bid from Borse Dubai. Finnish group KONE (-3.0%) acquired US elevator services company Florida Coast Elevator. In pharma news, ORION (+0.31%) initiated a study to protect its patent in the US regarding its Parkinson's medication Stalevo. In other news, VESTAS WIND (unch) booked an order to deliver 33 turbines to the Central Plains Wind Farm in Kansas. Elsewhere, REC (-1.09%) was in focus as Reuters quoted Vilas Muttemwar, India's minister for renewable energy, saying the government will subsidise the manufacturing of solar energy.
Spanish shares closed the session in the red with SANTANDER (-1.35%) weighing after reports that it held takeover talks with UK's Alliance & Leicester. Wall Street trades lower at European close after ISM manufacturing data came in below 50. Locally, COLONIAL (shares suspended) is ready to sell assets including the 24% stake in SFL and 15% stake in FCC (-1.55%) in order to reduce debt, Cinco Dias reported. Colonial has already sold several buildings in Madrid and Barcelona to ABERTIS (-0.22%). IBERDROLA (+1.94%) has bought 1% of GAMESA (-3.15%) for €76.5 million from IBV, which is controlled by Iberdrola and BBVA. TELECINCO (+0.11%) topped the TV ratings table once more in December. PRISA (-0.07%) on Friday presented the official offer documents for the bid on SOGECABLE (+0.91%), and lifted the offer price to €28.00/sh from €27.98/sh. FERROVIAL's (-3.20%) chief executive Joaquin Ayuso has told the FT that BAA is not in crisis. Kepler said news of new tariff hikes on the 407 ETR is positive for CINTRA (-0.48%).