European Markets Finish Mixed

A roundup of Wednesday's action on major European exchanges


The FTSE 100 closed slightly lower as across the pond Wall Street was boosted by positive economic reports. The FOMC decision on interest rates is due after the European close. Expectations are for a 25bp cut. At home, BG's (-5.89%) 1Q beating forecasts. The group confirmed it has approached Origin Energy with a AUD14.70/sh cash offer. HOME RETAIL (+8.75%) reported FY results in line with expectations, with Argos LFL +0.7% and Homebase -4.1%. KAZAKHMYS (-4%) said 1Q copper cathode output fell 18.43%. ANTOFAGASTA (+2.49%) said cash costs rose sharply to US$0.722/pound. STANDARD LIFE (+1.11%) announced an 8% increase in new business sales in 1Q, ahead of estimates. BSKYB (+0.83%) added 56,000 new customers in 3Q, in line with forecasts. Merrill Lynch removed VEDANTA (-4.47%) from its Europe 1 list. HBOS (-3-34%) fell as brokers warn it may need to raise more cash. PARTY GAMING's (-8.49%) 1Q revenue rose 21%, but said the total average gross daily revenue fell 1% at the start of 2Q. BODYCOTE (+14.3%) rallied after saying YTD sales are up 18% y/y. BBA AVIATION (+7.16%) said trading in 1Q is in line, with total revenue up 12%. CRODA (+2.43%) announced an 84.8% jump in 1Q PTP as exceptionally strong trading momentum seen in 2H07 was sustained throughout 1Q. AEGIS (+7.69%) posted 8.3% organic growth in 1Q, ahead of the industry.


The CAC 40 (+0.39%) ended in the black with Wall Street trading higher on better-than-expected 1Q GDP. Consensus expects a 25bp cut from the Fed at 18:15 GMT. Back home, ALCATEL LUCENT (-3.56%) reported a 1Q net loss of EUR 181m and downgraded guidance by saying it sees the market in 2008 to be flat rather than slightly up to flat, as previously forecast. SANOFI AVENTIS (+0.8%) announces better-than-expected 1Q net sales of EUR 6.937bn, +0.8%, but added experimental antidepressant saredutant had failed in a trial. PERNOD RICARD's (+0.64%) 3Q sales came in at EUR 1.378bn, -1%, (+7.1% organic). Confirmed FY08 guidance. Outside results, JP Morgan upgraded FRANCE TELECOM (+0.93%) to neutral from underweight. Goldman Sachs downgrades LAFARGE (-2.52%) to sell from neutral. ALSTOM (+2.23%), in which BOUYGUES (-0.33%) holds 30%, could yet be in line for a stake in French state-owned nuclear group AREVA (-0.22%), Reuters reported. In utilities news, French authorities announced that household natural gas tariffs will rise 5.5% as of today - GDF (-1.31%) and SUEZ (-0.48%). Outside blue chips, ATOS (+2.55%) beat consensus with 1Q revenue of EUR 1.356bn, up 5.9% organic. NEXITY's (+0.77%) 1Q revenue came in at EUR 610.70m, +24% on a reported basis. IMERYS (-2.39%) reported 1Q op profit of EUR 115m, up 3.6% y/y.


Before taking a break for Labour Day, Xetra-Dax (+0.92%) finished the trading day with solid gains. Wall Street was also trading higher, after better-than-expected GDP growth and Chicago PMI data. Locally, Reuters reported that DEUTSCHE POST (+0.35%) reached an agreement with trade union about a wage deal. In earnings SIEMENS (+2.97%) posted a sharper-than-expected 67% slide in fiscal 2Q net income to EUR 412m due to discontinued operations and project delays. Quarterly sales up 2% y/y at EUR 18.1bn was also lower than expected. Order intake of EUR 23.4bn, however, topped the consensus view, as does operating profit of EUR 1.2bn. SAP (-2.0%) missed expectations, with 1Q revenues from software licences and related services up 15% to EUR 1.74bn. A 20% rise was expected. All in all, weak US sales and the negative outlook for SAP's new midmarket product Business ByDesign were clearly disappointing. FMC's (+1.19%) 1Q EBIT came in at US$389m on revenues of US$2.5bn. The group confirmed its full-year outlook. WACKER CHEMIE's (+11.86%) 1Q core earnings rose 10% to EUR 291m on in-line sales at EUR 1.02bn. SYMRISE's (-0.56%) quarterly net income of EUR 24.9m was lower than expected. Away from earnings, traders noted market rumours that Novartis could bid EUR 50/share for STADA ARZNEIMITTEL (3.91%). Finally, DAIMLER (-0.52%) reportedly reached a preliminary accord to set up a truckmaking j/v in China.


Milan ended Wednesday's session mildly higher as Wall Street trades in the black following encouraging macro data and amid expectation on the FOMC decision on interest rates. Back home, PIRELLI & C (+0.96%) could invest a few million euros in a consortium to either take over ALITALIA (+7.87%) or enter into Milan's Malpensa airport. In M&A news, BANCO POPOLARE (+1.66%) and France's Credit Agricole have decided to combine their units Ducato and Agos. BSkyB's CEO Jeremy Darroch said that the group will take a look at TISCALI (+0.68%). A2A (+0.47%) has agreed to extend exclusive talks to acquire GDF's heating network management unit, Cofathec Coriance. In earnings, INDESIT (+3.95%) unveiled 1Q revenues of EUR 756.2m, up 0.6 y/y; EBIT at EUR 46.2m. On the energy sector front, SARAS'(-0.46%) Chairman Gian Marco Moratti said that the company aims to make 'an important acquisition'. Separately, JP Morgan lowered forecasts for new refining margin and crude price assumptions and operational issues. In other news, IMPREGILO (+0.8%) was awarded a EUR 630m contract to build the first stretch of the Pedemontana Lombarda motorway. Alberto Bombassei and Piero Ferrari will participate in PININFARINA's (-4.81%) capital increase. In broker moves, Lehman cut STMICRO's (-1.4%) target price to EUR 8.00, following 1Q results.


The SLI (+0.87%) managed to scoop up some solid gains by the close, ahead of the Fed decision due later today. April's gain for the SLI was 5.9%. Some key US economic data pleased the market today - 1Q GDP was better-than-expected, and in line with the 4Q reading. Chicago PMI was also a touch better, and the ADP National Employment Report surprisingly showed jobs growth in April. Of local note, the KOF indicator slid to a three year-low. On the Swiss trading floor, CLARIANT (+19.33%) skyrocketed as the group's 1Q operating margin improved to 7.9% from 7.1% y/y. CEO Jan Secher commented that the measures initiated to improve operational performance have started to show a positive impact. Meanwhile, HOLCIM (-2.95%) slumped as Goldman slashed its rating to conviction sell from neutral. JP Morgan cut PETROPLUS (-1.74%) to underweight. LONZA (+3.06%) sold its remaining stake in Polynt SpA of 3.37% for EUR 3.67/share. SIKA (+0.39%) bought the commercial and industrial polymer flooring business of ICS Garland, Inc. SWISS LIFE (+0.81%) completed the sale of Dutch and Belgian units to SNS Reaal, resulting in a 2008 profit contribution of around CHF850m. FORBO (+0.29%) began share buyback worth up to CHF144.1m. Chatter late in the day suggested NOVARTIS (+1.44%) may be plotting to bid EUR 50/share for Germany's Stada. Note that Swiss markets will re-open on Friday.

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