Thursday May 8, 11:52 AM
Milan shares lower midday led by financial stocks; Tiscali, Buzzi up
MILAN (Thomson Financial) - Milan shares were lower midday Thursday, weighed down by UniCredit (Milan: UCG.MI - news) and other selective financial stocks and as investors waited for news on interest rates from the European Central Bank and the Bank of England, both of which are expected to keep rates on hold.
At 12:30 p.m., the Mibtel index was 0.56 percent lower at 26,118 points while the S&P/Mib index shed 0.80 percent at 34,271 points on volumes worth an estimated 4.775 billion euros.
'Despite the heavy closing on Wall Street yesterday, the market is holding on. There is still a lot of uncertainty with the financial sector continuing to suffer,' a trader said noting that UniCredit, along with banks in general, have a large weight on the blue-chip S&P/Mib index.
UniCredit was off 2.29 percent at 4.83 euros after the bank cut its 2008 earnings-per-share target to a range of 0.52 euros to 0.56 euros, compared with previous indications of 0.66 euros per share, and said that its core Tier 1 capital adequacy ratio would rise to 6 percent at the end of this year.
According to one dealer, the main disappointment was in commissions, which came in lower than expected both in the corporate, investment banking and asset management divisions of the bank.
Another dealer noted that the 'core Tier 1 ratio is undoubtedly low for a bank like UniCredit. I think that they will have to do something. I don't think a capital hike is needed but I think they will have to sell some of its hybrid portfolio.'
Elsewhere in the banking sector, Banco Popolare (Milan: BP.MI - news) was off 2.12 percent at 13.29 euros, Intesa Sanpaolo (Milan: ISP.MI - news) shed 1.49 percent at 4.70 euros, Banca Popolare di Milano (Milan: PMI.MI - news) was off 1.23 percent at 7.94 euros and UBI Banca (Milan: UBI.MI - news) fell 1.30 percent at 17.27 euros.
UBS (Virt-X: UBSN.VX - news) cut its target price on UBI from 21.2 euros to 20.5 euros, while that on Intesa Sanpaolo was cut to 5.3 euros from 5.5 euros.
'We expect UBI and Intesa Sanpaolo to deliver among the most resilient top-line results in Q1. Unicredit, BPM and Banco Popolares results are expected to reflect exposure to capital markets and a reduction in risk profile, respectively,' UBS said.
Among insurers, Alleanza shed 1.70 percent at 8.565 euros after its main shareholder Generali said that it was not planning any extraordinary operation on Alleanza.
In the past months there has been speculation that Generali would buy-out Alleanza minorities and these expectations were re-awakened Wednesday when Alleanza chief executive Ugo Ruffolo announced his resignation.
'I think that at this point it is premature since for Generali there are other issues pending,' said one analyst noting that Generali recently indicated that it would be interested in the insurance assets that Royal Bank of Scotland (LSE: 91ID.L - news) is selling.
Generali added 0.04 percent at 28.42 euros ahead of the release of its first-quarter results. Wednesday, Alleanza's results showed stronger-than-expected growth at the group's core agents network.
Fondiaria-SAI added 0.81 percent at 26.26 euros while Unipol (Milan: UNI.MI - news) , which will release its first-quarter results later Thursday, was off 0.42 percent at 2.155 euros.
In the industrial sector, Prysmian added 1.46 percent at 15.96 euros while among cement producers Buzzi Unicem (Milan: BZU.MI - news) was up 1.41 percent at 17.79 euros.
'Buzzi is benefiting from Dyckerhoff (Xetra: 559100 - news) results yesterday which came in higher than expected. The uncertainty is next week with Buzzi's results that could however be impacted negatively by the group's exposure to the U.S.,' a dealer said.
Dyckerhoff is the German unit of Buzzi.
Italcementi (Milan: IT.MI - news) was off 1.00 percent at 13.65 euros as JP Morgan cut its price target on the share to 20.88 euros from 21.1 euros,confirmed its 'overweight' stance on the stock and cut its 2008 earnings-per-share estimate by 4 percent following disappointing first-quarter results released on Wednesday.
In the telecommunications sector, Tiscali (TIS.MDD - news) added 3.55 percent at 2.6375 euros with reports saying that the group received eight non-binding offers for its assets. The group will examine the proposals at a board meeting on Monday and the aim is to conclude the sale by the end of June.
Telecom Italia (Milan: TIT.MI - news) shed 0.37 percent at 1.331 euros ahead of the release of its first-quarter results on Friday while Fastweb (Milan: FWB.MI - news) added 0.05 percent at 21.38 euros.
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