European Indexes Close Mixed

Media groups were in focus in France as oil stocks fell

From Standard & Poor's European MarketScope

The major European indexes traded mixed in the afternoon despite positive action in New York. A weaker US$ weighed on local exporters as focus turned to the Federal Reserve meeting Tuesday, where a 25bps rate increase is widely expected. Opec confirmed that it will leave production levels unchanged.

Germany: The Xetra-Dax index came off highs in late trade and ended only marginally higher. In Frankfurt, Deutsche Bank (DB )(+0.29%) disclosed its interest in buying Berliner Bank, part of Bankgesellschaft Berlin. In another development, Deutsche Bank may have to write down the value of its property fund by more than €100 million after investors withdrew money.

Siemens (SI )(+1.27%) was looking to sell its venture capital unit Siemens Acceleration in Communications. Separately, the conglomerate entered into a joint venture with China's Jiangsu Beide to tap into the growing low-voltage motors market. MAN (-0.21%) said it is still in the running to buy DaimlerChrysler's (DCX )(-1.09%) MTU Friedrichshafen, the heavy diesel engine unit.

A group led by ThyssenKrupp (+0.35%) raised its offer for BAE Systems's German marine electronics unit Atlas Electronik GmbH to €280 million, the FT said. Stada (+0.89%) bought European branded products from Sankyo, with sales of around €38 million in Europe last year, for €82 million. On the broker front, Vossloh (-3.77%) took a knock as UBS cut its target on the stock to €45 from €49. The broker reiterated its neutral rating.

United Kingdom: The FTSE 100 ended Monday's session lower as profit-taking in the heavy-weight oil sector kept the blue chip index in check. BP (BP )(-1.48%) and Royal Dutch Shell (RDS )(-0.95%) slipped. On the newsfront, Lloyds TSB (LYG )(-0.26%) said it expects satisfactory performance for the fiscal year. However, Dresdner KW advised switching out of Lloyds and into RBS or HBOS.

Amongst retailers, Marks & Spencer (+1.36%) outperformed, lifted by bullish broker comments. Next (-1.31%) retreated after a downgrade from Morgan Stanley. Cobham (+0.62%) said second half performance is in line with the outlook provided at the time of the interim results. GKN (-2.42%) said it continues to make steady progress and is on track to achieve the expected trading outcome for 2005.

Richard Branson was said to be prepared for a deal with ntl that values his 72% stake in Virgin Mobile (+1.13%) at £3.0 a share. Australia's Macquarie Bank is expected to make a firm cash offer for the LSE (-0.48%) this week, the FT reported. Mowlem (+2.63%) jumped after Balfour Beattie (-2.22%) confirmed that it is considering making an offer. This followed Carillion's (-2.5%) agreed takeover last month.

France:Wall Street trading helped to keep the CAC 40 index (+0.26%) in the black. In Paris, Total (TOT )(-1.24%) was the main laggard following the explosion of the depot at Buncefield. Media groups took center stage Monday. Vivendi (V )(+3.46%), TF1 (+7.99%) and M6 (+3.94%) clocked up gains as they confirmed talks to merge pay-TV units Canal+ and TPS. TF1 owns a 66% stake in TPS, while M6 holds 34%.

NRJ (+2.64%) reached a year high as Le Journal des Finances reported it could be eyeing the German unit of BSkyB. In other news, Pernod Ricard (+0.69%) was positive after selling Dunkin' Donuts for US$2.4 billion, according to Reuters. Natexis (-0.57%) was under pressure on reports that it could be merging with Ixis, according to La Lettre de l'Expansion. Toll-road operators ASF (+0.24%), Sanef (unch.) and APRR (-0.17%) were in focus as the press expects the government to announce the allocation of its stake by mid-week. The CEO of peer Havas (+0.25%), Vincent Bollore, unveils the new group strategy Tuesday morning.

Elsewhere: The AEX ended the session in the black. In Amsterdam, ING (ING )(+1.40%) remained the main upward force in the index as Cheuvreux upgraded it to outperform from underperform and raised its target to €33.00 from €28.50. Philips (PHG )(+1.25%) provided strong support as Rabo Securities upped its target to €29 from €27. VNU (-0.10%) traded lower after saying it would reject any takeover offer below €8.2 billion, or €32 per share, according to The Business newspaper.

Wall Street failed to inspire afternoon trade in the Nordics with bourses ending the session lower. Helsinki was the 'best' performer in the session, down only 0.19% as Nokia (NOK )(+0.79%) recovered Friday's losses.

Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)

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