European stocks end lower


  • Business
  • Thursday, 01 Dec 2005

LONDON: European shares closed lower Wednesday, with miners and banks among the decliners. 

However, Anglo-Dutch steelmaker Corus Group and Danish telecom TDC bucked the weaker trend. Corus gained after beating earnings expectations and TDC rose after a private-equity buyout bid valued at US$12 billion (euro10.2 billion). 

The German DAX 30 index closed down 0.1 percent at 5,193, France's CAC 40 fell 0.5 percent to 4,567 and the U.K.'s FTSE 100 lost 1.2 percent to 5,423. 

"The markets are up 6 percent in the last month or so and we're now at the top of a trading range and that appears to be a bit of a resistance level,'' said Akber Khan, of Deutsche Bank's European equity focus team. 

Khan said Wednesday's consolidation doesn't mean the end of stocks' recent rally from a medium-term perspective because the catalysts behind the rally remain in place. 

"Economic growth remains resilient, liquidity among investors remains very high, there is regular M&A activity and valuations are relatively attractive,'' he said, adding that currency trends and falling oil prices have also helped. 

"On days like this, if quality stocks fall too far then that's when you buy them,'' Khan concluded. 

Resource stocks were led lower by miners such as BHP Billiton and Anglo American. Both fell 2 percent or more. 

Some banks, including BNP Paribas, were lower ahead of a likely rate hike by the European Central Bank on Thursday. 

Corus bucked the lower resource-sector trend, gaining 6.7 percent. 

It reported third-quarter earnings before interest, taxes and depreciation of 176 million pounds (US$301 million; euro257 million), down 43 percent on a year-on-year basis but nonetheless above expectations. 

Corus said that selling prices have now stabilized and are beginning to recover. 

Danish telecom operator TDC gained 4.6 percent after five private equity firms bid 382 kroner (euro51; US$60) a share for the company. 

The offer from Apax Partners, Blackstone Group, Kohlberg Kravis Roberts & Co., Permira Advisers and Providence Equity Partners represents a 5.5 percent premium to Tuesday's closing price. 

British newspaper group Daily Mail & General Trust gained 11 percent after it said that its fiscal 2005 adjusted profit before tax climbed 8 percent, while sales edged up 1 percent. 

German household products maker Henkel advanced to its highest level since 1999 and closed up 4.6 percent, and rival Beiersdorf reached two-year highs, following strong retail sales data in Germany. 

October retail sales grew 1.9 percent from September, outstripping economist forecasts. 

Royal & Sun Alliance fell 2.8 percent after J.P. Morgan cut its rating on the insurer to neutral from overweight. 

"The stock has been the best-performing European insurer, up 51 percent year to date. As such, the valuation, at 1.35 times net asset value, looks full to us,'' the bank noted. 

Infineon Technologies declined 1.4 percent after Citigroup downgraded the chipmaker to hold from buy, citing a downward trend in DRAM memory chip pricing. 

And Credit Suisse First Boston cut caterer Compass Group PLC to underperform from neutral and slashed its price target, pulling Compass shares down 2.7 percent. - AP 

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