European Indexes End Lower

A roundup of Friday's action on major European exchanges


The London market closed in the red as Wall Street continued to trade lower, despite a surprisingly high reading of non-farm payrolls. The main fear haunting markets appeared to be that major investment banks will continue issuing hefty subprime-related write-downs. One stock especially being stamped on today was BARCLAYS (-5.95%), on talk of funding worries and the bank talking down estimates in New York. Merrill Lynch analysts issued a buy reiteration note on Barclays, claiming these stories 'look like a Friday bear raid in a skittish market'. Elsewhere, WTI was above US$95 a barrel, with prices supported by worries over tight supplies. £ was at US$2.0853. In earnings news, BRITISH AIRWAYS (-2.73%) reported a 25.9% rise in first half pretax profit. The airline lowered revenue guidance to 3% from 3.5% on a weak US$. BSKYB (-4.35%) added ahead-of-forecast 83,000 net new customers in first quarter. However, the pay-TV company's adjusted operating profit of £150 million missed forecasts. In other news: CARPHONE WAREHOUSE (+0.88%) expects to sell 10,000 Apple iPhones when the gadget is launched in the UK next Friday, The Times reported. SKYEPHARMA (+6.56%) said asthma drug Flutiform has cleared a Phase III safety study.


The CAC 40 (-0.18%) ended Friday's session a shade lower, held back by the down force of banking stocks, although the likes of SCHNEIDER and DANONE helped to lift the index off lows. In the US, the Dow was also trading with slight losses, as weighty concerns that the credit crisis could deepen further pulled banking stocks lower. The pressures were felt on the CAC 40: SOCGEN (-3.6%), BNP PARIBAS (-2.03%), CREDIT AGRICOLE (-2.6%) and DEXIA (-3.22%) dropped. The latter was downgraded to sell from neutral by UBS. In stock specific news, RENAULT (-1.87%) was driven lower after its October French sales fell by 4.9%. Outperformers included defensive stock France TELECOM (+1.47%) and DANONE (+2.82%). Merrill Lynch raised its target on Danone to €64 (settled at €59.85) and broker looks for third quarter organic growth of 8-10%. SCHNEIDER (+2.37%) also gained as it is seen as a potential target for ABB. L'OREAL (+0.69%) benefited from a positive article in the FT's Lex column, being viewed as a better stock than Reckitt Benckiser. In broker news, SocGen downgraded PPR (-2.77%) and HERMES (-3.37%) to sell from hold. Merrill Lynch downgraded THALES (-1.18%) to neutral from buy.


As Wall Street traded mixed, amid jobs data showing surprisingly strong growth, Xetra-Dax (-0.5%) ended Friday's session below breakeven - but off intra-day lows. Of local note, reports had it that CEO Klaus-Peter Mueller will become chairman of COMMERZBANK's (-1.5%) supervisory board next year and will be succeeded as CEO by Martin Blessing. ARCANDOR (-0.37%) is to take over METRO's (+3.03%) Kaufhof department stores, reported Handelsblatt. Efficiency gains of €350-400 million a year are expected. There was talk, based on Swedish press reports, of private equity group Cevian building up a stake in BASF (-0.23%). Speculation that Micron Technology is eyeing INFINEON (+0.2%) brought the German chip maker in focus. Auto data showed BMW's (-1.58%) North American vehicle sales rose 9.6% in October, boosted by demand for the 3 series car and a new version of the X5 sport utility vehicle. PORSCHE's (+0.67%) North American sales were up 21%, helped by new models of the Cayenne and 911 cars. VW's (-0.9%) US sales saw a 8.3% rise to 17,260 units. DAIMLER's (-1.13%) US sales rose 6.5% to 22,820 units last month. In other news pertaining to Daimler, the auto giant is in talks with India's Hero Group about an alliance to make commercial vehicles, according to the Economic Times.


All the Nordic bourses ended the last session of the week in the red. Across the Atlantic, Dow Jones and S&P 500 extend yesterday's losses as financials continue to weigh. Oil rose above US$95/bbl on worries over tight supplies. Back in the Nordics, SAMPO (+1.

81%) was the bright spot of the day bucking the negative trend as Cheuvreux was buying the name aggressively. Meanwhile, rumours that the Finnish bank may bid for the Swedish government's 20% stake in Nordea surfaced again today. On the reporting agenda, SCHIBSTED (-9.70%) fell sharply as third quarter core earnings came in short of expectations. S&P Eq Res pointed out the biggest weakness comes from Sweden, where Aftonbladet had to absorb SEK 41 million losses. NORSKE SKOG (-14.19%) delivered results for third quarter below expectations, with the numbers being even worse than the profit warning last month. PROSAFE (+2.00%), meanwhile, announced third quarter EBIT ahead of forecasts, with a positive market outlook for 2009-'11. In other news: Warner Music will withdraw its contract with NOKIA (unch.) following concerns about illegal downloading, The Wall Street Journal reported. TELENOR (unch.) was in focus as it may sell its 18.3% stake in Russian Golden Telecom for NOK4 billion to VimpelCom, Dagens Naeringliv reported. Key broker action, Goldman added NESTE OIL (+3.60%) to its conviction buy list.


The Ibex 35 ended Friday's session comfortably higher while major European financials extended losses. Although yesterday's All Saints Day broke the positive trend, in which the Spanish bourse benefitted from five profitable continued sessions, it seems that investors are still confident on Spanish banks. TELEFONICA and IBERDROLA were among the star performers. Of note, TELEFONICA (+1.89%) contributed with c.60 points. ING lifted its target price on the operator while the Mexican government said the investment in GTM does not contravene the law. In addition, shares were boosted amid expectations of strong iPhone sales when the device launches in the UK next week. Elsewhere, IBERDROLA (+0.63%) will invest €8.6 billion in its renewables unit to install 2,000 MW pa over the next three years, wrote La Gaceta. SACYR-VALLEHERMOSO's (+1.22%) unit Somague won a €75 million contract to build a light railway line in Dublin, according to Diario Economico. OHL (-1.04%) was confirmed as winner of five sets of Brazilian highway concessions. In addition, the construction group is reported to be seeking to make a third acquisition in the US to boost its civil works business, according to Cinco Dias. Cheuvreux downgraded TECNICAS REUNIDAS (-3.66%) on valuation grounds.

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