European, Asian Markets Mixed

In Hong Kong, the Hang Seng closed higher on Chinese Yuan revaluation speculation

European stock markets were mixed Thursday. In London, the Financial Times Stock Exchange 100 lost 2.40 points, or 0.5%, to close at 4819.60. UK stocks ended virtually unchanged, with the beverage sector providing most of the upside after heavyweight Allied Domecq agreed to a 7.4 billion pound tie-up with Pernod Ricard. The much anticipated takeover saw Pernod offering 6.70 pound per Allied share. Wall Street was trading higher, helped by Motorola, eBay and Nokia. Among broker changes, Shire Pharma was marked lower following a downgrade from ING, while ComputaCenter suffered again on downgrades from Merrill Lynch and ING. Among trading updates, WH Smith reported first-half pretax profits of 61 million pounds, vs. a 72 million pound loss year-on-year and said trading conditions are tough. However, it remains confident in the outcome for the fiscal.

In Germany, the Dax gained 15.08 points, or 0.36%, to close at 4193.70 Frankfurt drifted off intraday highs but still managed to close above yesterday's levels, in quiet afternoon trade, after solid first-quarter results from SAP and VW restored some confidence following recent jitters. While Wall Street attempted to erase the previous day's losses, German markets took heart from SAP, which posted net profit up 11% to 254 million euro, above the 249 million euro expected. Citigroup took little time in upgrading the shares to buy from hold, saying first-quarter results were excellent and the outlook strong. Licence revenue rose 17% to 434 million euro, again, above forecasts. Late last night, VW posted first-quarter net profit up to 70 million euro, vs. 57 million euro expected. At its press conference, CEO Pischetsrieder said profits will rise over the next three quarters on sales of new models. Its market share in China fell to 18.9% at the end of first-quarter from 25.2% as it loses share to rivals GM and Hyundai. Elsewhere, pharma stocks FMC and Schering lagged the market as some dealer reported some switching out of pharmas into techs.

France's, CAC 40 gained 1.00 points, or 0.03%, to close at 3951.02. The CAC40 closed flat, with sentiment improving somewhat as Wall Street opened higher. The DJIA started up 0.7% thanks to good employment data and strong earnings at eBay, Motorola and Nokia. In Paris, the CAC's flat performance concealed very mixed individual trends today, with investors cheering Pernod's agreed bid over Allied Domecq, while penalising Essilor's disappointing first-quarter sales update. DrKW noted Pernod's cost-savings looked lower than the broker had penciled in. However, DrKW was positive on strategic fit - as were most analysts. LVMH was higher after posting first-quarter sales of 3.082 billion euro, up 10% reported and up 11% like-for-like, under IFRS, better than expected. Dior also gained after reporting a similar performance: first-quarter sales of 3.225 billion euro, up 9.6% year-on-year, or up 11% like-for-like. Thomson reported first-quarter sales down 14% year-on-year, in line with consensus estimates, following separation from its TV venture. Cap Gemini benefited on a read-across from Germany's SAP.

Asian markets were mixed Thursday. In Japan, the Nikkei 225 lost 104.19 points, or 0.94%, to close at 10,984.39. Tracking Wall Street's fall overnight, Tokyo stocks plunged on Thursday. At close, the Nikkei was 0.9%, or 104 points, down to 10,984.39. Communications equipment maker Uniden Corp slid 3.1% on news that the firm's factory workers in Shenzhen have been on strike. Retailer Ito-Yokado slumped 9.2% on news that Seven-Eleven Japan will partner with Denny's Japan to block any takeover bids. Tokyo Steel lost 3.2% after the company said it expects its earnings to drop in this fiscal year due to rising costs.

In Hong Kong, the Hang Seng climbed 95.68 points, or 0.71%, to close at 13,597.31, on Chinese yuan revaluation speculations. Among 33 blue chips, 26 stocks went up, while only CITIC Pacific (-1.1%) came down. Top HSI percentage gainer was CKI Holdings, followed by Wheelock.

Canada's benchmark TSX/S&P gained 27.67 points, or 0.30%, to close at 9,405.78.