European Indexes Close Mixed

Exporters fell as the dollar dropped against the Euro. A state selloff of road companies provided focus in France.

From Standard & Poor's European MarketScope

European indexes closed mixed mirroring the performance on Wall Street. The US trade deficit hit a record US$68.9 billion in October, sending the dollar and exporters tumbling. Meanwhile, energy stocks also weakened as WTI futures fell on an unexpected increase in crude inventories.

Germany: The Xetra-Dax index closed lower, with negative breadth of 22-8. Deutsche Telekom (DT )(-0.43%) may have to write off the value of its T-Mobile UK unit by a substantial amount following the O2 takeover by Telefonica. Deutsche Post (-0.66%) lifted its fiscal year 2005 operating profit forecast to at least € 3.7 billion from an earlier prediction of at least €3.6 billion. However, including a positive non-operating extraordinary effect, the pure operating guidance fell to only at least €3.4 billion.

US private equity group Blackstone may take over E.On's (EON )(-0.46%) stake in Degussa (-1.44%), a preview of a WirtschaftsWoche report said. Puma's (+4.01%) biggest shareholder, Mayfair Fund, owned by billionaire siblings Guenter and Daniela Herz, may take over the sportswear group, Handelsblatt reported, but Mayfair firmly denied it.

Morphosys (+2.93%) signed an antibody license deal with Merck(MRK ). Steag Hamatech (+1.69%), which Singulus (-1.39%) has agreed to buy, said it won't reach its forecasts because of the unexpected length of weakness in the economy. On the broker front, Deutsche Bank upgraded Bayer (BAY )(+1.3%) to buy.

United Kingdom:The FTSE 100 index ended on positive ground, with 6-4 positive breadth thanks to a rebound in bank stocks and Vodafone (VOD ) (+1.00%), but profits were taken in energy and mining. Royal Dutch Shell (RDS )(-0.32%) fell as did BP (BP )(-0.63%).

The focus was on midcaps, with De Vere (+7.85%) shooting higher in afternoon trade on talk of a potential takeover. The group was not available for comment. Transport group Arriva (-0.42%) said trading continued in line with expectations. Yule Catto (-6.21%) plunged after saying the normal price erosion of generics has impacted profitability.

RHM (+4.17%) rose as brokers cheered the earlier than expected resolution of the pension issue. John Laing (-2.75%) sank after saying it broke off bid talks, arguing that it is not in shareholders' interests to prolong the current discussions. Whittard (+5.29%) ended higher after agreeing to a Baugur cash offer at £0.90 per share.

France: The CAC 40 index(-0.40%) closed firmly in the red, with breadth negative by 27-11. In Paris, Total (TOT )closed barely changed (+0.09%). Winners of the state motorway stakes stole the show: Vinci (+2.98%) snared ASF (+1.46%); the consortium Eiffage (+5.68%)-Macquarie secured Sanef (-1.30%). APRR (+0.50%) went to an Abertis-led group. The sale raised €14.8 billion. Elsewhere, France Telecom (FTE )(-0.70%) launched a counter-offer for Belgium's Telindus at €15.80/share, topping a bid by rival Mobistar.

In other news, brokers took a swipe at Havas (-2.08%) after yesterday's margin warning. Bouygues (+0.12%) posted in-line nine months net profit and raised its fiscal 2005 sales target slightly. Rodriguez (-13.9%) capsized after fiscal 2005 results fell short of expectations. Alstom (+0.95%) said it had won a €425 million contract in Oman. On the research front, Deutsche Bank upgraded Carrefour (unch.) to buy from hold, raising the target to €46; Merrill Lynch downgraded Elior (-1.78%) to neutral.

Elsewhere: Spain's Ibex 35 ended lower. Telefonica Moviles (-1.02%) came under pressure on news that Egypt's Orascom could be interested in taking a stake in Xfera. Hutchison Whampoa has also been mooted as a likely interested party. Jazztel (+9.21%) jumped after it announced good ADSL net adds.

Nordic bourses ended mixed, with Stockholm down 0.60%, but Helsinki managed a 0.49% gain. The trade deficit news caused significant pain to Stockholm's exporters: Sandvik (-3.66%), Skandia (-1.31%) and Atlas Copco (-1.16%). Securitas (+0.78%) was amongst a handful of positive stocks in Sweden after its US services division received the highest level of protection afforded by the US security department for the provision of anti-terrorism products and services. Elsewhere, Neste Oil (+2.15%) was fuelled by a Goldman Sachs's upgrade to in-line from underperform.

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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