European Indexes Climb

A roundup of Tuesday's action in European markets


The FTSE 100 closed strongly higher, helped by M&A in the beverages sector and strength in banking stocks. Additional support came from a higher open on Wall Street ahead of Alcoa's third quarter quarter figures. FOMC minutes are awaited. Oil climbed over US$80/bbl. At home, finance minister Alistair Darling said in his first PBR that the economy will grow more slowly than expected next year and Britain faced 'increased international economic uncertainty'. Darling also unveiled plans to charge 'nondoms' and increased the inheritance tax threshold. In the market, banks gained after the UK government threw a new lifeline to NORTHERN ROCK (+19.86%) by guaranteeing all new retail deposits in the mortgage lender. In big ticket M&A news, investors raised a toast as SABMILLER (+1.43%) said it will combine its US operations with Molson Coors to form a j/v. Regulators may delay a decision on whether to clear Thomson's bid for REUTERS (unch) after the European Commission ruled the deal should be subject to an in depth probe, the FT reported. In trading updates, NORTHERN FOODS (-1.92%) said it expects material costs to be 4% to 5% higher, resulting in a fiscal impact of 8% to 10%. Also, CARPETRIGHT (+4.65%) said it had received a revised £12.50/sh cash proposal from a consortium headed by chairman and CEO Lord Harris and other senior management members.


The CAC 40 (+0.38%) closed the session higher as Wall Street traded in the black at European close. Locally, SANOFI (+2.04%) gained on sustained speculation Pfizer is looking to buy a stake. GDF (+1.62%) wants to buy twice as much power from EDF (+3.08%) under a long-term contract that's under negotiation, Bloomberg said. VALLOUREC (+3.85%) moved higher on revived, if vague, bid rumour. RENAULT (+2.16%) outperformed following its addition to SocGen's Premium List. A market rumour did the rounds that MICHELIN (+1.37%) is bidding for German tyre maker Continental. However, the standout stocks were wider-market TF1 (+12.76%) and M6 (+8.25%) - in focus as the French culture minister announced last night that there will be a new TV regulation in 2008. Les Echos suggests that the 49% limit on shareholdings in terrestrial TV stations could be abolished in order for French companies to become media champions. TF1 was upgraded to outperform by Cheuvreux on the news. SOITEC (+13.56%) surged following the announcement it joined the SOI Industry Consortium. Among losers, CARREFOUR (-1.65%) suffered from an Exane downgrade to underperform. Midcap REXEL (-5.32%) is studying its options regarding Hagemeyer.


Frankurt closed the session flat as intraday gains were not sustained. On the local macro data front, Germany's trade surplus slipped to a seasonally adjusted €15.3 billion in August from €16.5 billion the month before. Stock-specific, talk of Sweden's Investor AB planning a bid for MAN (+2.13%) lifted the truck maker higher. ADIDAS (+1.46%) forecasts a double digit profit increase in 2008, according to an article in FAZ. MUNICH RE (+0.59%) said it is in talks to buy a majority stake in an online car insurer unit from South Korea's Daum Communications. The stake's book value is put at some US$12 million. Alitalia has shortlisted six possible bidders, including LUFTHANSA (+1.11%). Broader market-listed KLOECKNER & CO. (-18.74%) slumped after saying it won't meet its EBITDA forecast for 2007. It will undercut the previous year's figure of €395 million by some 10%, because of missing windfall profits and lower stainless steel prices. PREMIERE took a hit in late afternoon trading on reports that Leo Kirch's Sirius is to pay DFL €3 billion for six German football seasons and will market the football broadcast rights. PRE's shares were clearly knocked by this news but one analyst said it is probably an overreaction as Sirius is simply acting as a middle man for the rights.


All the Nordic bourses finished higher on Tuesday boosted by positive trading on Wall Street. Back in the Nordic region, TGS NOPEC (-12.

63%) fell head first as it issued a profit warning, highlighting productivity issues on two newly delivered 3D vessels, as well as difficulties in closing new Gulf of Mexico multi-client late sales. Meanwhile, STEPSTONE (+8.70%) soared as it said it is set for record third quarter results after experiencing strong business growth and momentum with both Online and Solutions. Moving on, DNB NOR (+2.42%) said it will cut costs by NOK1 billion per year by 2010, raising its profit target to NOK20 billion by 2010 vs NOK14.1 billion in 2006. In Stockholm, OMX (-0.53%) came under pressure in late trade as the financial watchdog Ekobrottsmyndigheten will investigate alleged insider trading in OMX shares on 18-19 September, the days before Nasdaq and Borse Dubai launched their bid, Affars Varlden reported. Elsewhere, BOLIDEN (-2.52%) fell as Cheuvreux downgraded to underperform due to falling zinc prices. In other news, FINNAIR (unch.) delivered September traffic figures that showed an increase in passenger kilometers by 16.8%, while the passenger load factor came in at 75.0% or 1.1 points lower than last year. In broker activity, Deutsche Bank reiterated coverage of NOKIA (-1.01) with buy.


The Spanish market ended higher, supported by positive trading on Wall Street and solid gains in IBERDROLA (+2.85%) and SOGECABLE (+6.75%), as US investors awaited earnings from Alcoa and the latest FOMC minutes. In the local market, IBERDROLA enjoyed strong gains as it valued its renewables unit at €25 billion ahead of the upcoming IPO, Expansion reported. This is ahead of analysts' initial estimates. Meanwhile, Cinco Dias reported that former directors of IBERIA (+2.33%) had held talks with investors with regard to making an offer for the airline. ACERINOX (+0.68%) recovered from early weakness sustained after German firm Kloeckner said it would not meet its EBITDA forecast for 2007 because of lower stainless steel prices. SOGECABLE and PRISA (+3.87%) surged after a court ruled that Mediapro could not commercialize TV rights for key Spanish football league matches. Elsewhere, shares in VUELING (+20.37%) soared on reports that SocGen had bought a 2.67% stake. FAES FARMA (+2.75%) signed an agreement with Jazz Pharmaceuticals to develop, produce and market Faes's new antidepressant Flufenoxina. In broker moves, UBS cut ABENGOA's (-0.72%) target price. Finally, Criteria Caixacorp, which lists tomorrow, set the final IPO price at €5.25, towards the lower end of the indicative range.

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