European Indexes Rally

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


The FTSE 100 (+1.7%) finished the final day of the trading week with firm gains. The US was trading mixed with the Nasdaq hit by disappointing results from Google and Microsoft while the Dow was supported by some better-than-expected earnings results, most notably from Citigroup. WTI traded at US$129.53/bbl. Financials thrived on the news from across the pond: BARCLAYS (+10.24%), HBOS (+5.13%). The former said shareholders had taken up just 19% of the rights offer, while the latter's offer ended today. The Independent said that underwriters Morgan Stanley and Dresdner Kleinwort may be left with large holdings of HBOS shares. Among today's trading updates, INVENSYS (+6.62%) reported a satisfactory start to the new financial year, with overall operating performance in 1Q in line with expectations. ELECTROCOMPONENTS (+1.47%) said group sales rose 1% in 1Q08. KIER (+5.99%) expects to report FY u/l PTP in line with current market forecasts. In M&A news, bankers said last night that the chances of success were fading for a consortium of private equity houses trying to raise money to fund a tentative GBP5.06/share approach for INFORMA (+5.51%), the FT reported. In broker action, RBS upgraded BAT (+2.17%) to buy, while REED ELSEVIER (+1.71%) suffered a downgrade at Dresdner and a target cut at JP Morgan.


The CAC 40 (+1.74%) closed the session in fine fettle while Wall Street trades mixed amid Citigroup's narrower-than-expected 2Q loss and disappointing results from Google and Microsoft. Locally, financials extended yesterday's rally: BNP PARIBAS (+6.57%), SOCGEN (+6.07%), CREDIT AGRICOLE (+7.60%), DEXIA (+6.85%). Citigroup upgraded NATIXIS (+8.05%) to hold from sell. On the reporting front, ACCOR (+2.92%) reported 2Q sales down 7.5% to EUR 1.97bn, in line with estimates. L'OREAL (-2.07%) fell as it cut its 2008 annual revenue growth target to around 6% from 6-8% after tabling 2Q revenues of EUR 4.29bn, a touch below the consensus estimate. Elsewhere, Spain's ACS has an agreement to sell its 45% stake in Union Fenosa to EDF (-3.27%), ABC reported. ARCELOR MITTAL (-2.83%) was hit by US player Nucor's 2Q statement, which revealed a sharp jump in profit but sounded a cautious note on outlook. The stock closed down 11%. Blue Capital increased its stake in CARREFOUR (-0.21%) to 13.55% of the shares. SANOFI (+2.44%) said a German court's decision to delay approval of Schweizerhall Holding's generic version of the Plavix blood thinner confirmed the validity of the French drugmaker's patent. In the wider market, PIERRE & VACANCES (-3.70%) tabled 2.1% fall in 3Q sales to EUR 306m. ADP's (-0.19%) June traffic rose 1.9% to 7.8m passengers. Cheuvreux cut its target to EUR 57 from EUR 67.


Xetra-Dax (+1.78%) ended higher on Friday with financials adding support after Citigroup reported a narrower-than-expected loss. COMMERZBANK (+6.28%) and DEUTSCHE BANK (+3.91%) gained. Oil was trading at US$129 a barrel at the European close. Of local note, June PPI took centre stage on the macro data front. It was 0.9% higher m/m and up 6.7% y/y. On the local corporate news front, CONTINENTAL's (-0.18%) chief of the supervisory board, Hubertus von Gruenberg, has spoken in favour of a takeover by Schaeffler. Italy's Il Corriere della Sera reported that Generali could decide to exit COMMERZBANK, should the German bank proceed in acquiring Dresdner from ALLIANZ (+4.91%). DAIMLER (+3.76%) plans to cut as many as 720 jobs at an Ontario truck plant, almost half the factory's workforce, as it reduces production because of lower demand. Earnings-wise, REPOWER (-0.29%) reported 1Q EBIT of EUR 10.2m versus EUR 0.1m a year ago. INFINEON (+8.35%) was well bid on Nokia news. Press reports had it that the Finnish mobile phone maker has sold tens of millions of single-chip phones. Talk of a placement weighed on K+S (-8.79%). Berenberg Bank said it has no plans to buy CASHLIFE (-5.0%), refuting earlier speculation on the matter.

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