MarketWatch 8:10 AM ET Jan. 13, 2006
LONDON (MarketWatch) -- European shares were lower Friday, pressured by a
string of broker downgrades and falling energy stocks as crude-oil prices
weakened and after Wall Street closed sharply lower for the first time in
2006.
Germany's DAX 30 fell 1.2% at 5,478, the French CAC 40 index dropped 1.1% at
4,836 and the U.K.'s FTSE 100 index lost 0.7% at 5,697.
The pan-European Dow Jones Stoxx 600 dipped 0.8% at 316.26.
U.S. stocks posted their first significant decline of the year so far on
Thursday, amid tension about the resumption of Iran's nuclear research
program. The Dow industrials closed down 81 points, or 0.7%, at 10,962.36.
Light sweet crude prices stood at $63.50 a barrel, off 44 cents, after
February crude futures briefly hit $65 a barrel on the New York Mercantile
Exchange.
Oil giant BP dipped 0.7%. Royal Dutch Shell fell 1.1% after it declared force
majeure on 106,000 barrels a day of Nigerian Forcados oil, following attacks
on facilities.
The company said the force majeure is likely to result in a three-to-four-day
deferment of Forcados offtake for the rest of January and all of February.
Broker downgrades
Elsewhere, broker sentiment pushed some major European stocks lower.
Siemens fell 2.3% after a Lehman Brothers downgrade. And Merrill Lynch
downgrades hit Shire Pharmaceuticals, down 3.2%m and Allianz, which fell 2.2%.
Meanwhile, France Telecom gave up 2.5% after UBS cut its rating on the company
to neutral from buy and following Thursday's warning that revenue would fall
below management's previous forecast.
"The drivers of the downgrade were not clear -- one element of this was, we
believe, a desire by France Telecom to take out a large degree of optimism in
the estimates," said David Brundish, a UBS analyst.
"Without clear detail ... it is hard to gain comfort in the divisional
fundamentals," Brundish added.
Also Friday, Bear Stearns downgraded the overall telecom services sector,
driven by concern over operational outlook and wireline revenue volatility.
The broker cut Vodafone to underperform from peer perform. Vodafone's shares
dipped 1.6%.
Charles Dautresme, an analyst at Standard & Poor's, said the telecom sector
may still offer investment opportunities.
"Even if the sector is doomed, some investors may want to consider it only for
the fact that it is the highest-yielding sector in the market, with a 4.4% '06
net dividend yield," he noted.
Elsewhere in Europe, Commerzbank AG dipped 0.5% after Dow Jones Newswires
reported Germany's second-largest publicly traded bank intends to sell its
14.6% stake in Korean Exchange Bank in the first half of the year.
Dexia shares eased 0.9% after it agreed to sell its U.K. private-banking
business to Rathbone Brothers for a maximum of 14 million pounds.
Rathbone, down 0.4%, said the deal, which should be completed by the end of
April, is expected to contribute to earnings in 2007.
The British pensions and investments firm also said Friday that total funds
under management increased by 23.4% in 2005 to 9.5 billion pounds ($16.8
billion).
Also in the U.K., Northern Foods slumped 9.6% after warning it expects fiscal-
year profit to fall.
This MarketWatch news update is provided to you courtesy of Thomson
Financial. The information herein is believed to be true and accurate. We take
no responsibility for inaccurate information and reserve the right to update
our reports. If you have any questions please e-mail Olivier Masson at
olivier.masson@thomson.com or call +44 (20) 7369 7814. For more information
about Thomson Financial visit us at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
back to top
