Europe Lower, Asia Mixed

European stock markets were lower on Friday, following a retreat on Wall Street. Consumer stocks were in focus with the P&G/Gillette merger

European stock markets were lower on Friday. In London, the Financial Times-Stock Exchange lost 20.60 points, or 0.42%, to close at 4832.80. Traders attentions were focused on mergers and acquisition rumours surrounding Reckitt Benckiser after Procter & Gamble's decision to buy Gillette for about $57 billion in stock raised talk Reckitt may be the target of a bid. Unilever and Cadbury Schweppes also gained on the news. In other Friday talk, Exel rose 1.56% after the Financial Times reported package delivery firm UPS is on the look out for acquisitions. Among broker changes, Virgin Mobile slid 3.93% after Goldman Sachs downgraded it to in-line from outperform.

Germany's DAX lost 14.60 points, or 0.35%, to close at 4201.81, as the Dow traded lower with McDonald's disappointing on the earnings front and the Nasdaq also lower despite Microsoft having delivered solid news after the U.S. close yesterday. Consumer goods companies were in focus after P&G agreed to acquire Gillette for some $57 billion in stock. Henkel and Beiersdorf both moved on the news. Microsoft's positive earnings news left SAP little moved. Porsche's fiscal first-half 2004/2005 profit rose 4.5% as its SUV Cayenne and 911 models boosted sales. Net income in the six months through Jan. 31 rose to 125 million euro, vs 119.6 million euro. Forecasts were for a profit of 129 million euro. Bayer's spun-off chemical unit, Lanxess, started trading on a when-issued basis, to begin official trading on the DAX 30 exchange on Monday after which it will probably move to the SDax. Lufthansa said it will only increase seating capacity by 3% this year after originally planning on raising it between 5% to 7%, in line with worldwide growth. Infineon moved 1.54% lower after global semiconductor oversupply fell more than expected in the fourth quarter as chipmakers cut stockpiles. Deutsche Boerse's official offer was again rejected by the LSE, which says the 5.30 pound offer undervalues the London exchange.

In France, the CAC-40 lost 21.05 points, or 0.54%, to close at 3870.35. The CAC40 ended modestly lower on Friday, following Wall Street's retreat. Sanofi-Aventis, Total and the banks dragged the market down in late trading as poor results from McDonald's offset better-than-expected earnings from Microsoft. The market is also cautious ahead of the Iraq elections and OPEC meeting on Sunday. Consumer goods companies were in focus after P&G agreed to acquire Gillette. In this context, BIC rallied 6.4% and investors speculated that Danone could be an acquisition target. Saint Gobain was down 0.9% on a touch weaker-than-forecast net profit. Results aside, Sanofi fell 1.5% after Kuwait Petroleum said it is selling its remaining 3.33% stake, or 47 million shares, in the pharma group via an accelerate bookbuild to international institutional investors. Publicis was lifted 2.4% by news that ad growth in the U.S. is exceeding expectations this year. Alcatel confirmed it had signed an agreement with Italian defence group Finmeccanica, to merge its space activities by creating two j/v companies.

Asian markets were mixed on Friday. In Japan, the Nikkei 225 lost 20.73 points, or 0.18%, to close at 11,320.58, with electronics parts maker Kyocera Corp sliding 1.74% after the company reduced its annual profit forecast by almost a third. KDDI tumbled 2.39% after the mobile phone company cut its full-year profit forecast for the second time. Canon Inc, which ended flat, said group operating profit came to 543.79 billion yen last year, up 20% from the previous year. The company said it expects group operating profit in 2005 to rise 5.4% to 573 billion yen.

In Hong Kong, the benchmark Hang Seng Index was almost flat, gaining 21.15 points, or 0.16%, to close at 13,650.06. Investors were winding down positions ahead of the Chinese New Year holidays. Talk of yuan revaluation ahead of the G7 meeting in London next week also weighed on sentiment.

Canada's benchmark TSX/S&P lost 26.45 points, or 0.29%, to close at 9,147.96.