Thursday May 8, 05:26 PM
Paris shares close lower; ECB decision to maintain rates no surprise UPDATE
(Updates with full report)
PARIS (Thomson Financial) - Share prices ended lower in thin trade, as fresh oil price highs prompted profit-taking. In the afternoon, the ECB, as expected, announced that it will leave rates unchanged.
The CAC-40 index closed 19.73 points, or 0.39 percent lower, at 5,055.58.
Among CAC-40 stocks, 13 closed higher and 27 closed lower.
The euro was quoted at $1.5398 compared to $1.5373 late yesterday.
In Paris, volume was low in Thursday's trading session, with many dealers away from their desks due to the extended bank holiday weekend in France.
The overriding sentiment was one of caution, as the surge in oil prices towards $124 a barrel exacerbated inflationary fears and raised concerns that the recent market rally may soon come to an end.
Financial stocks saw further profit-taking, tracking weak performances in the United States overnight, on renewed anxieties over credit losses in the sector.
French banks are due to report first-quarter earnings as of next week, with Societe Generale (Paris: FR0000130809 - news) kicking off the results on May 13.
Societe Generale ended the session down 2.44 percent at 74.18, Credit Agricole (Paris: FR0000045072 - news) was 1.95 percent lower at 21.51 and BNP Paribas (Paris: FR0000131104 - news) ended 1.25 percent lower at 68.89. Dexia (Brussels: DEXB.BR - news) , however, rose 0.51 percent to close at 17.48.
On the upside, seamless tube-maker Vallourec (Paris: FR0000120354 - news) recovered in afternoon trading, benefiting from unconfirmed rumours of stake-building by Bollore (Paris: FR0000039299 - news) . Vallourec closed 2.31 percent higher at 182.38. Bollore was up 0.52 percent at 146.76 at the close.
Vallourec's stock had fallen sharply in morning trade after publishing a disappointing set of first-quarter earnings Wednesday night.
Merrill Lynch (NYSE: MER - news) cut its stance on the company to 'neutral' from 'buy', saying it now has doubts about margin sustainability at the group, given that price increases are now not expected to materialise until 2009.
ABN Amro (Amsterdam: ABAGB.AS - news) also cut its stance to 'hold' from 'buy', saying shares have risen nearly 44 percent since the start of the year and short-term interest could now diminish, given that full margin recovery is potentially several quarters away.
Elsewhere, L'Oreal (Paris: FR0000120321 - news) shares rose 1.20 percent to 79.20 as rumours emerged that Swiss food group Nestle (Virt-X: NESN.VX - news) is building a stake in the cosmetics giant. The talk was sparked by news that Nestle chief executive Peter Brabeck has bought two million shares in the French group.
At the beginning of April, Nestle quashed talk it was casting an eye over L'Oreal, saying it had no plans for its stake before 2009.
Engineering (Milan: ENG.MI - news) group Alstom (Paris: FR0010220475 - news) climbed 3.16 percent to 150.59, pulling back from Wednesday's late session losses.
In a note following Wednesday's full-year earnings, UBS (Virt-X: UBSN.VX - news) said Alstom keeps delivering and offers strong prospects.
'We believe that Alstom continues to benefit from attractive prospects, which justify a premium to the sector and expect the stock to benefit from strong order intake in H1 2009. A slowing economic environment makes Alstom even more attractive relative to the engineering sector,' the broker commented, keeping a 'buy' stance.
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