European Indexes Weaken

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


The FTSE 100 turned around in the closing minutes to close moderately lower as concern over the state of the financial system returned. Earlier in the day, major central banks pumped over US$180bn extra funds into global money markets. WTI fell to US96.49/bbl in the face of a rising US$. Wall Street was trading slightly higher, but without much conviction. At home, rebounding miners and confirmation of the takeover of HBOS (+17.34%) by LLOYDSTSB (-15.1%) limited downside. The GBP12.2bn deal was welcomed by the FSA as it is likely to enhance stability within financial markets and improve confidence. The FSA insisted HBOS was a well capitalised bank. In other news, KINGFISHER (+9.68%) reported a 23% increase in 1H adj PTP, ahead of guidance, but a 2.6% drop in LFL sales, with B&Q LFL down 4.6%. BARCLAYS (-5.27%) completed a GBP701m share placing to fund the Lehman deal. ENTERPRISE INNS (+5.44%) jumped, helped by a Goldman Sachs upgrade. PRUDENTIAL (-0.75%) and AVIVA (+4.88%) were among a handful of European insurers expected to be front-runners in an auction of AIG's prime assets, The Times wrote. TATE & LYLE (-1.0%) announced the departure of its FD and said it expects 1H profits to be broadly in line y/y and with its own expectations. KIER GROUP (-2.61%) posted a 12.1% increase in FY u/l PTP. PROTHERICS (+16.3%) agreed to a GBP218.1m takeover by BTG (-14.93%) in a share swap deal.


The CAC 40 (-1.06%) closed firmly lower, reversing late in the session from an earlier positive trend while Wall Street also turned sour after it opened in the black. The Federal Reserve, Europe's biggest central banks and the Bank of Japan said they will pump US$180bn into financial markets. Locally, the financial sector rebounded: BNP PARIBAS (+2.99%), SOCGEN (+2.74%), AXA (+2.52%), DEXIA (+4.23%). CREDIT AGRICOLE (-3.18%) fell. Oil prices were also volatile today, with WTI slightly falling at European close, trading at c.US$96.80/bbl. TOTAL (-3.04%) weighed heavily. Elsewhere, PERNOD RICARD (-9.85%) reported FY net sales of EUR 6.58bn, net att. profit of EUR 840m vs a Bloomberg consensus of EUR 899m. ARCELOR MITTAL (-6.04%) and three other companies are being investigated over claims they trafficked in toxic waste in northern France, AP reported. Elsewhere, EDF (+0.12%) raised its offer for British Energy by 9 pence a share to GBP7.74 a share, Bloomberg reported, citing two people familiar with the matter. EDF also said it does not plan to raise its stake in Constellation. EADS (+0.82%) won't be able to consolidate the results of missile maker MBDA after 2010 because of new accounting rules, La Tribune wrote. Siemens seeks US$55m in damages from SAINT GOBAIN's (33.15%) Ceramics & Plastics unit, accusing it of infringing a patent for medical diagnostic scanners.


Xetra-Dax closed flat after recent sharp losses. Across the Atlantic, Wall Street was trading mixed, and heading into negative territory once again. Shares in State Street and other Trust Banks took a hit today after the Reserve Primary Fund fell below US$1, ie 'broke the buck', noted a trader. In the UK, troubled HBOS agreed to be taken over by Lloyds-TSB, a deal brokered by the British government. Locally, ALLIANZ (-5.53%) had to reassure nervous investors that its Dresdner Bank deal with COMMERZBANK (-1.89%) is still on track. Meanwhile, risk aversion firmly set in as DEUTSCHE BANK (-0.07%) is slowing down CDS trades that expose it to risk of failure among Wall Street firms. In other local news: Hannoversche Allgemeine said PORSCHE (+0.04%) is considering a controlling and profit transfer agreement with VW (+26.57%), for which it would need 75% of voting rights. Porsche denied this, saying it is not planned and totally unrealistic. DEUTSCHE POST (-2.11%) will have to charge its large clients VAT from 2010, according to a draft document by the German finance ministry, writes FAZ - therefore losing a tax advantage against competitors. Finally, ARCANDOR (+1.89%) said refinancing talks are still on track and it expects an agreement 'shortly'.


Nordic indices closed mixed: OSEBX (+2.49%), OMXS30 (+0.28%), OMXHPI (-1.59%) and OMXC20 (+0.92).

Wall Street trades flat-to-higher after a set of mixed macro data. Initial claims came in at 455k vs consensus of 440k. The Philly Fed Survey came in at +3.8 vs consensus -10, while leading indicators came in at -0.5% vs consensus of -0.2%. Of local note, CEOs of major Nordic banks SWEDBANK (-0.55%), HANDELSBANKEN (+1.56%) and NORDEA (+0.12%) commented on the crisis, telling Svenska Dagbladet the situation is serious. However, the three banks suggested they are well prepared. In earnings, DANISCO (+3.52%) reported 1Q EBIT above forecast and lifts its revenue and profit guidance for the year. ELEKTA's (-5.53%) 1Q EBIT significantly missed forecast. Elsewhere, CARGOTEC (-9.84%) plunged as it cut its FY08 guidance and launched restructuring initiatives. DFDS (-4.29%) also launched restructuring initiatives, aimed at achieving annual gains of DKK40m from 2009 onwards. YARA (+3.88%) outperformed after Reuters quoted executives of Canadian fertiliser companies Potash Corp and Agrium saying the outlook for their commodities remains positive. STATOILHYDRO (+2.17%) is to keep its petrol station brand Statoil, saving re-branding costs of c.NOK1.9bn. On the broker front, Goldman removed CARLSBERG (-2.9%) from its conviction buy list, while Merrill downgraded TELE2 (-7.37%) to underperform.


The Ibex 35 (+0.01%) finished the session just above the gain line while Wall Street was trading in the black after the announcement of a global coordinated action by the world's leading banks. Note that initial claims were worse than expected. WTI moved down to US$96.53/bbl. Locally, the CNE (Spanish energy regulator) was expected today to approve the acquisition of UNION FENOSA (-2.11%) by GAS NATURAL (-5.39%), Europa Press reported. FERROVIAL (+4.41%) was buoyed by yesterday's confirmation that it will sell Gatwick Airport. Traders said short-covering also contributed to the share price spike. FCC (+7.11%) was another beneficiary of short-covering, though sources said speculation over the stake owned by COLONIAL (-12.5%) could be another factor. SOS CUETARA (-0.08%) confirmed it is considering listing c.25% of its Italian unit Carapelli Firenza. In broker action, Morgan Stanley upgraded REPSOL (-0.37%) to overweight. INDITEX (-0.76%) received a flurry of target price cut as well as a recommendation upgrade from Landsbanki Kepler following yesterday's 1H results.

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