European Indexes Fall
London: The FTSE 100 closed in the red Wednesday, tracking mixed trade on Wall Street after US durable goods orders came in weaker than expected. Following the Bear Stearns shock and US homebuilder Lennar posting a quarterly loss, as well as warnings about housing markets, today UK homebuilders Taylor Woodrow (-2.77%) and George Wimpey (-2.57%) along with mortgage bank Northern Rock (-11.19%) added to the pile of problems.
Northern Rock cut fiscal underlying attributable profit growth to 15% vs analyst expectations of a 17% growth. Taylor Woodrow said it anticipates less buoyant UK market conditions in second half, due to the impact of interest rate hikes. George Wimpey expects the US market to see lower buyer confidence. Note that Woodrow is buying Wimpey in a £2.5 billion deal.
In more bad news, insurers fell in view of the UK flood situation. Miners were hit after copper slid on weak US data. The JPY gained on falling carry trade appetite. Gold slipped on US$ strength. The pound traded at US$1.9962. Oil gained to US$68.63/bbl on a surprise drop in gasoline supplies.
In good news, Centrica (+0.72%) powered up on upgrades by Credit Suisse and Morgan Stanley. Investors tuned in to ITV (+1.18%) on a Citigroup upgrade. In M&A, Royal Bank of Scotland (-2.03%) fell on report that it will go ahead with its ABN bid minus LaSalle. Sainsbury (+1.31%) rose on renewed bid talk, while Morrison (+2.24%) gained after Deutsche Bank declared a 3% stake.
Paris: The CAC 40 (-0.20%) closed the session in negative territory, though off intra day lows with Wall Street trading mixed following weaker-than-expected durable goods data.
Continuing rate and subprime fears hit domestic financials: BNP (-0.92%), SocGen (-0.94%), AXA (-0.91%) and Dexia (-2.18%) erased almost 12 index points. Total (-0.93%) also weighed heavily. The oil giant said the production at its N'Kossa oilfield in the Republic of Congo would resume on 1 August, a month later than expected.
Elsewhere, the French government could confirm the merger between GDF (+3.70%) and Suez (+1.02%) as soon as the middle of next week, Le Figaro reported. EDF (-0.51%) fell. Sanofi's (+0.57%) Taxotere drug has obtained a priority review procedure from FDA. Amongst second liners, the French stock market regulator AMF has ruled that Sacyr must make a new takeover bid for Eiffage (+0.19%) as the current bid apparently does not meet regulations. Sacyr has said it will appeal against the decision. Ciments Francais (-0.74%) has bought Chinese Fuping Cement for US$70 million.
Frankfurt: For the fourth consecutive session the Xetra-Dax (-0.75%) ended in the red, albeit off intraday lows. The Dow pared gains after energy stocks popped into positive terrain after weekly inventories data confirmed a build in crude stocks but registered an unexpected draw in gasoline and distillates.
Overnight, SAP's (+0.88%) rival Oracle announced solid quarterly earnings and gave a positive growth outlook for the current quarter. Locally, the head of KfW is playing down the likelihood of the state-owned bank selling its 16.9% stake in Deutsche Telekom (+0.59%) and 30.6% stake in Deutsche Post (-0.30%) any time soon. ProSieben (+1.15%) has bought SBS for €3.3 billion, creating a pan-European rival to Germany's RTL Group. The deal is considered inexpensive by analysts.
Axel Springer (+2.47%) has agreed to buy a 41.4% stake in AUFeminin.com, Europe's biggest women's website manager, for €32 per share in cash. Discussing the matter at a press conference, Springer revealed that it plans to start a French version of Bild, Europe's biggest-selling tabloid newspaper, this summer.
Nordex (+4.13%) is marked higher after a positive outlook statement. The wind turbine maker projects sales of €2.5-4.0 billion in 2011, and sees its operating profit margin rising to 9-12% in 2011 from the 6% expected this year.
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