European Indexes Finish in the Red

Weak trading on Wall Street dampened sentiment as inflation concerns mounted

From Standard & Poor's European MarketScope

Major European equity indexes ended Tuesday's session with losses. Weak trading on Wall Street dampened sentiment. In the U.S., inflation concerns were raised again after the release of worrying PPI data, which offset Monday night's upbeat report from IBM (IBM ).

Germany's Xetra-Dax index ended lower. In corporate news, Schering (SHR ) (+0.38%) signed a licensing deal with Sonus Pharmaceuticals giving it the exclusive worldwide licence for Tocosol Paclitaxel, which is currently in Phase III trials for breast cancer. Schering is to take a near-15% stake in Sonus. Altana (+1.39%) is, according to the WSJ, ready to sell its pharma business for around US$7 billion. Altana sources reportedly said talks are currently under way with banks on strategic options, but the process of selling the pharma unit has not been initiated yet. Metro (-0.2%) plans pre-IPO marketing for its DIY unit Praktiker on Oct. 24. The retail giant is still in talks about selling the unit to Permira.

Bayer (BAY ) (-0.54%) saw a target hike from Morgan Stanley. DaimlerChrysler (DCX ) (-1.31%) has received offers worth around €1.7 billion for its MTU Friedrichshafen diesel engine business, according to FAZ. Romania has received seven binding bids for the sale of its biggest bank Banca Comerciala Romana (BCR). Deutsche Bank (DB ) (-1.16%) is among them. Italy's UniCredito may receive EU antitrust approval as early as today for its purchase of HVB (-1.08%).

In the UK, the FTSE 100 index closed lower on Tuesday with AstraZeneca (AZN ) weighing along with oil and gas stocks. AstraZeneca (-2.02%) lost ground on news Ranbaxy Pharmaceuticals has submitted an Abbreviated New Drug Application involving its drug Nexium. The insurance sector remained strong after Aviva (+3.14%), the UK's largest insurer, set a higher profit target for its worldwide general insurance business. Diageo (DEO ) (unch.) said first quarter trading is in-line with its expectations. Rio Tinto (RTP ) (+1.09%) said it will invest a further US$1.35 billion in Australian projects. Arm Holdings (-10.66%) plunged after reporting fiscal year figures short of estimates and lowering its dollar revenue growth guidance to 15% from a 15-20% range previously. Gaming shares also came under pressure after a profit warning from Empire Online (-4.59%).

In France, the CAC 40 index (-0.63%) remained in the red at the close, trading on a negative breadth of 31-8. WTI crude oil eased to US$63.40 per barrel, causing Total (TOT ) (-0.62%) to slip. Arcelor (+0.58%) remained positive as CSFB upgraded the steel sector. Arcelor was also in focus after it deposited US$200 million to bid for Ukraine's Kryvorizhstal. Valeo (+0.79%) was higher as CEO Thierry Morin told Le Figaro the group is interested in Delphi units that could be for sale after the U.S. car-part maker filed for bankruptcy. GFI Informatique (+4.05%) rallied after closing the sale of its UK subsidiary.

Among decliners in Paris, Alstom (-1.99%) derailed after accusing London officals of playing politics over its £429 million underground maintenance contract. Also note Dresdner KW downgraded Credit Agricole (-1.92%) to add from buy. Inter Parfums (-2.23%) fell despite reporting third quarter organic revenue growth of 19%. Finally, LVMH (-0.73%) and Foncia (-3.67%) remained in watch ahead of third quarter sales due out after the market close.

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