European Market Reports 28 Ιουνιου 2011

Greek optimism lifts markets

European stock markets showed decent gains on Tuesday ahead of a critical Greek austerity vote, which is vital to assuring the nation’s short-term fundraising. Optimism over the Greek situation has increased over the last few days, despite the two-day general strike to protest budget cuts, pay cuts and tax reforms.

Meanwhile, in an appearance in Hamburg yesterday, European Central Bank (ECB) member Jurgen Stark affirmed that the ECB is ready to hike rates for a second time. “We are ready not to leave the interest-rate increase from April stand by itself,” said Stark.

Spanish banks BBVA and Santander rose following Morgan Stanley’s evaluation of their “readiness” for Basel III, as reported by Expansion. The Bank of International Settlements decided on Saturday that systemic banks “too big to fail” will have to maintain an additional capital ratio of 2.5% to protect from possible losses and prevent another financial crisis.

Engineering conglomerate Siemens was lower after it said it had seen the "first signs of easing growth" in the second half of its financial year, which runs to the end of September.

Satellite navigation firm TomTom fell sharply after it lowered profits guidance. Having previously indicated earnings per share in 2011 would be on or around last year's level of 49 cents, the company has now told the market to brace itself for earnings that are expected to be between 25 to 30 cents. Full-year sales are projected to fall between €1.23bn and €1.28bn, around one-seventh lower than previous guidance, and the second sales forecast cut this year.

German sportswear firms Adidas and Puma showed many other German stocks a clean pair of heels, as investors pile in following better-than-expected fourth quarter earnings from US rival Nike last night.

French supermarket giant Carrefour was on investors' shopping lists after it revealed that Gama, a Brazilian investment fund, has proposed to shareholders of Companhia Brasileira de Distribuicao Grupo Pao de Acucar (CBD) that the company's Brazilian interests should be merged with those of Carrefour.

The proposal is sure to irk Casino Guichard-Perrachon , Carrefour's French rival, which recently lifted its stake in CBD to 37%, with an option to raise it further. Casino's shares were lower, despite Aurel BGC rating them a "buy", with a price target of €85.

Elsewhere in the retail sector, Belgian discount grocer Colruyt is on offer after full-year results missed targets. Net income edged up 2.5% to €338m from last year, below the guidance of €346m issued by the company. Revenue rose 7.8% to €7.28bn, with growth seen in all of its markets.

Spanish oil and gas firm Repsol's joint venture with Statoil and Petrobras has struck oil in deepwater off the coast of Brazil.

In other broker action Exane BNP downgraded hotelier NH Hoteles from "neutral" to "underweight", while RBS cut its price target for airline Air France-KLM from €16 to €11 and shifted its stance from "buy" to "hold".

French publisher Lagardere was feeling the love from two brokers: Oddo upgraded from neutral to "buy" and raised the price target from €35 to €36, while UBS turned bullish on the stock, shifting from a neutral position to a "buy" recommendation.

Swiss banking giants UBS and Credit Suisse were on the up after US broker Sanford C Bernstein named the pair as its main picks of the European banking sector.

Goldman Sachs raised its potash price forecasts for the next 18 months, prompting demand for German potash producer K&S.

In other news, Italy issued debt for a total of €7.881bn in the morning. According to UniCredit, the outcome is "decent, especially considering the current volatility on Italian paper." The amount issued is at the top end of the announced target range of €5 to €8bn. Demand was "OK," Unicredit judged, and the average yield was a 20/25 basic point increase in the 3-and 10-year auctions, respectively. "Slightly better than we expected," according to UniCredit.

Πηγη ADVFN