12:00 PM ET Jan 13, 2006
LONDON (MarketWatch) -- European shares were weaker Friday afternoon,
though slightly off lows for the day, pressured by a string of broker
downgrades and falling energy stocks as crude slipped.
Germany's DAX 30 fell 1.1% at 5,483, the French CAC 40 dropped 0.8% at
4,850 and the U.K.'s FTSE 100 index lost 0.4% at 5,711.
The pan-European Dow Jones Stoxx 600 dipped 0.55% at 316.92.
European markets rebounded slightly from lows after U.S. stocks opened
higher Friday as December wholesale inflation, excluding food and energy
costs, came in better than expected. That helped to offset news of a formal
probe for International Business Machines and a lower revenue outlook from
Lucent Technologies.
In the energy markets, light sweet crude stood at $64.10 a barrel, off 39
cents.
Royal Dutch Shell fell 1%.
Shell restarted production at the E.A. oil field it operates in Nigeria, a
spokesman said Friday, according to Dow Jones Newswires. About 120,000
barrels a day of oil output from the offshore field has been shut in since
Wednesday after gunmen abducted four personnel.
Earlier Friday, Shell declared force majeure on 106,000 barrels per day of
Nigerian Forcados oil exports following an attack on a pipeline the company
operates in the Niger Delta.
Broker downgrades
Broker sentiment pushed some major European stocks lower.
Siemens AG fell 1.8% after a Lehman Brothers downgrade. And Merrill Lynch
downgrades hit Shire Pharmaceuticals, down 4%, and Allianz, which fell 2.2%.
Meanwhile, France Telecom gave up 2.2% 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 volatility in wireline revenue.
The broker cut Vodafone to underperform from peer perform. Vodafone's shares
dipped 1%.
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%
2006 net dividend yield," he noted.
Elsewhere in Europe, Commerzbank AG dipped 0.8% 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. Rathbone, up 0.2%, said the deal is expected
to contribute to earnings in 2007.
Also in the U.K., Northern Foods slumped 9% after warning it expects
fiscal-year profit to fall. See full story.
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SOURCE Thomson Financial Corporate Group
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