European Indexes Finish Mixed

A roundup of Monday's action on major European equity markets


The FTSE 100 closed the last session of the quarter just above the 5,700 level, having slipped below the 5,600 level in early intraday trading. The positive catalyst today was Wall Street, where investors welcomed a stronger-than-expected Chicago PMI. At home, support came from the energy and mining sectors. However, some stocks received a clobbering on broker downgrades and negative newsflow. Investors switched off ITV (-6.77%) following a UBS downgrade to sell from neutral, coupled with an estimates and a target price cut. VODAFONE (-3.89%) received a double downgrade from Morgan Stanley to underweight from overweight, plus a hefty target price cut. BRITISH AIRWAYS (-2.43%) shares joined the losers today on reports the airline faces fines of up to GBP5,000/passenger and the T5 chaos will reportedly cost the airline over GBP20m. A Goldman Sachs double downgrade to sell from buy, with a 43% cut in FY09 earnings estimate added to the drag on the airline's stock. Further, TESCO (-2.88%) slumped on a Sunday Telegraph report that the retailer has stopped the rollout of Fresh & Easy, its chain of US convenience stores. In company news, CAIRN ENERGY (+1.14%) said talks are continuing with the Indian government regarding financing of the Rajasthan pipeline. The company also raised its Rajasthan oil reserves estimate. FRIENDS PROVIDENT (+2.91%) rejected a fresh GBP1.50/sh offer from JC Flowers.


The CAC 40 (+0.24%) ended Monday's session with modest gains as Wall Street also edged higher following a better-than-expected reading of the Chicago PMI. Of local note, financials SOCGEN (-3.28%), BNP PARIBAS (-0.93%) and AXA (-1.08%) were lower after Merrill said UBS may suffer further write-downs. CREDIT AGRICOLE (+0.77%) and Italy's Banco Popolare are in exclusive talks about a j/v between their specialised Italian consumer credit subsidiaries Agos and Ducato. Elsewhere, PERNOD RICARD (-4.3%) said it will buy Sweden's Vin & Sprit for EUR 5.63bn, hence gaining the Absolut Vodka brand. Bain Capital, Permira Advisers and a fund backed by Citigroup are among preliminary bidders for TheFaceShop, a South Korean cosmetics maker in which L'OREAL (+0.47%) had shown initial interest, Bloomberg reports. AIR FRANCE-KLM's (+0.68%) CEO is reportedly meeting today with Alitalia's unions to discuss its buyout offer for the troubled airline. ARCELOR MITTAL (+1.15%) will cut 595 jobs at the Gandrange plant in eastern France, La Tribune reports, citing union representatives at the factory. STM (+1.66%), Intel and Francisco Partners completed the Numonyx j/v, combining their flash-memory units. In the wider market, VALEO (+2.28%) denied a report that India's Hinduja Group may buy a controlling stake in the French car parts maker.


Unable to break even, Xetra-Dax (-0.38%) finished the first trading day of the new week with minor losses. Wall Street was trading in the black, spurned by a better-than-expected reading of the Chicago PMI. WTI was a touch lower, trading at US$105.37. In local news, AIR BERLIN (-8.89%) fell sharply after it issued a profit warning, quoting high fuel costs as the main reason. The management's new guidance was for EBIT between EUR 72m - EUR 120m, down from EUR 140m - EUR 160m. The FAZ reported that SIEMENS (-0.33%) could face up to EUR1.5bn in additional costs due to delays at the Olkiluoto nuclear power plant in Finland. Rupert Murdoch's News Corp. planed to raise its 19.9% stake in PREMIERE (+2.4%) ahead of the AGM, according to Der Spiegel. DEUTSCHE TELEKOM's (-1.59%) Enterprise Customer Unit, T-Systems, secured the global hosting and storage section of a multi-sourcing contract, worth approximately c.EUR 1bn, with Royal Dutch Shell. Good news for INFINEON (+1.14%) as Bloomberg reported that Elpida Memory, Japan's largest chipmaker, would raise prices for DRAM chips by 20%. ARQUES' (-8.3%) fell after FY profits were lower than expected. REPOWER (+2.17%) increased its sales guidance for 2008/09 to EUR 1.1bn and forecast an EBIT margin between 5.5% and 6.5%. Finally, QSC (-0.59%) reiterated guidance, anticipating revenues of between EUR 385m and EUR 405m.


The AEX (+0.

17%) closed on positive ground after trading most of the day in the red. Wall Street is trading higher following better-than-expected Chicago PMI data, however the reading was below 50 signalling contraction. Of local note, the European Commission extended the deadline to decide on RANDSTAD's (+2.91%) acquisition of VEDIOR (+1.09%) from 3 April to 17 April to consider competition remedies. Deutsche Bank upgraded the stock to buy and lifted the target price. CRUCELL (+1.56%) said it has started a Phase II clinical trial in the US for rabies monoclonal antibodies to be used in combination with Sanofi-Aventis' vaccine. Elsewhere, Reuters quoting the secretary general of Gabon's National Organisation of Petroleum Workers (ONEP), said union officials are calling for a nationwide strike after negotiations with a subsidiary of ROYAL DUTCH SHELL (+1.15%) ended without agreement, which caused 60k bpd of production to halt. According to the EIA, the production of Gabon in 2007 reached 240k bpd. Elsewhere, ASMI (+0.51%) issued a statement regarding its AGM on 21 May, saying that Hermes has requested a reshuffling of the supervisory board, adding five points to the AGM agenda. The group also says 1Q sales and profit will be above 1Q07, but lower q/q. In other news, ARCELOR-MITTAL (+1.20%) will cut 595 jobs at the Gandrange plant in eastern France, La Tribune reported.


The SLI managed to recover from earlier losses, and ended the last session of a volatile month and quarter flat. Wall Street proved to be a positive catalyst today as the Chicago PMI came in at 48.2, vs expectations of 46. While Wall St went into the black, excitement was contained as a reading below 50 still implies contraction. Among Swiss stocks, UBS (-0.41%) was in focus. There was a report in Sonntag that the bank may ask shareholders to approve a capital increase of up to CHF16bn. Derek De Vries, analyst at Merrill Lynch, expects UBS to reveal some US$11bn of further 1Q write-downs and has lowered its 2008 forecast to a loss, and argues that a capital raising at UBS is a 'real possibility'. Separately, UBS may name Swiss former justice minister Christoph Blocher as president to replace Marcel Ospel, Blick am Sonntag reported. Away from the banks, ROCHE (-0.8%) and NOVARTIS (-0.68%) slipped as Vontobel highlighted negative currency impacts on the two pharma giants. It lowered its target on both stocks. HSBC lowered targets on SWATCH (+0.57%) and RICHEMONT (+0.45%). BARRY CALLEBAUT (+1.13%) is to acquire a 60% stake in Malaysia's KLK Cocoa, a cocoa and chocolate manufacturer. According to SonntagsZeitung, VALORA (-0.77%) will fire CEO Wuest this week and four board members will step down.

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