European Stocks Slump

A roundup of Friday's action on major European stock exchanges


The FTSE 100 closed lower amid a sell-off in financials and mining shares. Wall Street was trading in the red as oil bounced back after yesterday's slump and on earnings jitters among banking stocks as Merrill Lynch cut estimates for US large cap regional banks. WTI was trading at US$135.32 a barrel. On the trading floor, HBOS (-4.21%) fell after a number of brokers cut the target price and estimates on yesterday's trading update. BRADFORD & BINGLEY (-5.90%) was down on a vague rumour that the lender was in serious financial trouble. BARCLAYS (-1.90%) is said to be close to securing a GBP470m cash injection from Sumitomo, according to The Times. Elsewhere, CARPHONE WAREHOUSE's (-5.24%) David Ross has sold a large portion of his stake in the business, the Daily Mail wrote. BARRATT DEVELOPMENT (+8.31%) rallied on a Building magazine report it has struck a deal with banks to waive a clause that could have put it in breach of its lending covenants after it writes down the value of its landbank in July. TAYLOR WIMPEY (+5.64%) benefited. BALFOUR BEATTY (-0.57%) bought German rail engineering group Schreck-Mieves for EUR 36m in cash. HALFORDS (-0.56%) appointed Wal-Mart's David Wild as CEO. Guoco increased its stake in RANK (-1.84%) to 14.37%. ST IVES (-1.88%) dropped after warning that market conditions were tougher than expected.


The CAC 40 (-1.79%) closed deep the red with 19-1 negative breadth, as Wall Street traded lower amid rumour (denied) of pre-announced earnings and guidance cutting from Merrill Lynch. Also, note quarterly futures and options expire today, adding to volatility. Oil prices rose to US$135.06/bbl. Iran reportedly says the oil market is oversupplied ahead of an oil producers meeting in Jeddah this weekend. Locally, AIR FRANCE-KLM (-1.98%) fell. DANONE (-3.71%) stumbled after Merrill Lynch reportedly said that UK's peer Cadbury shares are unlikely to rise further because there's little chance that it will merge with a competitor soon, adding that Nestle has said it will make no large takeovers anytime soon. In corporate news, EDF (-2.6%) has been given permission by the French nuclear safety watchdog to resume building its EUR 3.3bn new-generation EPR in Normandy. VIVENDI's (-3.51%) SFR mobile phone unit has acquired 96.5% of Neuf Cegetel and will make an offer to buy the remaining shares, CEO reportedly said. FRANCE TELECOM's (-1.98%) CFO said the group is in contact with TeliaSonera about 'the conditions under which formal negotiations with the latter can begin', the FT reports. In the broader market, Exane bought EUR 195m of ATOS (+7.04%) shares for PAI Partners. New York-based investor Guy Wyser-Pratte has bought a 1.66% stake in VALEO (+0.46%) and demands a strategy review.


With US markets trading lower, Xetra-Dax (-2.12%) finished the final day of the trading week firmly below breakeven. A key drag on European blue-chips were underperforming banks: DEUTSCHE BANK (-3.08%); COMMERZBANK (-8.48%). On the local corporate news front, DEUTSCHE POST (-1.23%) will open POSTBANK's (-0.86%) books next week and expects to receive firm bids within the next three weeks, reported Die Welt. MERCK (+1.55%) applied for an extension of the use of Erbitux in the treatment of head and neck cancer. Continental Airlines is joining the Star Alliance to which LUFTHANSA (-1.94%) belongs. Tchibo heir Michael Herz took a stake of about 12% in ESCADA (+2.72%), Reuters reported sources as saying. This would confirm recent press reports on the matter. FREENET (-1.65%) issued an invitation for interest in its broadband business from potential purchasers. THYSSENKRUPP (+1.82%) moved in tandem with sector peer KLOECKNER (+1.2%), which said it will raise its business forecast for the current fiscal year. The distributor of steel and metal products projects sales at least 10% higher y/y and EBITDA to exceed current market expectations. K+S (+2.02%) agreed with European customers to raise the average standard potash price from July to around EUR 540/tonne from EUR 280/tonne in 1H. HANOVER RE (-0.21%) reached an exclusive cooperation agreement with India's government-owned reinsurer GIC Re.


With Helsinki and Stockholm closed today, Oslo (-1.59%) and Copenhagen (-1.77%) finished the day firmly in the red. Wall Street was trading lower with financials weighing. Of local note, VESTAS WIND (-0.44%) said it has booked a major order in Spain for 61 turbines. CARSLBERG (+1.49%) will be allowed to sponsor football in Russia after the country's government removed a ban against the combination of the sport with beer commercials, Berlingske wrote. French company Tereos will not bid for DANISCO's (-2.91%) sugar unit, Les Echos reported. S&P Equity Research cut its target price on the stock. In the wider market, NEUROSEARCH (+4.08%) said positive results have emerged in a phase two study with ABT-894 for the treatment of adults suffering from Attention-Deficit Hyperactivity Disorder (ADHD). Oil and oil services companies weighed on the Oslo index as WTI traded at US$135.23/bbl: STATOILHYDRO (-2.85%); ACERGY (-4.6%); PGS (-2.77%). PROSAFE PRODUCTION (-2.77%) said it has sold 30.1% of the outstanding share capital in Teekay Petrojarl for NOK59 per share, representing its entire holding. On the broker front, M. Stanley upgraded G4S (+0.51%) to overweight.


Piazza Affari ended deep in the red as worries regarding financials weighed on stock markets on both sides of the Atlantic. WTI was trading at US$135.25/bbl. FIAT's (-6.52%) CEO Sergio Marchionne has said that the group's Italian new car sales have been just as disastrous so far in June as they were in May. Italy's civil aviation agency has called for a meeting with ALITALIA's executives next week to examine information on its finances and its plans to manage the summer season. TENARIS (+2.39%) was the only gainer in the SP/MIB ahead of a decision by the US International Trade Commission on the import of welded pipes from China. In M&A news, Il Sole 24 Ore writes that TISCALI (-8.9%) has failed to attract bids from British groups. Local press reported that GEOX (-5.33%) is not interested in participating in the bid for the sale of Austria's Stiefelkoenig. In management changes, TELECOM ITALIA's (-1.97%) CFO Enrico Parazzini has resigned and will be replaced by Marco Patuano on 8 August. Reuters writes that GEMINA's (-1.76%) current CFO Stefano Honorati, could be appointed CFO at Risanamento as early as next week.

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