European Indexes Fall
The FTSE 100 closed deep in the red amid uncertainty over the US economy, mixed messages from the Fed and stratospheric oil prices. Wall Street was trading sharply lower. The Bank of England voted 7-2 to hold rates at 5.75%. The Bank of England's deputy governor John Gieve has reportedly said that there could me more turmoil in store for the money markets before the end of the year. WTI slipped to US$97.07 a barrel after inventories showed a rise in stocks at Nymex delivery point in Cushing. However, copper prices slipped on credit worries. Gold closed below US$800 in London. Among financials, NORTHERN ROCK (-13.40%) said it has received additional proposals and advisors have begun talks with number of selected parties. Further pressure came as Goldman Sachs lowered price target on various financials. In company news, travel giant THOMAS COOK GROUP (-6.22%) said it expects to double its operating profit in three years as it promised dividends. Newspaper publisher DAILY MAIL (-9.01%) appointed Martin Morgan as CEO, as it unveiled an 11% rise in fiscal pretax profit. Italy's Monte Paschi said it has sold its stake in LSE (-7.79%) for £17.70/sh.
The CAC 40 (-2.28%) closed firmly lower, with Wall Street also in the red amid growing concerns over economic outlook. The €hit a new record high against the US$. WTI came within striking distance of US$100/bbl last night. It fell back this afternoon after inventories showed a rise in stocks at Nymex delivery point in Cushing - TOTAL (-0.2%) outperformed. In news back home, MEDEF boss Laurence Parisot said widespread strikes represent 'a catastrophe for our economy.' EDF (+2.37%) was one of only three blue chip gainers in its role as a defensive safe haven. ALSTOM (+0.26%) and Orascom have won a US$1.98 billion contract to build a power plant 250 miles west of Algiers. At the other end of the market, financials weighed heavy after SOC GEN (-5.92%) was downgraded to sell by Goldman Sachs: BNP (-3.1%), AXA (-2.95%), DEXIA (-6.15%). The latter was hit by a downgrade to hold from Dresdner. Elsewhere, research company Dell'Oro Group revealed that ALCATEL LUCENT'S (-6.06%) market share for mobile networks, GSM and WCDMA has decreased to 8.6% in third quarter (vs 9.8% q/q), Reuters reported. ARCELOR MITTAL (-3.92%) this morning announced it has formed a coal mining j/v with Mozambique's Black Gold Mining. In wider market news, SEB (-6.01%) has been given the all-clear by Chinese authorities to take a 52.74% stake in Supor.
It was a rough day on the markets, with the S&P Europe 350 down about 2.46% and S&P 500 off 1.2% at the close. In Frankfurt, the Dax (-1.4%) saw less downside than most other benchmark European indices, with speculators once again putting POSTBANK (+2.19%) on the M&A shelf. The stock was boosted after DEUTSCHE BANK's (-1.69%) CEO Ackermann reportedly said at a Berlin conference he does not rule out Postbank interest. Other financial names, meanwhile, were dumped by the market on the back of Freddie Mac's woes. HYPO REAL ESTATE (-6.23%) and COMMERZBANK (-6.45%) both fell, as did IKB (-12.1%). Onto the carmakers: according to an article on capital.de, VW (-1.68%) appears to be targeting 2010 operating profit of €8.4 billion and an improvement in the EBIT margin to 6.5%. TUI (-5.15%) turned lower, after having traded in the black earlier as the Russian investor Alexei Mordashov increased his stake to 3.02%, according to FAZ. In other news, DEUTSCHE BOERSE (-2.62%) said the projected annual savings of €100 million from 2010 it announced in September will be predominantly through a reduction of non-personnel related costs.
Among Nordic equity markets the C20 (-3.29%) and HPI (-3.23%) were furthest in the red, the S30 (-1.66%) and OSEBX (-1.6%) were also firmly lower. In New York, shares traded lower after the Fed yesterday cut its 2008 outlook for US economic growth to a range of 1.8-2.5% from earlier 2.5-2.75%. Meanwhile WTI nearly hit the US$100 mark overnight but fell back at the end of the session to US$96.
93/bbl after EIA's weekly inventory data showed a 1.1 million draw in crude vs a forecast of an 0.6 million build. In the telecoms sector, Reuters reported citing research company Dell'Oro Group, that NOKIA's (-4.12%) NSN market share for mobile networks, GSM and WCDMA has expanded to 35.5% in third quarter, vs 25.2% q/q. ERICSSON's (-8.25%) market share decreased to 41.1% in third quarter, vs 48.1% q/q. JP Morgan cut its target to SEK16 from SEK19.16, saying the outlook has worsened and lowers estimates after surprise Analyst Day. From another perspective, WestLB upgraded the stock to buy, believing the sharp stock decline is overdone. The broker argues that investors need to look beyond 2008 sales and earnings to appreciate the fundamental value of the company. In other news, SKANSKA (-1.06%) said it has been selected by MTA New York City to expand part of Subway Line 7 in New York. The total value of the contract is SEK7.8 billion in which Skanska has a 35% share, representing SEK2.75 billion. JP Morgan upgraded VOLVO (+0.73%) to overweight.
The AEX (-2.09%) closed lower, with Wall Street trading in the red amid high oil prices and ongoing worries about the US economy. ROYAL DUTCH (+1.15%) was the only blue-chip gainer. AHOLD (-1.55%) failed to rise above breakeven, although its third quarter results were 'solid', according to analysts. Current sentiment stopped the stock from rising. In M&A news, HEINEKEN (-0.81%) and Carlsberg said in a statement that results at Scottish & Newcastle's western European businesses were disappointing. Heineken has teamed up with Carlsberg to buy the UK's biggest brewer for £7.3 billion, an offer Scottish & Newcastle has rejected as too low. ARCELOR-MITTAL (-3.64%) announced it has formed a coal mining j/v with Mozambique-registered Black Gold Mining. In the wider market, INNOCONCEPTS (+6.83%) was the key outperformer in Amsterdam as it announced an agreement with an unnamed US multinational from which it expects a substantial contribution to its operating result. SMIT INTL (+0.45%) also bucked the negative trend as it raised its fiscal profit guidance.