European Indexes Finish Mixed

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


The FTSE 100 closed firmly higher on strength in resource stocks. An extra boost came from M&A talk and as index heavyweight VODAFONE (+4.76%) dialled up gains on positive broker comments. WTI was above US$140/bbl. Commodities remained lofty, boosting miners. An FT report indicated that Lakshmi Mittal could enter the takeover battle for RIO TINTO (+3.22%). Another report suggested ANGLO AMERICAN (+3.71%) is looking at the iron ore assets of RIO and BHP BILLITON (+1.4%) in the event of a regulatory sale. BARCLAYS (-2.94%) tried to reassure the market, with John Varley insisting GBP4.5bn is enough, after Friday's note from Citigroup insisting the bank would still need a further GBP9bn. CABLE & WIRELESS (+2.31%) launched an agreed GBP1.80/sh bid for THUS (+20.48%). Clive Cowdery said he is ready to come back if called by the BRADFORD & BINGLEY (-3.56%) board. Meanwhile, rival TPG was on a charm offensive with leading shareholders ahead of next week's EGM, The Daily Telegraph reported. DRAX (-0.2%) said FY results will be modestly higher than market consensus. TAYLOR WIMPEY (-3.23%) confirmed plans for a cash call amid GBP550m writedowns in the UK. TRINITY MIRROR (-26.57%) fell after it said it expects revenues to fall 1.5% in 1H, as advertising market conditions have deteriorated.


The CAC 40 (+0.85%) closed in the black with Wall Street in the black. The Chicago PMI reading was better-than-expected. WTI is off intra-day highs at US$140.01/bbl. Locally, TOTAL (+2.44%) gained. FRANCE TELECOM (+7.19%) has decided not to submit a firm offer to TeliaSonera's shareholders. Cheuvreux upgraded to Selected List. CARREFOUR (+3.01%) was upgraded to neutral from underperform by Exane. In related news, the retailer is a possible j/v partner for India's Future group, wrote The Economic Times. Merrill Lynch upgraded ALCATEL LUCENT (+2.25%) to neutral from underperform. In the red, ARCELOR MITTAL (-1.43%) is looking at entering the takeover battle for Rio Tinto, the FT reported. The paper added CEO Lakshmi Mittal is keen to secure larger supplies of iron ore. The FT reported that CEO Baudouin Prot has dismissed the view that BNP PARIBAS (-0.64%), which has emerged relatively unscathed from the credit crisis, has been ultra-cautious and is sitting pretty by default, but has instead focused on client-driven businesses. SAINT GOBAIN (-3.19%) was one of a host of construction supplies stocks seeing its target and estimates cut by Exane. In the wider market, Goldman Sachs downgraded RODRIGUEZ (-4.72%) to neutral from buy. The family controlling CLARINS (susp.) made a US$3.6bn buyout offer to minority shareholders in order to delist the cosmetics firm, according to the French stock market regulator.


Xetra-Dax (-0.06%) pared earlier losses to close flat as sentiment on Wall Street turned positive amid a surprise rise in the June US PMI. Oil prices remained high but have eased slightly. Of local note, auto stocks BMW (+1.19%) and VW (+2.36%) were among the gainers. DAIMLER (-1.5%) fell because Lehman removed the stock from its recommended list. In the airline sector, AIR BERLIN (-6.86%) fell sharply after end-of-quarter portfolio adjustments. Investors dropped the budget airline in many instances from their portfolios, traders noted. Elsewhere, ADVA (-32.49%) took a severe knock after it cut its quarterly sales guidance. REPOWER (+5.59%), on the other hand, was well bid after reporting an increase in gross revenues in its short fiscal year 2008 to EUR 150.2m and orders up 44% y/y. In other news, there were reports that SIEMENS (-0.52%) will cut 6,450 jobs in Germany as part of a plan to save EUR 1.2bn by 2010. RWE's (+2.1%) CEO told Frankfurter Allgemeine Sonntagszeitung that he bought EUR 5m worth of stock and that he will not sell his stake while he is head of the group. DEUTSCHE BOERSE (-0.34%) took a 0.75% stake in Bolsa Mexicana de Valores worth EUR 5m, according to Boersen-Zeitung. ARCANDOR (-0.81%) wants to sell its stake in KarstadtQuelle Versicherungen to MUNICH RE's (-0.22%) Ergo unit, according to FAZ.


The AEX closed unchanged, paring earlier losses, as Wall Street traded higher after a surprise rise of June US PMI data. Oil related stocks were comfortably higher even though WTI fell back to below US$140 a barrel: ROYAL DUTCH SHELL (+2.19%) and SBM OFFSHORE (+2.9%). KPN (+2.25%) remained well bid throughout the day as France Telecom withdrew its bid for TeliaSonera. Traders cited speculation that KPN could now be eyed by France Telecom although the French telco said it sees no other alternative European target now. Financials were in focus: the WSJ reported that FORTIS (-4.51%) has received US$630m in capital from Russian billionaire Suleiman Kerimov as part of its recent share issue. The ban on withdrawing money from AEGON's (+0.08%) GBP1.6bn Scottish Equitable property funds is set to be lifted in the coming weeks as the insurer's cash liquidity levels have improved since the height of the subprime crisis, the FT reported. It also wrote that ARCELOR-MITTAL (-1.38%) is looking at entering the takeover battle for Rio Tinto as Mr Mittal is keen to secure larger supplies of iron ore. TOMTOM's (-1.14%) TeleAtlas signed a five-year contract with Google to provide digital maps to the company. In the wider market, IMTECH (+1.08%) won orders worth EUR 40m from Janssen, Glaxo, Schering Plough.


Milan ended the session slightly higher amid gains in oil-related stocks. Wall Street was trading higher. WTI was off highs as the European session ended, but was still trading around US$140/bbl. SAIPEM (+3.04%), TENARIS (+2.69%) and ENI (+1.37%) all gained. Of local note, Il Sole 24 Ore says that a plan for ALITALIA's survival could include between 6,000-8,000 job cuts. Meanwhile, La Repubblica writes unions have said they will not negotiate if the job cut level reaches 4,000. In M&A news, BANCA ITALEASE's (+6.5%) largest shareholder, BANCA POPOLARE (+1.64%), has agreed a MoU with Germany's DZ Bank on an industrial alliance, according to Sunday's Il Sole 24 Ore, under which DZ Bank will buy 10% stake of Banca Italease from Banco Popolare. Press reports that Spain's Santander currently owns a stake of over 2% in MONTE PASCHI (+5.45%). In other news, FIAT (-0.01%) shares were in focus as Il Sole 24 Ore wrote that Italy's new car sales could have fallen c.17% in June. SNAM RETE GAS (+2.12%) will set up an Independent Transmission Operator following a decision from Italy's energy authority regarding the separation of the gas transportation business from other activities. On the broker front, Exane upgraded INTESA SANPAOLO (+0.22%) to outperform and cuts target to EUR 4.70.

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