European Indexes Rally

A roundup of Thursday's action in major European markets


The FTSE 100 closed strongly higher as Wall Street traded in the black boosted by Wal-Mart raising its profit forecast. At home, strength in oil and commodity prices kept mining and energy majors in demand. The BoJ left rates on hold at 0.5%. WTI fired up to US$83.07/bbl as US refinery inputs fell and gasoline demand rose. Copper prices gained, while gold glittered. £ was at US$2.0356. Among the gainers, oil giant BP (+2.33%) unveiled plans to improve delivery to boost revenues and cut costs. Index heavyweight VODAFONE (+4.85%) jumped on market talk that CEO Arun Sarin may leave the company. The company refused to comment. In the sector, Telefonica has promised higher profits and dividends. Among other solid risers, BRADFORD & BINGLEY (+0.99%) was strong on speculation of a positive US roadshow and after Standard Life Investments declared a 3.2% stake. In earnings, WH SMITH (-6.37%) wrote up a forecast-beating 29% rise in fiscal pretax profit pre-ex, but said that it expects the key Christmas season to be very competitive. SAGE (-3.28%) said fiscal core earnings are expected to rise 18.4%, with results seen in line with market consensus. The software company said that its North America CEO Ron Verni has left with immediate effect. HAYS (+1.40%) said it has made a strong start to the year, with net fees growing 21% on an like-for-like basis.


The CAC 40 (+0.42%) closed the session higher with Wall Street trading in the black. Locally, France TELECOM (+4.24%) outperformed - boosted by positive comments from Spanish peer Telefonica this morning. Italy's Tenaris has pledged to remain independent, ruling out any possible sale to ARCELOR MITTAL (+1.64), wrote the FT. Boeing has warned of further delays to its new 787 model because of assembly difficulties. EADS (+1.54%) gained. In other news, the French government provided LAGARDERE (-0.29%) with advice on how to sell its stake in EADS through the Agence des Participations de l'Etat (APE), La Tribune reported, citing documents from the APE. SUEZ (+0.53%) plans to increase the number of its employees by 32% over the next five years. About 110,000 people will be added worldwide, including 52,000 in France. ALSTOM (+0.69%) has won contracts worth €350 million to supply equipment to hydropower plants in Brazil and China. SOCGEN (-0.95%) underperformed on the back of revived market rumour it is interested in Commerzbank. DANONE (-1.16%) plans to increase French dairy products prices by 10% to face the 'brutal' and 'unprecedented' rise in the price of raw milk. PPR (-0.35%) may consider merging its YSL Beaute unit with CLARINS (+5.8%) to achieve critical size in the cosmetics industry,


The DAX closed less than 100 points from its 2007 high. SAP (-1.99%) was among the few fallers as rumours swirled of a €45/share counterbid from Oracle for Business Objects. VW (+4.75%) was top gainer having upped its 2007 China sales target to 900,000 vehicles after having posted nine months China sales up 30% to 684,786 vehicles. Rumours had it that DAIMLER (+0.83%) will pay a €1.10/sh bonus dividend. THYSSENKRUPP (+2.54%) was higher following a report in the Nikkei business daily that Japanese steel giant JFE Holdings will outsource production of automotive steel sheet to the German company to supply the European factories of carmakers such as Toyota. ALLIANZ (-0.51%) was in focus as it agreed to transfer Rasfin Sim to Italian investment bank Banca Leonardo. DEUTSCHE BOERSE (-1.1%) is to replace ABN Amro in the EURO STOXX 50 - with the change effective as of the opening of trading on Monday 15 October. Meanwhile, DEUTSCHE POST (+1.45%) will take up a spot in the EURO STOXX Selected Dividend 30 index. Moving onto the MDAX stocks, SUEDZUCKER (+5.25%) sweetened up after raising its operating profit forecast for the financial year to at least €210 million from €120 million-€160 million. BILFINGER (+3.94%) was buoyed by WestLB's addition of the stock to its mid & small cap focus list. KfW is evaluating all strategic options for its 37.8% stake in IKB (-0.5%).


Oslo outperformed and Helsinki was well bid on Thursday; the two lead the pack and finished Europe's best performing bourses, boosted by STATOILHYDRO (+3.76%), TELENOR (+4.34%) and NOKIA (+3.63%). Stockholm and Copenhagen also ended in the black as US markets traded higher at the European close. Back home, STATOILHYDRO rose as Goldman added the stock to its Pan Europe conviction buy list. Separately, the investigation of the Norwegian oil giant regarding oil dealings in Libya has been terminated. NOKIA cheered as Merrill Lynch resumed coverage with a buy rating. Also in telecoms, ERICSSON's (+1.07%) j/v Sony Ericsson posted better-than-expected third quarter earnings, while ASP at €120 was lower than anticipated. TELIASONERA (+1.35%) hit the headlines as Mikhail Fridman, chairman at Alfa Group said the group is not interested in buying the Swedish govt's 37% stake in the Scandi telco. Meanwhile, Fridman said he hopes the dispute with TELENOR regarding control of Kyivstar will be resolved within six months. DNB NOR (+2.14%) was also on the move upwards today as Goldman Sachs and Deutsche Bank raised their valuation on the bank. On the downside, METRO (-2.08%) slid as it lost 55,000 readers in Sweden in June to September 2007 compared to the same period last year, Dagens Industri reported.


The Ibex ended the day solidly higher, supported by sharp gains in TELEFONICA and a strong performance on Wall Street, which benefited from increased third quarter earnings guidance from Wal-Mart. The equity market's gains came despite a jump in Spanish inflation in September, with CPI up 2.7% year-over-year. Spanish Economy Secretary David Vegara said inflation could rise to near 3.0% by year end. In corporate news, TELEFONICA's (+6.99%) investor day in London was the centre of attention. The telecoms giant said it will pay a dividend of €1/sh for 2008 and it set out strong guidance for 2006-10, targeting OIBDA CAGR of 7-11%. News of further international diversification boosted ACCIONA (+2.92%); the firm will invest €290 million in two Polish property projects. In other news, IBERIA's (-1.10%) September passenger traffic (PKT) rose 3.3%, while the load factor improved by 1.5pp year-over-year to 84.8%. Meanwhile, the Ibex committee decided that ENDESA (-0.05%) will return to the selected index as of 23 October. GAMESA (+1.28%) and Berge joined forces to set up a group called Compass Transworld Logistics, which will transport wind turbines. Cheuvreux raised GRIFOLS' (+3.96%) target price to €15.13.

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