European Indexes Rally, Led by Financials
Major European stock indexes soared Tuesday, with financial issues leading the way higher. UBS (UBS) said it would carry out a 15 billion Swiss franc rights issue, after reporting a 12 billion Swiss franc loss in the first quarter; market players are hoping the move marks the last of the bank’s writedowns. Strong demand for a share offering by U.S. investment bank Lehman Brothers (UBS) also restored some confidence in financials. Wall Street was also having a good session after better-than-expected ISM manufacturing data.
The FTSE 100 index started the second quarter firmly in positive territory with a gain of 2.64%, closing above the 5,800 level. In the London session, miners and oils were down, tracking falling commodity prices, amid concerns over the sustainability of current price levels. National Grid (+3.47%) is to sell its Ravenswood Generating Station in New York City to TransCanada for US$2.9 billion. Scottish & Newcastle (unchanged) shareholders approved a 10 billion pound takeover by Heineken and Carlsberg, bringing an end to 120 years of life on the stock exchange.
In the broader market, GCAP Media (+10.69%) and Global Radio agreed on a recommended offer at 375 million pounds. Mitchells & Butlers (+4.37%) is thought to have given a lukewarm reception to a proposal from Permira offering to acquire a stake of up to 29.9% at a small premium, in return for board representation and a say in future strategy, The Times reported. Harry Potter worked his magic once again as Bloomsbury (-0.12%) posted a jump in fiscal year profit to 17.86 million pounds. The company said it is well positioned for the post Harry Potter era. Invensys (+11.33%) jumped after winning a 95 million pound payout from Bombardier.
The CAC 40 index (+3.38%) ended with strong gains on Tuesday, The banking sector added strong support with BNP Paribas (+6.04%), Soc Gen (+9.48%) and Credit Agricole (+8.21%) all gaining.
In other news: Campari may be interested in Vin & Sprit's Plymouth Gin brand. Various reports suggest Pernod Ricard (+4.48%) may sell Plymouth Gin after it won the bid for the Absolut vodka maker. Alitalia has announced that the deadline for takeover talks with Air France-KLM (+7.96%) has been extended to Wednesday, 2 April. Sanofi-Aventis (SNY; +2.27%) plans to cut 471 jobs, or 71% of the workforce, at its Vitry-sur-Seine plant near Paris, Le Parisien reports. In March, French sales at Renault (+4.85%) rose 16% while PSA's (+0.2%) fell 7.8%.
French watchdog AMF has confirmed suspicions of 'massive' insider trading at EADS (+5.2%). The probe concerns disclosure by EADS of production delays to its A380 super jumbo. Ubisoft (+5.55%) raised its fiscal 2008 sales forecast to 920 million euros from 875 million euros previously.
In broker news, Cheuvreux downgraded Essilor (+0.65%) to underperform from selected list.
After minor losses Monday, the Xetra-Dax index (+2.84%) finished Tuesday with solid gains. German financial heavyweights Commerzbank (+7.53%) and Hypo Real Estate (+8.57%) rose along with their counterparts in other countries on the UBS news. Deutsche Bank (DB; +3.88%) said it anticipated first-quarter mark-downs of some 2.5 billion euros, while Postbank (+0.69%) also sees further write-downs ahead.
In earnings news, Heidelberger Druckmaschinen (-9.35%) warned that it wouldn't reach the fiscal year sales and EBIT guidance, due to the difficult market environment. Kloeckner & Co. (+6.76%) reported 2007 net profit of 133.4 million euros, down 35.3% year-over-year, on sales 13.4% higher at 6.27 billion euros.
On the M&A front, Man (+4.91%) said it had no plans to take a stake in Russia's Kamaz. Key for Metro (+1.56%) and its peers, German retail sales fell 1.6% from the previous month and 0.3% year-over-year in February. Infineon (+9.44%) made strong gains as it was reported that global semiconductor revenues rose 3.8% to US$273.9 billion last year. Finally, Deutsche Post (+1.6%) said would sell a property portfolio of about 1,300 assets located mainly in Germany to Lone Star, with the transaction worth some EUR 1 billion.