European Indexes End Mostly Higher

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


The FTSE 100 closed higher as Wall Street turned higher. US CPI data fanned inflation fears, but rebounding tech stocks and news of fresh loan package regulations for Fannie Mae and Freddie Mac helped US markets to rally. Wal-Mart was upbeat in 2Q, lifting its FY forecast: TESCO (+2.52%). Commodities were in focus as metal prices recovered and steel makers Salzgitter and ThyssenKrupp both raised guidance. At home, XSTRATA (+5.6%), ANGLO AMERICAN (+4.73%) rallied after Merrill Lynch said UK miners were oversold. TUI TRAVEL (-2.19%) unveiled a 39% jump in 3Q operating profit, saying 2008, 2009 expectations can be achieved. BRITISH LAND's (unch) 1Q earnings were flat, while portfolio value fell 5% and NAV was down 10%. The company is reviewing the timing of construction and target completion for the Leadenhall skyscraper. LOGICACMG (+13.56%) jumped after 1H sales ahead of estimates and it raised FY revenue growth guidance. More pain from housebuilder BELLWAY (-2.86%) as completions in the 12M to 31 July fell 14.2% and average selling price dropped with operating margins likely to be eroded. The group is not yet considering widespread land write-downs. In other news, BRITISH AIRWAYS (-0.68%) signed a transatlantic deal with American Airlines and Iberia. EASYJET (-0.28%) is to complain about rising charges at Schipol Airport.


The CAC 40 (+0.41%) recovered ground to close higher, with Wall Street rebounding amid talk of further US Treasury action to shore up Fannie Mae and Freddie Mac. Oil and energy stocks gained following recent losses, despite WTI down at the close at US$114.70/bbl: TOTAL (+0.74%), EDF (+0.74%), GDF SUEZ (+1.56%). In Germany, steel players ThyssenKrupp and Salzgitter both raised guidance having released results - ARCELOR MITTAL (+1.29%) climbed. Back home, the French Economy Ministry has filed a complaint against MICHELIN (+0.33%) with the domestic competition watchdog, Le Figaro reported. Among losers, Morgan Stanley downgraded L'OREAL (-4.58%) to underweight from equal weight and cut target to EUR 60 from EUR 82, believing it trades on an unjustifiably high earnings multiple despite a more than 20% stock fall YTD. Credit Suisse initiated AIR FRANCE-KLM (-1.66%) with underperform and a EUR 14.00 target. In the wider market, STERIA (+9.63%) last night reported 1H revenue of EUR 878.7m, up 35.6% y/y. The IT company expects to exceed its 1H operating margin target. IPSOS (+0.22%) yesterday unveiled 2Q sales of EUR 245.5m, up 2.98% y/y, with organic growth at 7.3% y/y. S&P Ratings yesterday affirmed its BBB-/A-3 long- and short-term corporate credit ratings on WENDEL (+0.81%) and took it off CreditWatch negative.


Xetra-Dax (+0.31%) closed higher as Wall Street turned positive after news that regulators will allow US home loan lenders to sell loans into the bond market. The news offset higher-than-expected CPI and jobless claims data.

Locally, it was earnings galore once more: RWE (-0.71%) posted in-line 1H operating income of EUR 3.9bn, down 8% y/y, on sales at EUR 24.7bn. THYSSENKRUPP (+0.181) raised its PTP guidance after reporting 3Q EBITDA of EUR 1.366bn on revenues of EUR 14.2bn. SALZGITTER (+0.1%) revealed 1H revenue of EUR 6.23bn and PTP of EUR 646.4m. The steelmaker raised its profit forecast for FY08. HOCHTIEF (+2.54%) tabled higher-than-expected 2Q pretax profit of EUR 188.9m on quarterly output of EUR 5.29bn and upped its 2008 earnings outlook. TUI (-1.83%) disclosed a 2Q group loss of EUR 125.3m on sales of EUR 6.25bn. The results were weighed down by special items related to the realignment of flight operations. IVG (-4.16%) cut its 2008 EBIT guidance after reporting 1H adjusted EBIT of EUR 151.1m. VERSATEL (+11.38%) posted 2Q EBITDA of EUR 65.1m, up from EUR 38.7m for the same quarter a year ago, on revenues of EUR 211m. The telco services group raised its sales guidance. Earnings apart, there was talk Schaeffler may sweeten its unsolicited bid for CONTINENTAL (+0.11%) to EUR 78/sh, but Reuters reported that Schaeffler may only raise its bid by a 'smidgen' from the current EUR 70.12/share.


In somewhat volatile trading today, the AEX (-0.

22%) closed slightly lower, coming off earlier lows as Wall Street turned positive following news that regulators will allow US home loan lenders to sell loans into the bond market. The news offsets higher-than-expected CPI and jobless claims data. Energy-related shares closed higher today: ROYAL DUTCH SHELL (+1.89%). ARCELOR-MITTAL (+1.25%) outperformed as German peers ThyssenKrupp and Salzgitter raised their outlook. In local earnings, in the wider market, LOGICACMG's (+14.08%) 1H sales came in ahead of ests and the company raised its FY guidance. SNS REAAL (-2.05%) reported 1H net income of EUR 226m vs an expected EUR 237m. Brokers said they regret the departure of chairman of insurance unit, Cor van den Bos. IMTECH's (+0.75%) 1H profit topped estimates, with net earnings coming in at EUR 46.1m, up 31% y/y. EUROCASTLE (unch) reported a pre-tax loss for 2Q of EUR 33m, better than some analysts expected (Citi's estimate was for a loss of EUR 50.2m). In other news: PHILIPS (-0.52%) sold its remaining shares in TSMC, exiting its shareholding from the Taiwanese group and booking a non-taxable gain of EUR 260m. DRAKA (+0.46%) will close its copper wire production factory and consolidate other production factories within Europe.


Spanish shares ended in the red, although off lows as Wall Street turned higher. US CPI data fanned inflation fears, but rebounding tech stocks and news of new loan package regulations for Fannie Mae and Freddie Mac helped US markets to rally. Spanish GDP growth slipped to a 15-year low of +0.1% in 2Q, vs +0.3% in 1Q and forecasts for no growth. On the corporate front, banks underperformed: SANTANDER (-0.92%). Key for the likes of ARCELOR-MITTAL (+1.83%), German steelmakers ThyssenKrupp and Salzgitter both raised their earnings guidance. In M&A news, unlisted savings bank CAM has agreed to sell its 5.15% stake in UNION FENOSA (+0.23%) to GAS NATURAL (-0.41%), via an equity swap deal with UBS. IBERIA (-1.46%), British Airways and American Airlines have signed a joint business agreement on flights between North America and Europe. A New York regulator will decide on 27 August whether IBERDROLA (-0.96%) can buy Energy East, Cinco Dias reports. Troubled homebuilder MARTINSA-FADESA (sus.) is to cut 234 jobs. In broker moves, Morgan Stanley initiated on GAS NATURAL with equal weight while SocGen cut FERROVIAL's (-0.23%) target.