European Indexes Lower

Investor sentiment took a hit after the German Ifo index fell more than expected

London: The FTSE 100 continued to trade in the red in late-session action Friday as investor sentiment takes a hit after the German Ifo index falls more than expected. Wall Street is seen opening lower ahead of next week's Federal Reserve decision on interest rates. WTI trades at US$68.36/bbl. Gold clings onto slim gains as US$ strengthens. The pound is higher at US$1.9963 on the possibility of a BoE rate hike in July. Copper rises on a fall in stockpiles.

Locally, retailers bounce back after yesterday's falls. Tesco (+2.78%) gains after Cazenove reiterates its outperform rating on the stock. Sainsbury (+0.09%) receives a rating and target upgrade at SocGen. Also, Cadbury Schweppes (CSG) (-0.29%) is in focus after activist investor Nelson Peltz bought a 3% stake in Kraft Foods. Peltz has in the past called for breaking up Cadbury Schweppes.

In other news, ICI (ICI) (-0.72%) could counterbid for Akzo Nobel (AKZOY) after it rejected the Dutch rival's offer last week, according to The Business. Pearson (+2.67%) and GE have decided against a bid for Dow Jones. UBS thinks Pearson (PSO) could be worth £12.30/sh if recent M&A transactions are considered. Lloyds TSB (+0.17%) may sell a £2 billion annuity portfolio to free up excess funds, writes the FT.

Frankfurt: Xetra-Dax (-0.29%) trades lower midsession Friday, having earlier surpassed the 8,000 mark once again, with investors taking in news that the Ifo business climate index slid to 107.0 in June from 108.6 last time and 108.4 expected.

Stock-specific, Allianz (AZ) (+0.89%) refuses to comment on market talk that the retail business of its Dresdner Bank unit is up for grabs, with Deutsche Bank (-1.01%) a possible buyer. Dresdner's investment banking part is also considered to be on the chopping block.

In the exchanges sector, NYSE Euronext (NYX) has submitted a €1.5 billion bid for Borsa Italiana as the Milan exchange considers LSE's bid. Meanwhile, at its investor day, Deutsche Boerse (-0.14%) confirmed its outlook for 2007. I

In other news: SGL Carbon (-1.81%) plans to make acquisitions in the aircraft, defence technology and automotive sectors, CEO Robert Koehler said during a conference in Frankfurt. EM.TV (-1.3%) seeks growth through add-ons in the area of pay-TV. Key on the broker front, Merrill Lynch has downgraded Infineon (-1.56%) to neutral from buy, while Wacker Chemie (+1.99%) sees a target hike at UBS, as does Hugo Boss (+0.82%) at WestLB.

Paris: The CAC 40 (-0.04%) remains flat this morning. WTI fell from highs overnight, currently trading at US$68.40. In Paris, Total (TOT) (-0.71%) falls, weighing 5.5 index points. EDF (+3.01%) continues its rally, with strong sentiment from yesterday's and today's brokers comments sustaining its advance. Vallourec (+3.01%) gains on rumors of an imminent bid on the tube maker. Traders note rumor of a potential Chinese bid.

EADS (+1.85%) denies studying the sale of its 46% stake in Dassault Aviation (+0.93%) to raise funds for future development, contrary to what the FT reports. In further news, La Tribune writes that Airbus expects some 900 orders this year. Arcelor Mittal (MT) (-2.08%) will maintain its current pricing structure for flat products in Europe for the third quarter despite robust conditions.

Michelin (-1.52%) falls as JP Morgan removes the stock from its Analyst Focus List. Schneider (-0.91%) is in exclusive talks with Eaton Corp to divest its small-systems unit for €425 million. Pernod Ricard (-0.18%) will pay an interim dividend of €1.26 a share on July 4.

Thomson (TMS) (+0.36%) has decided to distribute as many as 20 free shares per employee. NYSE Euronext (-0.16%) submits a bid for Borsa Italiana of some €1.5 billion as the Milan exchange considers LSE's bid, reports the WSJ. JC Decaux (-0.34%) buys 50% of Kazakhstan's RTS Perekrestok to expand in Kazakhstan.