European Indexes Fall

A rundown of Tuesday's action on major European exchanges


The FTSE 100 pared earlier losses but closed below the gain line, dragged down by financials and energy shares. Wall Street trades above breakeven, helped by WTI retreating to US$135.89 and Fed Chairman Bernanke easing credit concerns. At home, a rebound by retailers and higher utilities lent support. The FTSE sank to more than 20% from its October high this morning, dipping into bear market territory, amid heightened fears of a recession. However, the mood was softened after Ben Bernanke's comments that the US central bank may extend its emergency lending programme beyond the end of the year in order to aid the restoration of stability. At home, banks, especially mortgage lenders, continued to suffer. Housing and building materials stocks plunged after a grim update from PERSIMMON (+3.4%). The group will cut 1,100 jobs, as legal completions in 1H fell 31%, bringing total sales down 34% and squeezing margins. HEYWOOD WILLIAMS (-43.64%) warned FY results will be significantly below market expectations. WOLSELEY (-4.18%) plummeted. LSE (-7.06%) fell on renewed competition fears, and ahead of tomorrow's update. DAILY MAIL (-6.5%) posted FY profit up 5% y/y but margins were slightly lower. PARTYGAMING (-9.97%) said gross revenues have fallen slightly since the end of April. SKYEPHARMA (-31.93%) tumbled despite saying 1H08 revenues will be significantly ahead y/y.


The CAC 40 (-1.54%) closed the session deeply in the red, with Wall Street trading higher amid worse-than-expected pending home sales data but falling oil prices. WTI was at c.US$136 at European close. Locally, AIR FRANCE (+2.84%) gained. Defensive stock SANOFI (+1.95%) also closed in the black. US-exposed building stock VINCI (-4.21%), however, fell sharply. The banking sector remained grim: BNP PARIBAS (-1.84%), CREDIT AGRICOLE (-2.65%), DEXIA (-5.54%). SOCGEN's (-2.01%) Franfinance is set to become partner to French state-owned La Banque Postale in a j/v to provide consumer credit, Les Echos reported. Elsewhere, MICHELIN (-3.24%) suffered a downgrade to sell from hold at SocGen. PSA (-1.41%) said 1H08 car and light-truck sales rose 4.6% to 1.85m units. EADS's (-2.27%) Airbus unit is to spend between EUR 8bn and EUR 10bn on new A320 jets from 2014, La Tribune wrote. ALCATEL LUCENT (-3.06%) appeared before a federal appeals court yesterday asking that a US$1.53bn jury verdict for it against Microsoft be reinstated. GDF (-1.37%) announced its entry into the Italian storage market, unveiling a j/v with Acea and Gas Plus. VEOLIA ENVIRONNEMENT (-0.58%) is making a second attempt to gain a license to sell regional rail transport services in Poland, the WSJ Polska reported. Wider-market CLARINS (+26.60%) resumed trading today.


Xetra-Dax (-1.43%) finished the day with firm losses. Across the pond, the Dow was in the black, as oil retreating to US$137.81 a barrel offset disappointing pending home sales. SIEMENS (-1.61%) said it is set to axe some 16,750 jobs worldwide. 12,600 - mainly administrative ones - are to be chopped by 2010, while another 4,150 are to go as part of the engineering giant's restructuring programme. HENKEL (-0.91%) also plans to cut 3,000 jobs from a global workforce of some 52,000 in the coming years, FAZ reported. BMW (+0.87%) signed a memorandum of understanding with Fiat regarding possible co-operation over systems and components for the Mini and Alfa Romeo brands. SYMRISE (-5.15%) will hike prices by up to 10% and more in its scent and care division because of increases in raw materials prices. Key for the likes of DEUTSCHE TELEKOM (+1.36%), EU lawmakers yesterday voted to water down plans to overhaul EU telecom rules, but held on to a key provision to split operators into business units and boost competition. On the earnings front, KLOECKNER & CO. (+2.82%) reported preliminary 2Q EBITDA of EUR 200m, higher than expected. The steel group forecast full-year core earnings topping EUR 480m. Spectacles maker FIELMAN (+3.13%) saw its 1H net income rise to around EUR 56m. SOLON (-10.05%) said it plans no capital hike. On the broker front, Deutsche Bank cut DEUTSCHE POST (-3.48%) to hold from buy.


With the Dow trading in the black after a bumpy start to the session, the SLI (-0.91%) closed in the red, but off intra-day lows. WTI trades at US$136.30, down US$5.07 from the settle. Back home, pharmas were well bid today because of their safe-haven quality. Stock-specific, following a report in The WSJ, shares in ROCHE's (+0.89%) partner Genentech fell nearly 3% overnight amid renewed concerns about the potential danger of patients being treated with its drug Rituxan. NOVARTIS (+2.41%) has completed the acquisition of 25% of Alcon, the eye care group, for some US$10.4bn in cash. LONZA (+1.82%) was in fine fettle following Deutsche's upgrade of the stock to buy. Citing CEO Herbert Scheidt, Cash newspaper reported that new private bank inflows at VONTOBEL (-0.79%) have met management expectations this year and are still positive. PARTNERS GROUP's (+1.52%) assets under management rose to CHF24.5bn as of 30 June, up CHF1bn y/y. ASCOM (-6.11%) stumbled despite news it has landed a CHF3.6m contract to deliver the operational communication system for the Gotthard Base Tunnel.


The AEX (-2.03%) closed firmly in the red, with Wall Street trading higher. Comments from Fed Chairman Ben Bernanke regarding emergency liquidity support and WTI falling to US$136.3 aided sentiment. Locally, AHOLD (+2.42%) and UNILEVER (+1.88%) were the only two outperformers. TOMTOM (-11.46%) was the biggest blue-chip percentage loser after Goldman Sachs cut its target on the stock, saying the weakening consumer outlook substantially increases the risk that TomTom could break the covenants on its EUR 1.4bn of net debt, requiring it to raise fresh capital. In other news, PHILIPS (-1.71%) will transfer its PC monitors business, IT Displays, to TPV Technology, which can exclusively use the Philips brand name in exchange for revenue-based royalty payments. ROYAL DUTCH SHELL's (-1.97%) CFO, Peter Voser, has dropped out of the race to succeed CEO Jeroen van der Veer because he may take a role at UBS, Dow Jones reported. TNT (-3.13%) has agreed to buy 35% in online pharmacy, Reuters reported. In the wider market, VOPAK (-3.42%) has signed a memorandum of understanding with a Chinese partner to build storage tanks in China, according to Het Financieele Dagblad.

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