European Markets Pare Losses

Major indexes moved off session lows following positive trading action in the U.S.

European markets recovered somewhat Monday afternoon. However, the market was cautious as the sell-off went on. Among other things that hit negative territory: gold was at US$640, which affected sentiment in the mining sector. Nickel, Zinc, Copper - all saw losses by over 3%. Crude oil cooled by US$1.18 to US$60.46 a barrel.

UK: The FTSE 100 index (-0.94%) closed off intra-day lows. In company news: HSBC (+1.13%) posted a 5% rise in FY PTP, slightly below analyst expectations. The bank's bad debts hit US$10.6bn. However, traders said the results were better than expected overall and the bad debt fears had been over-exaggerated. Shares of the bank were among the few risers in a sinking market.

Royal & Sun (+4.22%) said it had completed the sale of its US operation. At the other extreme, British Airways (-6.59%) dived following reports that the EU and the US had reached a deal on 'open skies' and that GB Airways' unit pilots were voting on industrial action over Easter.

In other earnings: insurance broker JLT (-3.22%) reported a 2.2% rise in FY underlying PTP. TNN (+0.47%) posted a fall in FY adj PTP. William Hill (-2.68%) booked a 19% rise in FY profit.

France: The CAC 40 index (-0.73%) trimmed almost half of its earlier losses - but the French market still closed in negative territory. Total (-1.16%) weighed heaviest, erasing 7.6 index points as oil dropped to below US$60.40/bbl. Arcelor Mittal (-3.32%) was the worst percentage performer, suffering along with other key cyclical stocks: Vallourec (-2.96%), Bouygues (-0.89%) and Saint Gobain (-1.96%).

Suez (-1.00%) said it would buy out the remaining 1.38% of Electrabel. EADS (-2.58%) is 'highly vulnerable' to damaging strikes since it has full order books and fixed delivery schedules, Focus magazine said, citing co-CEO Tom Enders. Alcatel Lucent (-2.23%) will 'resume growth' through the year, said the FT - citing CEO Patricia Russo.

Socialist presidential candidate Segolene Royal has not committed to building a second aircraft carrier, but pledged to keep defense a priority: Thales (-0.71%) fell. PSA (+0.49%) said it won't renew cooperation agreement with Malaysian carmaker Proton Holdings, Le Figaro reported. Elsewhere, Converium would consider a higher bid by Scor (-1.80%) and is open to talks, Finanz und Wirtschaft said, citing Chairman Markus Dennler. Areva (-5.06%) fell having gained approval for its purchase of Germany's Repower.

Germany Thanks to US markets, the Dax index came off the day's lows to end lower by 1.04% after being down over 2% earlier in the session. Among blue chips, ThyssenKrupp (-2.95%) was the worst performer, while E.On (-0.01%) remained in focus with the Endesa story. Cinco Dias wrote that the German group is considering improving its bid for the Spanish firm after receiving permission to do so from the CNMV. However, E.On's chairman has not yet received clearance from the supervisory board.

According to El Economista, Spain's main opposition party, Partido Popular, will claim that Italy's Enel is acting on concert with the Spanish govt. to block E.On's bid for Endesa. The PP is expected to ask Spain's energy regulator to force Enel to launch a partial takeover of Endesa. Meanwhile, E.On may acquire a stake in Italy's Enel as a bargaining tool for its takeover offer of Endesa, wrote Der Spiegel.

Away from the E.On/Endesa happenings, Porsche (-1.15%) revealed 1H net profit of € 1.14bn. TUI (-1.66%) reportedly said sales in Germany for the current winter season and the upcoming summer one have risen y/y on higher spending for quality holiday packages. Heidelberg Cement (-1.32%) intends to sell its 35% stake in French Group Vicat. Stada (+0.51%) raised its dividend by 59% following solid 2006 prelims. Vossloh (+0.96%) bought rail switch manufacturer Pohl for US$21m.

Elsewhere: At 8676.86, the SMI index (-1.38%) ended Monday's session lower but managed to swing up from the day's low of 8609.43.

Piazza Affari (Milan) also closed today's trading session in the red, but off session lows.

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