European Indexes End Higher

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


The FTSE 100 closed sharply higher led by gains in banks and energy stocks. However, Wall Street lost some steam at the European close as support from good JP Morgan numbers was offset by a rise in oil and a fall in Philly Fed factory activity in July. At home, the banking sector saw BRADFORD & BINGLEY's (+7.46%) shareholders approve the GBP400m rights issue. RBS (+8.67%), BARCLAYS (+8.90%) rallied. DRAX (-5.24%) plunged on an underperform call from Cazenove. BRITISH ENERGY (-1.73%) warned that final repair costs will be significantly higher than the initial GBP50m estimate. Mining giant FRESNILLO (unch) said silver and gold production was stable in 1H, fully in line with expectations amid record average silver and gold prices. MOTHERCARE's (unch) 1Q UK LFL sales rose 1%, bringing total 1Q total sales up 20.7%. BLACKS LEISURE (+3.20%) posted a 2.2% drop in Outdoor LFL sales in the first 19 weeks, with Boardwear down 15.5% and group LFL down -5.4%. DAIRY CREST (+9.91%) said 1Q was in line, Food sales are up 14%, Dairies are up 5%. KINGFISHER (+7.91%) named DSG INTL's (+1.32%) Kevin O'Byrne as group FD, from 1 October. Nicholas Cadbury will replace O'Byrne at DSG. INFORMA (-6.89%) plunged on rumours that funding for a bid has run into trouble.


The CAC 40 (+2.76%) came off mid-afternoon highs as a weaker-than-expected Philly Fed survey halted Wall Street's upward progress. US shares were flat to lower at the European close. Locally, financials were well bid: BNP (+6.65%), SOC GEN (+4.9%), CREDIT AGRICOLE (+8.13%), DEXIA (+4.16%). Wider-market listed NATIXIS (+11.48%) will launch a EUR 3.7bn capital increase - a move that had been expected. In reporting news, ESSILOR (-8.39%) disappointed with 2Q sales of EUR 758.1m, up 2.3% and missing estimates. Colony Capital and Groupe Arnault - united as CARREFOUR's (+5.49%) No.1 shareholder Blue Capital - are discussing the future of the retailer's current chairman Jose-Luis Duran and are looking for a 'credible alternative', La Tribune reports citing an unnamed source. As expected, GDF (+1.28%) and SUEZ (+1.98%) shareholders overwhelmingly approved the companies' merger in separate votes yesterday. In broker news, Bernstein upgraded DANONE (+5.11%) to outperform from underperform and SocGen downgraded ARCELOR MITTAL (-1.87%) to sell from hold. In the broader market, ETAM's (-1.42%) 2Q sales came in at EUR 223m, down 4.9% y/y.


Xetra-Dax (+1.88%) closed higher but off earlier highs as Wall Street turned flat to lower following a weaker-than-expected Philly Fed survey. However, financials closed as leading German blue-chip gainers: DEUTSCHE BANK (+7.12%); COMMERZBANK (+6.52%); HYPO REAL ESTATE (+6.83%). Stock-specific, ALLIANZ (+4.9%) will make a decision on whether or not to separate from Dresdner Bank at its EGM tomorrow, according to Boersen-Zeitung. The financial daily reckons Commerzbank is the most likely buyer. Meanwhile, potential buyers of IKB (+7.44%) have until tomorrow to hand in their bids for the troubled bank. In earnings news, FMC (-4.66%) reported a 17% rise in 2Q net income to US$209m on quarterly revenue up 11% at US$2.67bn. Weighing on the stock was the news that holding group FRESENIUS SE (-1.39%) plans to issue a bond exchangeable into FMC shares. Other news: Italian tyre group Pirelli has indicated that it has no interest in buying CONTINENTAL (-2.48%). VW (-0.27%) said it expects to gain a voting majority in Sweden's Scania by 22 July. CONERGY (+5.75%) announced that it plans an equity issue, from which it expects gross proceeds of about EUR 450m, to strengthen its balance sheet.


Nordic equity markets closed sharply higher: OMXS30 (+3.82%), OMXHPI (+3.49%), OMXC20 (+3.56%) and OSEBX (+2.73%). Wall Street turned lower as the Philly Fed index came in weaker than expected. Of local note, NOKIA (+7.87%) reported a mixed set of results. 2Q adjusted EPS arrives at EUR 0.36 up 12.5% y/y, just short of consensus. The ASP is also lower than expected. However, shipments were above forecast as the company reported a 40% market share and raised its outlook for the global handset market to over 10%. ERICSSON (+6.09%) rose after the news and benefited as Merrill removed the stock from its tech least preferred list. Elsewhere, SWEDBANK (+9.59%) reported better-than-expected 2Q EBIT at SEK4.58bn with NII of SEK5.3bn. The bank said earnings at the Baltic operations remain strong and credit quality is still high. ENIRO (+14.22%) reported 2Q EBITDA ahead of expectations at SEK580m. ELECTROLUX's (-4.29%) 2Q core earnings topped expectations, however the outlook was below consensus. TOMRA's (+4.68%) 2Q EBIT is above forecast at NOK122m. FORTUM's (-4.02%) 2Q PTP missed consensus. In other news: ABB (+1.83%) named Joseph Hogan as new CEO, starting his post on 1 September of this year. SKANSKA (+8.2%) booked a capital gain of SEK94m after selling land with building rights in Warsaw for SEK117m.


The Ibex 35 ended around 350 points higher with banks and utilities driving the gains. Wall Street was trading flat after a weaker-than-expected reading of the Philly Fed index offset strong results from JP Morgan. Of local note, ACS (+9.6%) is considering selling its 45.3% stake in UNION FENOSA (+16.44%) in order to strengthen its holding in IBERDROLA (+4.71%), but no deal has yet been reached. The buyer would have to launch a takeover bid on Fenosa. In further M&A news, IBERDROLA RENOVABLES (+3.19%) has increased its stake in Rokas to 67.95%. SANTANDER (+2.98%) has put its EUR 3bn unit Santander Asset Management up for sale, Cinco Dias reports. In order to satisfy its lenders, COLONIAL (+18.42%) may sell a 33% stake in SFL, Riofisa, the 15% stake in FCC (+4.64%) and some property assets, Expansion writes. Fellow real estate group RENTA (+3.68%) says 1H net loss will be EUR 25m-EUR 27m. REPSOL (+1.67%) has extended E&P contracts in Libya until 2032. The FT reports that British Airways and American Airlines have agreed on their j/v and now aim to add IBERIA (+6.29%) to the accord by the end of the month. SOLARIA (-4.29%) was one of the biggest losers on news of solar subsidy cuts and a cap on new capacity. In broker moves, SocGen upgraded MAPFRE (+3.33%) and ACERINOX (+3.13%).

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