Europe Closes Lower

European stock markets closed lower on Wednesday as Wall Street traded mixed and oil prices remained on the rise

European stock markets were lower on Wednesday as Wall Street traded mixed, recovering from session lows in active trading. The DJIA and the Nasdaq were flat, following a surprising jump in the US trade deficit, which sent the US$ reeling down. Also the oil price remained on the rise after US oil inventories fell more than expected. The Financial Times-Stock Exchange 100 lost 35.10 points, or 0.73%, to close at 4783.60. At home, Aggregate jumped 23.25% after Swiss cement group Holcim made a 1.8 billion pound bid approach at 1.38 pounds per share. But the shares traded above that mark, suggesting expectations of a higher bid from a rival. FTSE 100 rival Hanson and Wolseley gained on the news. BP dipped 0.49% after a mixed trading update this morning. It expects average production of 3.995 million barrels of oil equivalent per day for 2004, just below its 4 million target. Among retail stocks, Dixons reported group growth of 1% for the eight weeks to Jan. 8, 2005 and 3% growth for the four weeks to Jan. 8. While fashion house Burberry said third-quarter sales rose 3% while underlying sales moved up 7%. Daily Mail fell 2.56% after London Mayor Ken Livingstone said he would end the exclusive distribution of the company's free Metro newspaper in London tube stations to encourage more competition.

In Frankfurt, the DAX lost 49.19 points, or 1.16%, to close at 4208.82. Metro plummeted 4.66% after posting results that missed its own guidance on growth (5.3%, vs 5.5% forecast). Post-Christmas sales were also significantly below expectations. MAN was under pressure after Allianz, Munich Re and Commerzbank said they would sell a combined 25% stake worth 1.4 billion euro as the three continue to reduce their industrial holdings to protect their earnings from stock market swings. Infineon ended 2.72% lower, as a good report from Intel was seen as stock-specific. Puma fell 4.77% after a report by broker UBS sees order-backlog stagnating by the fourth quarter as the European consumer slowdown continues to hurt bottom line.

France's CAC-40 lost 32.85 points, or 0.85%, to close at 3816.14. Strength at Carrefour, France Telecom and Lafarge was offset by weakness in Total, Sanofi and key banks. Carrefour was the day's star after fourth-quarter sales numbers prompted positive broker reactions: UBS raised the target, and ABN Amro upgraded to hold from reduce. EADS was hit after Airbus asked airlines to conduct checks after cracks were detected in a part of a wing of one plane. In the broader market, Havas managed to end flat after early weakness on reports it had decided to pull out of the tender for a key account with Intel, worth an estimated $300 million. Such a move would weaken its U.S. position.

Asian markets were mixed on Wednesday. In Japan, the Nikkei average lost 86.60 points, or 0.75%, to close at 11,453.39, as investors cashed in profits following a weak session on Wall Street overnight and amid worries over a weakening dollar against the yen. But the index's fall was limited by gains in chip stocks after Intel Corp posted record quarterly sales.

In Hong Kong, the benchmark Hang Seng Index was almost flat, gaining 56.06 points, or 0.41%, to close at 13,565.31. Financials and properties edged lower while utilities rose due to their defensive nature. Standard Chartered continued to slide after Lehman Brothers cut its price target for the bank's UK-listed shares on its plan to buy Korea First Bank for $3.3 billion. On the economic front, Hong Kong's economy grew 7.5% in 2004, propelled by growth in exports and a revival of domestic demand. Unemployment at the end of 2004 stood at 6.7% versus a record 8.7% in spring 2003.

Canada's benchmark TSX/S&P lost 0.26 points to close at 9,020.03.

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