European Indexes Gain

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


The final day of the trading week saw the FTSE 100 (+0.21%) finish with minor gains, as Wall Street was trading more firmly in the black. WTI crude declined to US$116.6 as the dollar strengthened. Airlines gained strongly on the news: BRITISH AIRWAYS (+8.14%), EASYJET (+5.18%). VODAFONE (+0.68%) finished in the black in spite of being the main drag this morning after Goldman Sachs removed the stock from its Conviction Buy List and downgraded its recommendation to neutral. ROYAL BANK SCOTLAND (+3.2%) jumped despite posting its first loss ever, as the slump was smaller than anticipated. PTP loss was GBP691m in 1H, following credit market write-downs of GBP5.9bn. BG (-1.45%) announced a material new oil discovery in the pre-salt Santos Basin, offshore of Brazil. BAT (-2.03%) retreated after Richemont and Remgro announced further details about a restructuring that would see their respective shareholders become direct shareholders in the group. SCHRODERS (+6.36%) rebounded after a negative start. The group came with a 1H PTP of GBP135.7m, down 26.88%, below ests. CATLIN (+2.27%) reported 1H PTP of US$150m, short of expectations. Finally, RYANAIR's (+11.45%) Michael O'Leary is interested in launching a EUR 2bn bid for Stansted airport, The Daily Telegraph reported.


The CAC 40 (+0.77%) closed higher, with Wall Street firmly in the black. Many stocks - in Europe and stateside - have been lifted by the US$ breaking a 5-month high vs the EUR and the consequent depression of WTI to US$115.96/bbl: EADS (+9.72%), PSA (+4.33%), RENAULT (+4.57%), MICHELIN (+4.48%). Of course, there were losers: TOTAL (-1.47%), ARCELOR MITTAL (-3.4%). Elsewhere, SANOFI (+4.13%) gained. Its Multaq drug has reportedly been given priority review status by the US FDA. Also positive for the stock, RBS upgraded the pharma blue chip to buy from hold. Among other broker changes, Goldman Sachs added BOUYGUES (+3.77%) to its Conviction Buy List and AXA (+4.12%) enjoyed a Merrill upgrade to buy. In the wider market, aerospace player LATECOERE (+7.7%) expected FY sales to rise by more than the 10% it had previously forecast. Finally, street furniture operator JC DECAUX (+1.66%) is interested in News Corp unit News Outdoor, Les Echos reported, citing Russian daily Kommersant.


Xetra-Dax (+0.28%) closed higher on Friday, supported by higher trading on Wall Street and outperforming auto stocks, such as BMW (+6.53%) and DAIMLER (+3.88%), on the back of US$ gains versus the euro. Also, Toyota's shares jumped in Asian trading this morning as investors took comfort in the auto giant sticking with its guidance despite a 28% fall in quarterly earnings. LUFTHANSA (+2.65%) flew higher as crude moved lower. Elsewhere, news that Russia and Georgia were in military conflict did not weigh on the markets too much. If tensions do escalate over the weekend, it could be a different story come Monday. Of local note, CONERGY's (+7.96%) 1H sales rose 87% to EUR 582m. The half year ended with a net loss of EUR 59m. The 2Q EBIT loss of EUR 7m was not as deep in the red as was feared. However, the solar power products manufacturer cancelled its 2008 outlook due to its capital increase, it said. In M&A news: Singapore's Neptune Orient Lineswas invited to continue into the next phase of the bidding process for TUI's (+1.15%) Hapag-Lloyd unit, while CONTINENTAL (+0.4%) was understood to be looking for allies in Asian emerging markets and Russia as a suitable white knight to fend of Schaeffler's hostile bid. MTU (+13.18%) could be the next in line to be taken over following Epcos falling into TDK's hands, according to a weekly stock newsletter.


Nordic equity markets closed higher, with the exception of oil-heavy OSEBX (-0.71%) as WTI fell US$4 to US$116/bbl as the US$ hit a 5-month high vs the EUR following concerns about eurozone growth. Wall Street trades firmly higher as bond insurer MBIA posted net income of US$1.7bn, up 5.5% y/y. Of local note, FINNAIR (-6.84%) saw 2Q PTP at EUR 19.1m falling less than forecast. Says 2H operational result may be negative, with fuel cost seen rising to 28% of turnover. In Oslo, AKER YARDS (-2.33%) reported EBITDA of NOK72m, below forecast. Cut its 2008 EBITDA margin guidance to 2-3% vs a previous forecast of 3-4%. CERMAQ (-0.94%) reported 2Q operating loss, before biomass adjustments, of NOK8bn (vs EBIT of NOK196m) in line with forecast. CEO Geir Isaksen said 'costs in Chile were high due to disease and low harvest weight'. In Stockholm, MEDA (-3.26%) reported 2Q EBITDA in line with forecast. In key broker focus, Credit Suisse upgraded NORSKE SKOG (+15.74%) to neutral. RBS upgraded TGS (+5.08%) to buy. JP Morgan raised its rating for FORTUM (-2.11%) to neutral. UBS downgraded DANSKE BANK (+0.69%) to sell and cut its target objective for the stock.


The SLI (+0.75%) closed firmly higher as crude fell amid a stronger dollar. CIBA (+3.67%) and CLARIANT (+0.69%) both rose. Meanwhile, UBS (+1.2%) was in focus ahead of next week's results announcement. A US$19.4bn agreement was reportedly reached with US regulators to settle charges that the Swiss banking group misled investors into buying auction-rate securities that were far riskier than advertised. UBS has also agreed to pay US$150m in fines, according to various reports that were citing Massachusetts Secretary of State William Galvin. On a related note, STMicroelectronics sued CREDIT SUISSE (-0.18%) for allegedly placing US$450m of its cash into auction-rate securities without authorisation. Also, STM reckons at least a dozen other multinational corporations are victims of the same scheme and that the fraud involves more than US$2bn of these clients' monies. Away from financials, RICHEMONT (+3.39%) rose on news it made progress on its restructuring, with regards to its 19.4% stake in British American Tobacco. Incidentally, Credit Suisse initiated coverage on Richemont with outperform today, commenting that the BAT demerger should narrow the valuation discount of Richemont's luxury stub vs peers like LVMH. In the broader market, retailer CHARLES VOEGELE (-5.22%) slumped as it cut its forecast.

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