European Indexes Rally
The FTSE 100 closed firmly higher, boosted by hopes of further interest rate cuts, and solid trading on Wall Street, following better-than-expected results from Goldman Sachs and Lehman. Investor focus this afternoon will be on the FOMC's decision on interest rates. The US central bank lowered its discount rate over the weekend to 3.25%, and the Fed funds rate, currently at 3%, is expected to be cut by 100bps. On the trading floor, RIO TINTO (+3.50%) jumped after Chinalco said it may raise its stake. SHIRE PHARMA (+5.36%) rallied after UBS said ASTRAZENECA (+2.17%) could pay up to GBP14.25 per share and still create value. EDF, RWE and E.ON are thought to be the leading contenders for BRITISH ENERGY (+2.52%). LEGAL & GENERAL (+2.85%) reported a 26% fall in FY EEV op profit, missing estimates. TUI TRAVEL (+7.40%) was confident it will hit FY targets, and said current trading is strong. VENTURE (-9.40%) plunged after FY revenues came in short of forecasts. MISYS (+14.11%) soared after order intake in 3Q rose 29%. The group will merge its healthcare division with Allscripts. DEBENHAMS (+5.63%) unveiled a 1.2% increase in 1H sales, with LFL down 0.7%, below expectations, and said gross margin for 1H will fall y/y by some 20bp. DERWENT LONDON (+5.51%) posted a 8.4% increase in FY adjusted NAV per share to GBP18.62.
The CAC 40 (+3.42%) closed substantially higher, with Wall Street in fine fettle following better-than-expected results from Goldman Sachs and Lehman Bros. The Fed unveils its rate decision at 18:15 GMT, with consensus looking for a hefty cut. Back home, financials regained lost ground: BNP (+7.82%), SOC GEN (+6.68%). In other news, ARCELOR MITTAL (+1.61%) gained amid market rumour of interest in Bulgaria's Global Steel and the US's Nucor. Among utilities, EDF (-1.08%) underperformed, with press reports seeing it as interested in both British Energy and SUEZ's (+1.63%) Distrigas. Elsewhere, the caretaker Italian government last night gave its approval to AIR FRANCE-KLM's (+4.91%) all-share offer of EUR 139m for Alitalia, Reuters reported. L'OREAL (+3.51%) saw ING cut its price target, but reaffirm the HPC stock as a top sector pick. In the wider market, TECHNIP (-1.71%) fell on a JP Morgan downgrade to underweight. CASINO (-1.35%) has increased its stake in Dutch supermarket chain Super de Boer to 57%. SAFRAN (+3.46%) is preparing the sale of its Sagem Mobiles unit, Les Echos reported. LATECOERE (-2.12%) fell after DASSAULT AVIATION (+4.01%) CEO and GIFAS chief Charles Edelstenne said EUR/US$ at 1.60 is 'unbearable'. In results news, GFI INFORMATIQUE (-4.53%) unveiled FY07 net profit down 20.1% y/y after a 'particularly eventful and unsettled year'.
At the closing bell, Xetra-Dax (+3.41%) had made up for the larger part of the losses suffered yesterday, spurned by bad, but much better than expected results from Lehman Brothers and Goldman Sachs. The interest rate decision by the Fed after the European close will determine whether stocks will continue their rally tomorrow. Of local note, METRO's (-6.68%) 2007 EBIT rose 8.8% to EUR 2.1bn on sales 10.4% higher y/y at EUR 64.3m. The retailing giant said there won't be a break-up, but conceded it may sell its Galeria Kaufhof stores. TUI (-1.58%) voiced optimism about 2008, saying it expects a rise in group profitability. For 2007, it posted earnings attributable to shareholders of EUR 175.1m versus a loss of EUR 890.3m last time. No offers for Hapag-Lloyd have yet landed on the table. WACKER CHEMIE (+9.1%) reported 2007 profit of EUR 422m, up 36% y/y, and is optimistic about earnings this year. IVG (-2.59%) tabled a full-year net profit of EUR 301m. ALTANA (+0.21%) guided towards EUR 260m-290m EBITDA and sales of EUR 1.44bn-1.49bn for 2008. VW (+7.3%) said there are no write-downs in its finance unit, where it expects 2007 pretax profit to rise some 15% y/y. VOSSLOH (+8.68%) was well bid on market talk of a big contract win in China. Other rumours have it that Spain's ACS has inceased its stake in HOCHTIEF (+6.12%), with a complete takeover for EUR 85 per share seen as possible.
Milan ended Tuesday's session sharply higher as Wall Street trades in the black on hopes the Fed will announce an aggressive rate cut. In corporate news, Lehman Brothers and Goldman Sachs reported better-than-expected results. Back home, the caretaker Italian government gave its approval to Air France-KLM's all-share offer of EUR 139m for ALITALIA (-29.43%). Italian police clashed with aircraft maintenance workers protesting against future job cuts. In further M&A news, ENI (+2.61%), along with EDF and E.ON, will bid for the Belgian utility Distrigas, according to Il Sole 24 Ore. On the earnings front, BP MILANO (+4.27%) posted FY net profit of EUR 323.8m, down 18.8%. Raises FY dividend by 14.3% y/y as total revenues rise 2.7%. FINMECCANICA (+4.92%) unveiled a 49% fall in FY net profit to EUR 521m. MEDIOLANUM's (+4.94%) FY net profit came in at EUR 212m, down 5%. CAMPARI's (+8.29%) sales rose 2.7% to EUR 957.5m and the group proposes a dividend of EUR 0.11/sh. AUTOGRILL (+1.86%) posted a 4.1% increase in 2007 net profit to EUR 158.7m while revenues rose 23.7% to EUR 4.86bn. Said that for 2008, expects revenues of EUR 6bn. In broker action, Deutsche Bank cut TELECOM ITALIA's (+0.08%) target to EUR 2.10 from EUR 2.20. Keeps hold recommendation.
The Ibex 35 (+2.96%) closed the session comfortably higher as Wall Street trades in the black. Both Goldman Sachs and Lehman Brothers reported better-than-expected 1Q figures. Later on, all eyes will be on the FOMC as it will issue its verdict on interest rates. The Fed has already cut its discount rate over the weekend to 3.25%. However, the Fed funds rate, currently at 3%, is expected to be cut by 75bps-100bps. Back home, the banking sector gave strong support: BANCO SANTANDER (+4.03%), BBVA (+4.99%), BANCO POPULAR (+4.56%), BANKINTER (+5.17%). In further news, Ram Bhavnani may have bought c.3% of Banco Popular, according to Negocio. COLONIAL (+9.28%) agreed to back an offer from Investment Corporation of Dubai to buy Colonial's property unit for EUR 1.9bn. FERROVIAL's (+2.05%) BAA expects to sell its 50% stake in Airport Property Partnership in the coming two months for EUR 600m-EUR 700m, according to CincoDias. According to Expansion, ENDESA (+1.46%) wants to acquire power plants from Irish state-owned Electricity Supply Board (ESB). Neg-Ocio.com reported rumours having it that important AMPER (+1.37%) shareholders and IT Deusto shareholders plan a merger to create one of the biggest technological groups in Spain.