Friday 16 December, 5:00 PM GMT (Thomson Financial): European markets
ended the day higher on a positive footing, with quadruple witching
providing some volatility, coupled with an encouraging German IFO
expectations index, which rose to 99.6 versus 97.8 in November. Meanwhile,
the U.S.'s third quarter current account gap narrowed to US$195.8 billion
from US$197.8 billion in the previous quarter, beating market forecasts.
In corporate news, both Centrica and Persimmon expected their full year
earnings to be in line with their own guidance, while KBC Group decided to
repurchase and cancel 1 billion euros worth of its own shares in 2006. In
telecoms, the Dutch State agreed on the transfer and disposal of its
special share in KPN, while Belgacom countered France Telecom with a
higher offer for Belgacom.
In M&A news, Euronext remained higher on reports that rival Deutsche
Boerse had made an informal merger approach for the exchange operator,
while reports suggested that Arcelor was close to launching a counterbid
for the Canadian steelmaker Dofasco. Last month, Thyssenkrupp launched a
3.5 billion euros bid for Dofasco. Finally, BASF said it was interested in
acquiring Degussa's construction chemicals division.
London's FTSE-100 Index was up 36.30 points or 0.66% to 5,531.60 while
Paris's CAC-40 Index was up 31.27 points or 0.67% to 4,704.41. Frankfurt's
DAX Index was up 57.84 points or 1.09% to 5,353.66 and Milan's S&P MIB
Index was up 265.0 points or 0.76% to 35,286.0. The pan-European blue chip
Dow Jones Stoxx 50 Index was up 20.87 points or 0.63% to 3,343.69.
* Persimmon said it expects to announce another set of strong results, in
line with the board's expectations. It expects once again to report an
increase in legal completions to 12,600 in the year to 31 December 2005,
versus 12,360 last year, with turnover of 2.3 billion pounds, up 8%
year-on-year. The average selling prices for the full year was expected to
be 180,500 pounds, up 5% year-on-year.
* Centrica expects full year group earnings to be in line with consensus
as gas prices for the winter months continue to be volatile and high on
fears of a cold winter and gas shortages. For the year as a whole, British
Gas's weighted average cost of gas will be around 37% higher year-on-year.
For 2006, Centrica says consumers will face another year of price
increases as all suppliers look to recover higher wholesale costs. The
Chancellor's announced increase in the Gas Supplementary Charge tax rate
will impact future earnings. In 2006, the group currently estimated the
overall effect to be around 80 million pounds.
* Gallaher Group confirmed that overall current trading was in line with
expectations, with cigarette volumes increasing by 3.3% to 143.8 billion
in the first 10 months of 2005. This growth was driven by market share
gains across central and eastern Europe, which have more than offset
declines in western Europe. Gallaher's strategic cigarette brands
collectively grew their sales volumes by 12.6% in the period.
* KBC Group reaffirmed its long-term vision and approved the corresponding
new organisational structure of the group. At the same time, the Board of
Directors decided to repurchase and cancel 1 billion euros worth of KBC's
own shares in 2006.
* Following the recent reduction by the Dutch State of its shareholding in
KPN (the sale of 165 million ordinary shares, thereby lowering its
shareholding in the company to approximately 8%), both parties have now
reached agreement on the transfer and disposal of the State's special
share in KPN. Effective as of today, KPN repurchased the special share for
its nominal value of 48 eurocents.
* The board of directors of Telindus confirmed it had received a higher
offer from Belgacom at a price of 16.60 euros per Telindus share. This
topped a 15.8 euros offer from France Telecom for the Belgian
communications technology company made earlier this week.
* Novartis decided to stop the development of NKS104 (pitavastatin), a
lipid-lowering agent in Phase II for the treatment of elevated total
cholesterol, after data from recent investigational trials have showed the
compound is no longer competitive enough for Novartis to invest further
resources. As a result, Novartis intends to record an impairment of US$266
million in the fourth quarter of 2005 to fully write off the remaining
value of this asset.
* Roche announced that all four maintenance studies of the pivotal Phase
III renal program for its unique long-acting anti-anemia agent, CERA, were
successfully completed.
* BASF said it was interested in acquiring Degussa's construction
chemicals division to expand its own portfolio in a high-growth market
through forward integration. BASF plans to make a concrete offer for
Degussa's business and wishes to start the review as quickly as possible.
* Dutch postal and logistics company TNT nominated Henk van Dalen as Chief
Financial Officer and member of the Board of Management. He is a current
member of the Managing Board and CFO of Royal DSM of the Netherlands.
* Shares in Euronext traded higher after a report in Le Figaro suggests
rival Deutsche Boerse has made an informal merger approach for the
exchange operator.
* According to report in the Frankfurter Allgemeine Zeitung, Arcelor is
close to launching a counterbid for the Canadian steelmaker Dofasco. Last
month, Thyssenkrupp launched a 3.5 billion euros bid for Dofasco.
* The European Commission criticized French and other national telephone
regulators for their failure to crack down on possible excessive charges
for mobile phone roaming. The E.U. had been investigating mobile phone
companies in Europe for price-fixing on "roaming," or using other
operators' networks, for more than a decade. Its stated aim was to bring
down roaming charges, which some suspect could be up to 500% above charges
for regular telephone calls. In the U.K., the Commission reportedly
believed Vodafone and O2 set prices more than 20% higher for foreign
rivals than for domestic ones to connect to their networks.
* BP completed the sale of Innovene, its petrochemicals group, to INEOS.
Lord Browne, BP group chief executive said, the sale of Innovene had been
the biggest single divestment in BP's history and with hard work on both
sides was completed it in just 10 weeks - ahead of schedule and still in
2005.
Simon.Tse@Thomson.com; Thomson Financial
This is Thomson Financial Corporate Services Europe Market Commentary.
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