European Indexes Finish Mostly Higher

A roundup of Wednesday's action on major European exchanges


FTSE shares ended higher, helped by news that the Fed and other central banks are to join forces to help ease liquidity strains in global markets. At home, NORTHERN ROCK (-4.98%) underperformed on news Cerberus has dropped out and only two bidders remain. Investors took profits on miners. XSTRATA (-0.88%) confirmed talks with potential suitors. BHP BILLITON (-0.12%) said the logic of its bid for RIO TINTO (-0.4%) is compelling but it has not yet made a submission to the takeover panel. ASTRAZENECA (-0.09%) has taken legal action against plans to release generic versions of Crestor. A CC verdict on BSKYB's (-0.74%) stake in ITV is expected by the end of the week. MORRISON (+1.83%) jumped after a report saying it increased its market share for the first time in 5 years. RANK (-5.58%) slumped after a poor trading update and news it is scrapping its dividend. HMV (+1.5%) outperformed after reporting a return to profit in first half. BUNZL (-1.6%) said trading is in line despite a weak US$. NORTHGATE IS (+14.77%) said in late trade that it has received a takeover approach. The FTSE 100 reshuffle is decided today. NORTHERN ROCK, BARRATT (+4.68%), PUNCH (-1.85%), M&B (-2.12%), DAILY MAIL (-2.19%) could be shown the door.


The CAC 40 (+0.32%) closed the session in the black with 3-2 positive breadth, with Wall Street trading higher on news central banks including the Fed and ECB are joining forces to increase liquidity in money markets. Of local note, France TELECOM (+1.91%) gained after announcing it has purchased a 25% stake in Spanish phone operator AlPi. It also enjoyed a Goldman Sachs target hike to €28.40. The broker has kept its buy rating. ARCELOR MITTAL (+1.83%) announced a new share buyback program of up to 44 million shares. Separately, it plans to build a US$380 million beam mill in Canada and will shut down some existing facilities. ALCATEL LUCENT (+2.18%) won a US$79 million contract for a 4,900 km submarine cable network with The East Africa Marine System Ltd consortium. Elsewhere, STM (+0.57%) president Carlo Bozotti told Le Figaro that he looks for 'average annual sector growth of 6-7% in the next five years,' but has an ambition for STM to achieve 10%. In the wider market, GEMALTO (+3.98%) shone after CEO Olivier Piou yesterday said 2007 consensus expectations are 'too low'.


Xetra-Dax (+0.83%) closed in fine fettle again after this morning's sea of red, with Wall Street recovering from yesterday's hammering after the Fed announced a joint move with the BoC, BoE, ECB and SNB to ease the credit crunch by increasing liquidity. Local banking shares reacted favorably to the news: DEUTSCHE BANK (+0.54%); HYPO REAL ESTATE (+2.63%). On the corporate news front, CONERGY (-11.79%) won't achieve its sales target this year, it said, and expects EBIT to come in between €-150 million and €-200 million. The solar energy group is discontinuing some non-core activities. It is, therefore, shedding 500 jobs. CARL ZEISS MEDITEC (-2.88%) fared better with its trading update, saying it is increasing its dividend payment, as 2006/07 earnings have jumped almost 80%. Missing guidance for 2008, however, weighed. Top percentage performer among blue chips today was BAYER (+2.7%), on talk Swiss drugs giant Novartis could bid €70 per share and amid a general positive day for the European chemicals sector. Two executives who worked at one of CONTINENTAL's (+0.91%) units are pleading guilty in a federal court for their roles in price fixing. Also in the gaze of the law, SIEMENS' (+0.71%) main Moscow office was searched as part of a probe into embezzlement. Finally, GILDEMEISTER (+3.99%) was well bid as it joined the mid-cap index.


Italian stocks ended flat-to-higher as Wall Street was trading firmly higher after the Fed Reserve and the ECB announced that they would launch a temporary auction facility to increase liquidity. Back home, newsflow was dense for ALITALIA (+2.71%) as the Italian govt prepares to meet later today to discuss its sale. The market toyed with speculation that Air One could bid €0.95-€1.00/sh for the airline. Air One also unveiled bid details saying it could cut about 3,700 jobs, and has the support of four big banks. ENEL (-0.59%) announced it sees costs savings of above €1.03 billion p.a for Endesa. FIAT (-1.18%) announced it is losing production of cars at the rate of 5,000 units per day due to a truck drivers strike. The automaker named Luca De Meo CEO the Alfa Romeo unit. In late news, Germany's Arcandor has agreed to sell its remaining property portfolio to a consortium that includes PIRELLI RE (-0.54%) for €800 million. Meanwhile, PIRELLLI & CO (-0.71%) ordinary shareholders have approved the payment of a €827 million extraordinary dividend or €0.154/sh. STM's (+1.21%) president looks for annual sector growth of 6-7% in the next five years. On the broker front, ITALMOBILIARE (+2.59%) rallied after Cheuvreux upgraded it to outperform and BANCO POPOLARE (+1.36%) climbed after UBS upgraded it to buy.


The Ibex 35 ended just below breakeven as steep declines in INDITEX offset upbeat trading on Wall Street. US and European bourses generally cheered news that central banks, including the Fed and ECB, are joining forces to increase liquidity in money markets. Locally, INDITEX (-5.13%) fell out of fashion as nine months sales came in slightly below consensus. Exane said third quarter like-for-like sales were disappointing. Nevertheless, the retail group reported higher-than-expected nine months net earnings of €825 million, with the gross margin inching higher to 57.1%. ACCIONA (+1.74%) and Enel said they expect synergies of €1 billion pa from the ENDESA (-1.48%) deal. IBERDROLA (+0.09%) has set the IPO price for Iberdrola Renovables at €5.30, the lower end of the indicative range. The renewables group lists tomorrow. GRIFOLS (+3.34%) and ABENGOA (+6.42%) will join the Ibex 35 in January. In broker changes, Cheuvreux downgraded TELEFONICA (unch) to underperform on valuation, while Lehman Brothers upgraded REPSOL (+0.56%) and TECNICAS REUNIDAS (+4.53%).

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