European Indexes Post Modest Gains

A roundup of Tuesday's action on major European exchanges


The FTSE 100 gave up all gains, but managed to close above break-even. Wall Street was trading flat as weak Microsoft shares and credit woes weighed. At home, miners and energy stocks limited the downside, as red hot metal prices and a scorching WTI supported the respective sectors. Copper gained on a strike in Peru, while gold climbed - tracking oil. WTI jumped to US$96.67/bbl on a weak US$ and supply woes. In earnings, MARKS & SPENCER (+4.59%) dished out an 11.5% rise in first half adjusted pretax profit and announces a £1 billion share buyback program. AB FOODS (-2.85%) reported fiscal adjusted pretax profit in line with forecasts, but said high commodity costs will pressure margins. YELL (+1.41%) unveiled ahead-of-forecast first half adjusted EBITDA, but slipped on profit-taking. JD WETHERSPOON (-3.39%) said first quarter like-for-like fell 1%, adding that it is cautious over the outlook. INTERCONTINENTAL HOTELS (-1.81%) posted a 22% rise in third quarter operating profit, saying it is positive on the outlook for the rest of the year. In the property sector, LIBERTY INTL's (+0.35%) nine months adjusted earnings rose 10%. BOVIS HOMES (+1.01%) said autumn sales have been lower than expected and 2007 volumes are expected to be marginally down.


The CAC 40 (+0.44%) closed higher, though Wall Street trades flat-to-lower, with Microsoft off Goldman Sachs's Americas Conviction Buy List. WTI was trading higher at US$96.80, lifting TOTAL (+0.44%), which also benefited from an upgrade to outperform at Credit Suisse. SANOFI (+2.21%) climbed higher after the FDA rejected a generic version of its blood-thinning drug Lovenox from Momenta Pharmaceuticals. EDF (+2.91%) gained following news it will enter the MSCI Index on 30 November. This should add support as index trackers adjust. EADS (-0.55%) is expected to cut its sales forecast on Thursday, Financial Times Deutschland reported. In results news, blue-chip retailer PPR (-1.3%) saw third quarter sales come in a shade above forecasts at €5.195 billion, up 21.9% year-over-year. Ahead of VINCI's (-0.58%) third quarter sales after the close, a Bloomberg consensus looked for growth of 11% year-over-year to €7.719 billion. A Reuters poll expects ALSTOM's (+0.85%) first half net profit to come in at €374 million, up 64.8% year-over-year. 30% stakeholder BOUYGUES (+2.23%) moved higher. In the wider market, RHODIA (+11.54%) jumped after third quarter EBITDA rose 20% year-over-year to €192 million. It said it will meet a key debt target a year ahead of schedule. ALTRAN (+4.18%) posted third quarter sales of €378.7 million, up 6.6% year-over-year (8.1% year-over-year organic growth). IMERYS (-4.86%) reported a 6.6% rise in third quarter net profit.


Xetra-Dax (+0.3%) came off earlier highs to close marginally in the black, while Wall Street traded mixed. Today saw a flurry of third quarter releases. BMW (-3.33%) weighed heavily on the Dax as it reported third quarter group pretax profit of €765 million below consensus expectations, on group revenues of €13.78 billion. BAYER (-0.68%) posted EBIT before special items of €953 million, a touch better than expected, on in-line sales at €7.79 billion. The pharma giant has initiated cost-cutting measures at its MaterialScience unit to help save €300 million yearly by the end of 2009. COMMERZBANK (+0.99%) disclosed a third quarter net profit of €339 million, with an impairment charge on US subprime exposure of €291 million. The bank didn't lower guidance, as was feared. BEIERSDORF's (+0.65%) third quarter EBIT excluding special items was €158 million, up 12% year-over-year but below forecasts. HEIDELBERGER DRUCK (-7.23%) reported lower-than-expected second quarter EBIT of €70 million, saying the detrimental effect of exchange rate movements and high energy and raw material costs have made life difficult. HEIDELCEMENT (+1.61%) posted third quarter net profit of €500 million on sales at €3.09 billion. KUKA (+10.12%) tabled nine months EBIT of €49.

1 million and said it aims to resume payment of a dividend for the 2007 financial year. Upping its guidance, AIXTRON's (+18.67%) nine months results were better than expected, with orders at €160.8 million, up 20% year-over-year. QIAGEN (+2.12%) reported a third quarter net loss of US$7.3 million, not as steep as feared. Quarterly sales rose 50% to US$176.6 million.


Outperforming other European bourses, Oslo's benchmark index closed firmly higher supported by the likes of STATOILHYDRO (+2.49%). The rest of the Nordic bourses also closed comfortably in the black. Meanwhile US equities traded flat to lower after a strong start, as Goldman Sachs removed Microsoft from its buy list and WTI rose to US$96.74/bbl. Locally, STATOILHYDRO started well production at the North Sea's Oseberg field on 1 November. Telecoms were the bright spot of the day, with TELENOR (+1.99%) remaining well bid as UBS upgraded it to buy. ERICSSON (+0.74%) was marked higher amid an upgrade to buy at Goldman, while TELE2 (+1.36%) and TELIASONERA (+0.82%) saw their targets raised at UBS. In earnings, VESTAS WIND (+15.70%) positioned itself at the top of the list at the OMXC20 as it increased its fiscal 2008 revenue guidance by 25% to €5.7 billion, with an EBIT margin of 10-12% seen. Meanwhile, GN STORE NORD (-16.73%) was hit after it said it will abandon the sale of ReSound. Elsewhere, market talk suggests Icelandic Exista, a major shareholder in SAMPO (-1.89%), is pushing for an extraordinary dividend. One possible reason could be Sampo's increased accumulation of shares in NORDEA (unch) as it employs cash instead of paying them out.


Spanish shares ended off intra-session highs as Wall Street turned lower. Microsoft suffers as it is removed from the Goldman Sachs conviction buy list, while oil prices near US$97/bbl. In Spain, GAS NATURAL (+0.65%) delivered nine months net profit up 12.2% to €726.1 million, beating forecasts. The gas group also presented its new strategic plan, saying it sees annual accumulated dividend growth of 10% between 2008 and 2012. BANCO SABADELL (-0.57%) held an investor day in Barcelona. The bank targets an efficiency ratio of 37.5% and ROE of 20.5% by end-December 2009. Elsewhere, GAMESA (+2.84%) gained after strong guidance from peer Vestas. TELEFONICA's (+0.43%) Brazilian j/v Vivo yesterday posted third quarter net profit of BRL4.4 million vs a loss of BRL196.9 million year-over-year. IBERIA (+0.87%) posts results after the close. VUELING (+0.31%) achieved a load factor of 73.4% in October, up 8pp year-over-year. London City Airport could be interested in bidding for BAA's Gatwick airport, writes Cinco Dias: FERROVIAL (+1.11%). UNION FENOSA (-0.4%) has sold 2% of REE (-0.41%). In broker action, Cheuvreux downgraded FADESA (-5.02%).

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