Wednesday May 7, 12:30 PM
Paris shares up midsession led by tech, building stocks after strong results
PARIS (Thomson Financial) - Share prices were higher midsession, resuming their recent rally, as a flurry of solid corporate results helped inject renewed momentum into the market. Construction stocks were among the biggest risers, helped by consensus-beating figures from cement-maker Lafarge (Paris: FR0000120537 - news) , while stronger-than-expected Q3 earnings from Cisco Systems Inc (NASDAQ: CSCO - news) . overnight helped lift the technology sector.
At 1.00 p.m., the CAC-40 index was up 32.51 points, or 0.64 percent, at 5,073.56 and the SBF-120 was 26.31, or 0.72 percent, higher at 3,680.50.
On the Matif, May CAC-40 futures were trading at 5,037.00 and the euro was quoted at $1.5430 compared to $1.556 late yesterday.
'The market seems fairly optimistic after some good results, although there's still a bit of wariness around banks, which is prompting some profit-taking after recent sector gains,' said Jean-Francois Virolles, head of strategy at Global Equities.
Bank stocks were among the main fallers of the day as sentiment remained negative in the wake of Tuesday's disappointing earnings from Swiss bank UBS (Virt-X: UBSN.VX - news) and an overnight earnings miss from Fannie Mae (NYSE: FNM - news) in the United States.
Societe Generale (Paris: FR0000130809 - news) fell 0.54 euros, or 0.71 percent, to 75.86, Credit Agricole (Paris: FR0000045072 - news) was down 0.07 or 0.32 percent at 21.89 and BNP Paribas (Paris: FR0000131104 - news) underperformed the market, edging up just 0.12 or 0.16 percent to 80.31.
Dexia (Brussels: DEXB.BR - news) was harder hit after outperforming in recent days, shedding 0.18, or 1.02 percent, to 17.52.
Lehman Brothers (NYSE: LEH - news) downgraded the investment bank to 'underweight' from 'equal weight' Wednesday morning, and lowered its target price to 20.4 euros from 21.7, saying it sees a risk to earnings due to the FSA's non-prime insured assets.
Lehman is materially below consensus on 2008 estimates and the broker's estimated upside potential stands 8 points below the sector average.
In insurance, however, Axa (Paris: FR0000120628 - news) rose 0.27, or 1.10 percent, to 24.32, recouping earlier losses as investors digested a mixed set of first quarter activity indicators.
Analysts at Keefe, Bruyette & Woods said annual premium growth in the life business was a slight miss against consensus, but stressed that indicators showed resilience in key markets within a difficult economic environment.
Lafarge helped drive the construction sector higher, after the cement maker published consensus-beating results for the first quarter and confirmed a positive outlook for the full year along with a favourable business environment.
Shares in the cement group jumped 5.90 or 5.14 percent to 120.60.
Oddo Securities reiterated a 'buy' stance on the group, saying it 'smashed' the consensus, and market estimates are likely to be adjusted upwards on the back of the results.
Elsewhere in the sector, building materials group Saint Gobain (Paris: FR0000125007 - news) rose 1.55, or 2.98 percent, to 53.60, while construction group Vinci (Paris: FR0000125486 - news) added 0.90, or 1.90 percent, to 48.25.
Bouygues (Paris: FR0000120503 - news) added 1.04, or 2.20 percent, to 48.31.
An overnight earnings surprise from U.S. group Cisco Systems Inc. helped lift the European technology sector, driving Alcatel (Paris: FR0000130007 - news) -Lucent up 0.18, or 3.92 percent, to 4.64, and STMicroelectronics (Paris: NL0000226223 - news) up 0.28, or 3.47 percent, to 8.20.
Cisco's third-quarter results beat consensus estimates, raising hopes that the sector might be heading for a turnaround.
'The (Cisco) numbers came in above expectations, and it shows that the factors stimulating growth are back in place,' analyst Roland Pitz at Unicredit (Milan: UCG.MI - news) said.
Capgemini underperformed, however, after first quarter sales from the IT services group showed a slowdown in key Western European markets and in the group's technology services business.
Shares in the group edged up just 0.14, or 0.36 percent, to 38.90.
According to an analyst at a major European brokerage, the market had probably been expecting better numbers after rival Atos Origin (Paris: FR0000051732 - news) published stronger than forecast sales at the end of April.
Outside the CAC-40, Rhodia (Paris: FR0010479956 - news) surged 1.18, or 8.71 percent, to 14.73, after first quarter operating profit jumped to 40 million euros, from a loss of 19 million euros a year earlier.
Outdoor advertising group JC Decaux (Paris: FR0000077919 - news) climbed 1.23, or 6.86 percent, to 24.60, as investors welcomed solid organic sales growth in the first quarter, and raised guidance for the full year.
M6 rose 0.53, or 3.48 percent, to 15.75, helped by an upgrade to 'outperform' from 'neutral' at Exane BNP Paribas.
Among the fallers, Euler Hermes (Paris: FR0004254035 - news) plunged 11.42, or 14.91 percent, to 65.17 after the credit insurer revealed a 65.6 percent drop in first-quarter net profit.
Cheuvreux downgraded the stock to 'underperform' from 'outperform' and reduced its target price to 70 euros, while Landsbanki Kepler cut its stance to 'reduce' from 'buy'.
CAC-40 heavyweight Total slipped back 0.16, or 0.29 percent, to 54.35, as first-quarter numbers failed to impress, offsetting near record oil prices.
'These numbers are unimpressive compared to peers, there's no reason for further rerating,' said one trader at a leading brokerage. Merrill Lynch (NYSE: MER - news) agreed, saying total adjusted net income was just two percent above consensus forecasts.
Peers Royal Dutch Shell and BP (LSE: BP.L - news) reported a much stronger first quarter result, with BP's numbers beating market forecasts by 25 percent.
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