European Indexes Finish Mixed
In London, the FTSE 100 closed lower Tuesday, weighed down by oil stocks. European bourses traded lower as well after a surprise slump in Germany's ZEW investor sentiment. Wall Street is marginally higher after yesterday's falls. Iran said it was ready for a serious talks, in response to an incentive package by world powers to end the nuclear standoff. WTI is at US$72.50. Copper fell on selling pressure in London due to a strong dollar and ongoing talks at Chile's Escondida.
Locally, Lloyds TSB (+0.29%) shares minted gains as rumours resurfaced that Bank of America may bid. BT (unch.) reportedly claimed wins on German net access after an European Commission backing. In the earnings section, Intercontinental Hotels' (-0.66%) 1H profit from continuing operations jumped 30% to GBP107m. The hotelier said current trading was healthy and the outlook for the rest of the year remained positive. Persimmon (-1.1%) reported a forecast-beating 16% rise in 1H PTP. The housebuilder said the rise in interest rates will have no tangible impact. Bodycote (-5.23%) reported a 20.2% rise in 1H headline PTP to GBP35.1m. The engineer was confident of in line FY results, but brokers, like Numis, argued this was already priced in. In broker moves, Taylor Nelson (+2.28%) jumped on ABN Amro's initiation with buy.
In Paris, the CAC 40 (+0.46%) ended the session on a 24 points gain, as a positive open on Wall St lifted the index from an earlier dip. Mid-morning, the ZEW consumer sentiment index had revealed a surprise plunge to a five-year low of -5.6 from 15.1 in July and expectations for 12.0 - sending European markets lower. However a firm oil price and a moderately higher start on Wall St helped indices back up above the gain line. US home builder Toll Brothers reported lower 3Q earnings, though profits topped analysts' forecasts. Iran was set to discuss its refusal to drop nuclear enrichment activities with six world powers. Its chief nuclear negotiator indicated in late afternoon that it was ready for 'serious' talks, starting tomorrow. WTI stood firm at US$72.50/bbl, making Total (+0.84%) the French index's strongest upwards force.
Elsewhere on the CAC 40, Alstom (+4.25%) was the day's star after a EUR 560m US contract win. Lafarge's (+1.40%) roofing unit, valued at EUR 2bn, would have attracted at least a dozen investment funds, La Tribune reported. ADP (+0.17%) said July traffic rose 3.7% y/y. EADS (-0.97%) and Axa (-0.91%) were the main laggards on downgrades from ABN Amro and Cheuvreux, respectively.
The Xetra-Dax turned higher again in late Frankfurt trading to end up 0.41% after news from Iran that the country was ready for serious talks over its nuclear programme. This outweighed the plunge of the ZEW index. On the local corporate news front, it emerged that VW's (-1.69%) Brazilian unit may close one of its factories if it failed to reach an agreement with labour unions over its proposed restructuring plan. ThyssenKrupp (+1.52%) was in talks to sell its US vehicle chassis business, Budd Company, according to Die Welt. Siemens (+0.75%) closed a US$4bn seven-year syndicated loan, which will be used for general corporate purposes.
FAZ wrote that BASF (+0.05%) was working on a new strategy to tackle the Russian market for chemical products more directly, with the chemicals giant saying it was too early to give details. TUI's (+1.09%) executive board member Sebastian Ebel and executive committee member Eric Debry said they will leave the group, Handelsblatt reported. The FAZ said that Beierdorf's (+0.74%) Tesa unit is looking to increase its operating margin to 10% next year and achieve a return on equity of 25% in 2007 or 2008. Key on the broker front, Credit Suisse lifted its target on Deutsche Boerse (-0.22%) and Cheuvreux removed Alliance (-0.87%) from its Selected List. WestLB upgraded AWD (+0.87%) to add from hold. See Broker Views - Germany.
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