European Indexes Stumble

A roundup of Friday's action on major European stock exchanges


The FTSE (-1.53%) finished the final day of the trading week firmly in the red, with Wall Street also far below break even and WTI trading at US$132.80, off record highs. At home, Nigeria demanded that ROYAL DUTCH SHELL (-1.89%) and ExxonMobil pay a combined total of almost US$2bn (GBP1bn) in unpaid taxes and revenues after a review of contracts covering huge offshore oilfields signed in the early 1990s, according to the FT. EXPRO (+5.52%) confirmed an approach from Halliburton at GBP15.25 per share in cash. This followed a GBP14.35 per share bid from a consortium of Goldman Sachs and funds managed by Candover. MARSTON'S (+2.68%) dished out in line 1H results, with revenues of GBP316.4m as higher food sales offset the impact of the smoking ban. FUTURE (-6.67%) anticipated satisfactory FY results and says online advertising was up 31%. Carlyle was said to be in advanced talks to buy DE LA RUE's (-1.06%) Cash Systems business, according to The Daily Telegraph. JJB SPORTS (unch.) bought the 22-store Qube Footwear for a nominal GBP1. WOOLWORTHS (unch.) is preparing to announce GBP10m of price cuts covering 1,000 products from plant food to DVD players, The Times reported. In broker news, ING downgraded CADBURY (-1.43%) to sell, lifting the target to GBP6.25 from GBP5.80.


The CAC 40 (-1.89%) closed firmly lower, with Wall Street also in negative territory. WTI was off highs hit yesterday at US$131.68/bbl. April's existing home sales were better than expected, but inventories of unsold homes climbed 10.5%. Back home, AIR FRANCE-KLM (-0.48%), which fell 10% yesterday, outperformed other blue chips. TOTAL (-1.55%) lost ground. Elsewhere, SUEZ (-3.08%) - with which GDF (-3.31%) is scheduled to merge by 2H08 - said talks have ended with British Energy and that its focus is the merger with GDF. EDF (-2.73%) is thought to remain in the running for the UK nuclear player. In further news, GDF issued a statement yesterday saying that its competitors 'enjoy access to the different infrastructures owned by GDF or its subsidiaries under transparent and non-discriminatory conditions' in the wake of news the EC is launching a competition probe. EADS (-4.36%) fell after Exec Chairman Louis Gallois said A380 delays could be '3-4 months.' Among broker updates, VIVENDI (+0.46%) enjoyed an upgrade to equal weight from Morgan Stanley and ARCELOR MITTAL (-1.56%) was upgraded to buy at Goldman Sachs. In the wider market, UBI SOFT (-6.65%) reported nearly tripled FY net profit of EUR 109.8m from sales of EUR 928.3m. THOMSON (-2.58%) reiterated at its AGM yesterday that it currently expects revenues for 2Q08 to decline 6-8% y/y at constant fx.


The Dax (-1.73%) closed firmly lower on Friday with Wall Street also in the red. Sales of US houses fell in April and the supply of unsold properties reached a record, signalling no let-up in the housing slump. In Europe, May Eurozone PMI fell, reinforcing bleak sentiment. Oil prices were off yesterday's highs at US$131.68/bbl. Back home, German financials were in the spotlight: the FT wrote ALLIANZ (-1.22%) held detailed talks with COMMERZBANK (-0.18%) about a bid for POSTBANK (+2.77%) but that no formal offer has been submitted. This echoed yesterday's reports from Manager Magazin. Meanwhile, Die Welt wrote DEUTSCHE POST (+1.39%) is collecting bids for Postbank. Elsewhere, an investor group coordinated by JC Flowers published details of its offer for a 24.9% stake in HYPO REAL ESTATE (-0.09%). The acceptance period began today and ends on 23 June. The cash offer price amounts to EUR 22.50 per share. More M&A news in the wider market: WINCOR NIXDORF (-3.21%) is believed to have progressed to the final stages of the auction for De La Rue's Cash Systems business, although then the company reportedly dropped out. In other news, VW's (-2.45%) group sales rose 10.5% in April. Separately, a senior German Economy Ministry official said there was 'legal uncertainty' in a proposed new law that would maintain the state of Lower Saxony's blocking minority in Co., Reuters reported.


Spanish shares ended deep in the red as the major banks and TELEFONICA (-1.61%) weighed. Wall Street was also trading lower with WTI back on the rise, reaching US$132.8/bbl at the European close. In local corporate news, BBVA (-1.83%) is to lift its stake in CITIC International Financial Holdings to 35% from 15%, according to The Standard. FERROVIAL (-2.47%) bought a further 3% of CINTRA (-1.07%) during 1Q08 as part of its plan to reach a 75% stake vs the previous 65%, Cinco Dias reports. PRISA (+1.7%) is considering selling some or all of pay-TV business Digital Plus, according to press reports citing CEO Juan Luis Cebrian. GRIFOLS (-0.74%) will sign on Monday a EUR 350m syndicated loan with 24 banks, Expansion reported. In broker moves, Credit Suisse initiated on ACCIONA (-0.53%) and ENDESA (+1.39%) with outperform. Deutsche Bank downgraded FCC (-2.25%) to sell, while Lehman downgraded ABERTIS (-3.05%) to underweight and Cheuvreux upgraded TELECINCO (+0.09%) to outperform.


Swiss stocks ended lower, in line with other European markets. Meanwhile, Wall Street was also trading in the red ahead of Monday's Memorial day holiday. April's existing home sales were better than expected, but inventories of unsold homes climbed 10.5%. WTI at US$131.68/bbl was off highs hit yesterday, but remained historically elevated: PETROPLUS (+0.74%). In Switzerland, ZURICH FINANCIAL (-0.73%) fell towards the close after advancing on an upward revision of its new business value target for the global life segment. SYNGENTA (-1.48%) closed down despite earlier gains on news it settled a litigation on global corn and soybean with Monsanto. ROCHE (-2.07%) said it will increase its stake in Chugai to 59.9% from 50.1%. SPEEDEL (+3.21%) has received a royalty report from NOVARTIS (-0.64%) regarding SPP100/Aliskiren and stated it has earned CHF2.58m in 1Q vs previous estimate of CHF2.2m. Speedel also said it disagrees with Novartis regarding the level of royalty revenues that it should receive from the sale of the combination drug Tekturna + Diuretic HCT.

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