European Indexes End Mostly Lower

LONDON

The FTSE 100 closed flat as energy and mining stocks offset weak banking and pharma. Wall Street was lower, but cut earlier losses. WTI continued its run to an all-time high, trading over US$122/bbl on supply woes and a Goldman note suggesting oil could hit US$200/bbl. TULLOW OIL [+24.14%] said its well offshore Ghana had hit a significant column of oil. Among other gainers, WHITBREAD [+3.52%] was hot after Merrill added it to the Europe 1 list and raises FY earnings estimates. CAPITA [+3.31%] said has performed strongly in first 4M of 2008. At the other extreme, SMITH & NEPHEW [-1.85%] fell on a Vontobel downgrade to sell from hold. BRITISH AIRWAYS [-3.92%] hit turbulence after bearish notes from Deutsche and JP Morgan. The airline's April traffic fell 7%. In company news, XSTRATA's [+2.70%] 1Q copper production rose 2%, but nickel was down 15%. LLOYDS TSB [-2.92%] said it was on track for a good 1H08 performance, adding impact of market dislocation on Wholesale and International Banking PTP was GBP387m. Housebuilders were weak after BOVIS HOMES [-2.76%] said 1H result will be significantly lower than anticipated and conditions in the housing market had deteriorated sharply. In the sector, BARRATT DEVELOPMENT [-0.65%] has reportedly turned down Apollo's offer to buy a stake in the troubled UK housebuilder. A negative M.Stanley note featuring target cuts also weighed on real estate stocks.

PARIS

The CAC 40 [-0.84%] closed in the red, with Wall Street trading lower following a worse-than-expected loss at Fannie Mae. WTI is at a record high of c.US$122/bbl. Fed Reserve Chairman Ben Bernanke said yesterday that high home foreclosure rates could hurt the broader economy. Locally, financials suffered: SOC GEN [-2.61%], BNP [-1.2%], CREDIT AGRICOLE [-2.36%], AXA [-2.08%]. In results news, VEOLIA [-6.3%] posted 1Q08 op. profit of EUR 701.2m vs. consensus of EUR 744m. Senior Exec VP Jerome Contamine reportedly says that FY08 operating margin will be 'slightly lower' y/y. However, SUEZ [+2.76%] pleased the market, with consensus-beating 1Q op. profit of EUR 1.7bn, up 11.3% y/y organic: GDF [+2.87%]. Elsewhere, ALSTOM [-0.65%] is being investigated for bribery by French and Swiss authorities between 1995-2003, the WSJ reports. EADS [-1.59%] has cautioned there could be further A380 delays. EDF [-1.94%] is seen as the clear frontrunner to table an offer for British Energy ahead of this week's deadline, The Daily Telegraph reported. In the black, ARCELOR MITTAL [+3.31%] enjoyed a 30% target hike to US$130 from Exane BNP Paribas, which rates the stock outperform. In the wider market, NICOX [-28.68%] tumbled on news its partner Pfizer won't launch global phase 3 for a glaucoma drug jointly developed by both companies.

FRANKFURT

Xetra-Dax [-0.5%] closed the day with some losses, though off intra day lows. Wall Street also traded below breakeven after worse-than-expected results at Fannie Mae, and WTI crude continuing to set new records breaching the US$122 mark. Of local note, HYPO REAL ESTATE [-3.51%] found itself on the very bottom of the index, as it wrote down EUR 175m in 1Q on its portfolio of structured credits, noting markets were still dysfunctional in some areas. On top of the index, ADIDAS [+5.69%] topped expectations, with net income coming in at EUR 169m. Elsewhere, BMW [+0.9%] reiterated that it would propose a dividend of EUR 1.06 per ordinary share and EUR 1.06 per preference share, as planned, quashing rumours that it would cut its div. BEIERSDORF [-5.23%] reported 1Q EBIT of EUR 195m, short of expectations. HANOVER RE's [-0.53%] 1Q core profit beat estimates at EUR 245.6m, up 59% y/y. Meanwhile, there were rumours, since refuted by the reinsurer, that it was interested in MLP [+5.46%]. Other earnings news saw EPCOS [+4.54%] posting EBIT of EUR 26m, higher than forecast. For fiscal 2008 as a whole, the group still expected EBIT to improve to about EUR 110m. KUKA's [-5.01%] 1Q EBIT topped expectations, but sales slid 4% to EUR 280m. Finally, there were some unsubstantiated rumours that Samsung and Intel were showing an interest in INFINEON [+2.22%], with EUR 10 per share thought to be on the table.

MILAN

Milan ended Tuesday's session mildly lower as Wall Street was trading in the red following a loss reported by Fannie Mae and higher oil prices. Back home, ALITALIA received the EUR 300m bridging loan approved by the Italian government in April. In further M&A news, La Repubblica wrote that ENI [+0.16%] offered Rome's gas network as part of its bid for Suez's 57% of Distrigaz. On the earnings front, RECORDATI [-0.33%] reported 1Q08 consolidated revenue of EUR 171.9m, up 5.2% while its op income came in at EUR 38.1m, up 2.9%. SAFILO's [-2.53%] 1Q net profit fell to EUR 13.2m, but the eyewear maker confirmed 2008 objectives. TELECOM ITALIA's [-3.36%] Brazilian unit, TIM Brazil, posted weaker-than-expected 1Q results. LOTTOMATICA's [+0.19%] 1Q net profit came in at EUR 55m and it confirmed 2008-2010 guidance. TENARIS [+0.97%] is expected after market close to unveil a 9% increase in 1Q net profit due to record high crude oil prices, according to a Reuters poll. In other news, PARMALAT [-1.48%] is seeking US$2.2bn from Citigroup over the bank's alleged responsibility for the group's 2003 bankruptcy. In broker action, Goldman reviewed the European insurance sector: GENERALI [-0.87%], UNIPOL [+1.4%], MEDIOLANUM [-0.93%], FONSAI [-0.42%].

ZURICH

With crude having broken the US$122/bbl level and Goldman Sachs warning it could reach US$150-US$200/bbl over the next 6-24 months, the SLI [-1.71%] ended in the red. Meanwhile, Wall Street was trading lower. Financials weighed on the markets. SWISS RE [-4.79%] dropped sharply as its 1Q net profit fell short of expectations, coming in at CHF624m. The reinsurer disclosed an additional quarterly mark to market loss of CHF819m, and estimated a further loss from market fluctuations of CHF200m for last month. ZKB downgraded the stock. UBS [-4.5%] expects financial industry conditions to remain difficult this year, as it reported net new money outflows. The group is cutting 5,500 jobs - c.7% of its total workforce. SWISS LIFE's [-1.97%] 1Q premium income slid 3% to CHF6.6bn, but the insurer sticks with previously given guidance. HOLCIM [-1.96%] posted mixed results. The lower margin in Asia had a particularly negative impact on the cement group's operating profit. ADECCO's [-2.59%] 1Q net profit topped expectations. ABN Amro said organic growth in France was +2%, which is good after two quarters of negative growth. RIETER [-3.62%] cut 2008 forecasts for sales and operating margins because of a weaker market for textile machinery and vehicle production. Cheuvreux and Vontobel both downgraded the stock. In other news, NOVARTIS [-0.19%] said its Menveo vaccine shows a superior immune response.