European Indexes Finish Mixed
London's FTSE 100 index slips into the red at midsession Friday after the UK's second quarter GDP figure stays unrevised, raising concerns that the BoE may lift interest rates by year-end. However, M&A activity helps limit losses. Oil prices leap over US$73 as another storm gathers in the Caribbean with the potential to reach the Gulf of Mexico next week. US futures indicate a slightly higher start on Wall Street ahead of a speech from Fed Chairman Bernanke.
On the London trading floor, banking stocks gain on bid talk that Bank of America may bid for a UK bank - thought to be Lloyds TSB (+0.57%). Barclays (+0.78%) and Royal Bank of Scotland (+0.11%) mint gains. Bid rumours also catalyse industrials, with Corus (+1.26%) back in focus on unspecified takeover talk. Index heavyweight Vodafone (+0.68%) sells its 25% stake in Proximus for €2 billion. House of Fraser (+1.57%) agrees to Baugur's £1.48/share bid. Mining shares are up on a rebound in copper prices, but BHP (+0.20%) cautions against markets expecting more share buybacks due to profits being generated by miners. Stagecoach (+0.64%) says the year has started well. In broker moves: Rexam (-1.91%) is hit by a Citigroup downgrade to hold and profit taking. iSoft (+37.06%) surges as it secures financing agreements.
In Frankfurt, the Xetra-Dax index (+0.01%) remains barely changed midsession Friday as oil prices climb above US$73 per barrel as another storm gathers in the Caribbean with the potential to reach the Gulf of Mexico next week. Today's key event will be Fed Chairman Bernanke's speech - at 14:00 GMT - with investors looking out for comments on inflation and the outlook for US interest rates for the rest of this year and into 2007.
On the corporate news front, takeover talk resurfaces in the banking sector and pushes Commerzbank (+4.32%) higher. In the frame are Goldman Sachs, JP Morgan and Bank of America, though the latter is thought to be more interested in UK
's Lloyds TSB. In the auto sector, VW's (-0.48%) brand sales rose 8% in July to over 280,000 units, bringing sales in the first seven months of the year to 1.96 million, up 12.8% year-over-year. DCX's (-0.68%) Chrysler unit plans to cut fourth quarter production as it tries to check growing inventory of trucks and SUVs. Continental (+0.8%) and its works council broke off negotiations over compensation for 370 workers affected by the planned closure of a car tyre division in Hanover, the FTD reports. Elsewhere, ThyssenKrupp (+1.32%) finds support in the German MoD's plan to spend €3 billion on marine vessels. Karstadt's (-0.94%) former property at the Lenne Triangle on Potsdamer Platz in Berlin was awarded to the Jewish Claims Conference. Karstadt may now have to pay damages (cons. €145 million), the FTD reports.
The CAC 40 index (-0.06%) in Paris drifts just below the gain line in a directionless session. Turnover on the benchmark index is a tame €1.036 billion, in the absence of major corporate earnings reports and as the UK
prepares for a three-day weekend. The main focus of today's session will be a speech by Fed chairman Ben Bernanke, with investors looking out for comments on inflation and the outlook for interest rates. Notable today is a rally in the oil price, back above US$73/bbl as a storm is brewing near the Gulf of Mexico.
On the French bourse, banks are buoyed by news Banca Intesa and SanPaolo-IMI will hold merger talks at the weekend. Credit Agricole (+1.23%), which owns 18% of Banca Intesa, reportedly backs the deal to create a €60 billion giant. Speculation also boosts Safran (+10.56%), following confirmation that executive board member Gregoire Olivier will leave. Analysts say this could spark the disposal of underperforming assets, namely the telecom arm of which he was in charge. Avenir Telecom (-6.07%) fiscal year revenue rises 16% - hinting at a weak fourth quarter as nine months revenues were up 24%. A Deutsche Bank research note favors Michelin (+2.55%) over Continental, highlighting greater leverage to declining natural rubber prices and labor cost improvements. SG upgrades Accor (+2.18%) to buy.
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