European Indexes Post Gains

A rundown of Wednesday's action on major European stock exchanges


The FTSE 100 (+0.58%) finished the day with minor gains, as Wall Street traded below break-even. WTI retreated to US$117.78 reacting to government inventory data showing domestic crude supplies rose sharply last week. At home, the mining sector rallied after XSTRATA (+1.03%) announced a surprise GBP33 per share cash bid for LONMIN (+47.74%). The price represents a 42% premium. Xstrata also reported in line 1H figures, with EBIT at US$4.513bn. ENRC (+7.05%) said 2Q volumes rose y/y and expected continued organic growth in 2H across all divisions. On the downside, ITV (-5.83%) plunged on worse than expected ad revenue outlook. The group said ITV NAR to August fell 1% and it would fall by 20% in the 9M to September. OLD MUTUAL (-11.37%) announced an injection of GBP150m into US its business. STANDARD LIFE (-0.41%) posted a 51% rise in 1H EEV op profit, ahead of estimates. LIBERTY INTL (-7.22%) announced a 13.3% drop in NAV in 1H but the group said it is confident it could meet challenges under market conditions. TULLOW OIL (-0.27%) said it has found over 31 metres of oil and at least six metres of gas at the Kasamene-1 exploration well, in Uganda. In the broader market, F&C ASSET MANAGEMENT's (-0.96%) 1H net revenue slipped to GBP117.9m. INMARSAT's (+1.26%) 1H revenue jumped 70.8%, and the company has a confident outlook for 2H08. MORGAN CRUCIBLE (+5.26%) said order book is ahead y/y.


The CAC 40 (+1.41%) closed markedly higher with Wall Street off lows trading flat-to-negative. Crude falls sharply to US$117.39/bbl after EIA data. TOTAL (+1.2%) recovered recently lost ground, while AIR FRANCE-KLM (+2.81%) gained altitude. BNP PARIBAS (+5.15%) posted 2Q net profit of EUR 1.505bn, while 34% lower y/y, was a touch higher than expected. Revenues also beat consensus, coming in at EUR 7.517bn, down 8.5% y/y. The bank labelled its CIB results a 'rebound', with revenues down 24.5% y/y, but up 41.3% q/q. The bank sees no need for a capital increase. Other financials rose, including SOC GEN (+2.95%) - which Goldman Sachs added to its Conviction Buy list after yesterday's consensus-beating 2Q. UNIBAIL RODAMCO (-0.97%) saw Credit Suisse cut target to EUR 140.44, with a neutral rating. In the wider market, BIC (+10.6%) unveiled 2Q08 net sales of EUR 392.4m, -1.6% (+5.8% constant fx) - with 1H sales at EUR 700.50m - and net income EUR 45.50m (1H EUR 70.60m). Maintained FY08 outlook despite the uncertain overall economic environment. VILMORIN (-10.68%) tabled an 11.5% rise in 2007/08 sales to EUR 896.9m and said it expects a significant increase in its operating margin for the year. Exane BNP Paribas cut target on the stock to EUR 124, keeping its outperform stance.


As US stocks open broadly lower, with Freddie Mac posting a fourth consecutive quarterly loss, Xetra-Dax (+0.33%) is positive. Locally, a flurry of earnings results give investors food for thought. COMMERZBANK (-2.85%) reports better-than-expected 2Q net profit of EUR 817m, up 6.4% y/y and boosted by tax revenue of EUR 386m. Worrying investors, the 2008 outlook remains cautious, as further write-downs may come about. MUNICH RE (+2.22%) tables a 2Q operating result of EUR 1.023bn and net income before minorities of EUR 621m. The company reiterates that it expects full-year net earnings 'well above' EUR 2bn and maintains its EUR 5.50 per share dividend payment for 2008. HENKEL's (+3.67%) 2Q EBIT slides to EUR 113m, down from EUR 339m a year ago and weaker than expected, on sales 11.4% y/y higher at EUR 3.67bn. News on price hikes of 5-10% in 2H, however, provides cheer. PROSIEBEN's (+2.1%) 2Q numbers top expectations. The broadcaster says it has no idea when the downturn in advertising spending is likely to end. BALDA's (-3.85%) 1H net loss is EUR 11.2m on sales 19% higher y/y at EUR 103.1m. FUCHS PETROLUB (-3.57%) posts 1H EBIT of EUR 98.4m on sales of EUR 718.7m. Earnings news aside, ARQUES (+3.93%) is taking over Huenert, a German petrol station supplier. AIR BERLIN's (+5.65%) July passenger count falls 1.4%, while fair yield rises 14.6%.


The Ibex ended in the black with the rest of the European markets, despite news that Spanish industrial output fell a record 9.0% y/y in June. Wall Street was cutting losses trading mixed after inventory data showed domestic crude supplies rose sharply last week. WTI trades now below US$118/bbl. Back home, FERROVIAL's (-1.15%) BAA unit has secured support for its refinancing plan to migrate all series of existing bonds into a new ring-fenced structure. Also, BAA has started legal action against Ryanair after the budget carrier refused to pay higher landing fees, The Times wrote. In M&A news, Expansion reported that British Airways could be forced to launch a full bid for IBERIA (+1.44%), as under Spanish takeover rules it is compulsory if one shareholder acquires more than 30% of a company. Cinco Dias wrote that the bank that is financing the Sanahuja family, which owns a 80% stake in METROVACESA (unch.), has rejected a proposal to merge Metrovacesa and Sanahuja's firm, Sacresa Terrenos 2. Moving on, Venezuelan president Hugo Chavez aims to offer EUR 775m for SANTANDER's (unch.) Venezuelan unit, Bolsa Cinco reported. MECALUX (+3.05%) has redeemed a EUR 45m credit four years before its maturity date. On the broker front, Goldman initiated on BME (-1.3%) with neutral and EUR 27.00 target price. Meanwhile, JP Morgan cut INDRA's (-0.41%) target to EUR 19.00 from EUR 19.50. Kept neutral rating.


All Nordic bourses closed in positive territory: OSEBX (+1.92%), OMXS30 (+1.13%), OMXC20 (+1.12%) and OMXHPI (+0.58%). Wall Street traded lower after Freddie Mac posted a loss for the quarter. WTI fell to US$117.33/bbl after weekly EIA inventory data. In earnings locally, OLD MUTUAL (-10.24%) plunged as CEO Jim Sutcliffe says the group's decision to withdraw a string of US guaranteed products, on the back of hedging troubles, could result in a 15-20% drop in US life sales in 2008. Merrill Lynch downgraded to neutral. NOKIAN RENKAAT (-12.94%) reiterated guidance of 15% sales growth and higher profits in 2008. Added that it forecasts a steep increase in raw material cost for the end of the year, with average tyre price up in 2008 compared to 2007. Elsewhere, Carnegie sees buying opportunity in AKER SOLUTIONS (+6.02%) as its shares fell sharply yesterday on the back of 'a false story about another delay to Kashagan'. Moving on, H&M (-2.17%) said Jyrki Tervonen will replace Leif Persson as new CFO as of November 2008. In key broker focus, JP Morgan upgraded TELE2 (+0.47%) to neutral, while ING upgraded CARLSBERG (+5.57%) to buy. On the downside, Carnegie downgraded LUNDBECK (+0.83%) to underperform.

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