Friday May 9, 12:24 PM
Euroshares extend losses midday, Wall seen lower, oil price weighs
LONDON (Thomson Financial) - Europe's leading exchanges extended losses in midday trading, as Wall Street is headed for a lower open with the continuing rise in oil prices weighing on sentiment.
In corporate news, Sanofi (Paris:
FR0000120578 - news) -Aventis was a major faller today, down 4.8 percent after Swiss rival Schweizerhall said it is close to receiving approval for a generic version of Sanofi's blockbuster drug Plavix.
At 11:58 a.m., the DJ STOXX 50 was down 54.70 points or 1.67 percent to 3,220.93, while the DJ STOXX 600 lost 5.53 points or 1.68 percent to 323.75.
Looking ahead, Wall Street is on track to open lower after AIG released a larger-than-expected quarterly loss and following a report which said Citigroup (NYSE: C - news) is considering selling $400 billion in non-core assets in order to restore profit growth also unsettled investors.
According to spread bettors IG Index, the Dow Jones Industrial Average is expected to open down 105 points at 12,762. Separately, S&P 500 futures were off 6.90 points at 1,385.10, while Nasdaq 100 (NASDAQ: news) futures fell 6.75 points to 1,958.25.
Spirits were low on both sides of the Atlantic as the price of oil continued to rally.
'The oil price is really dominating thoughts today,' Howard Wheeldon, a strategist at BGC Partners said pointing to fresh record price at $124.93.
The strategist noted that markets have been dealing quite well with this challenge so far, but added that we are reaching a cut-off point when it will begin to seriously hurt the economy.
In corporate news in Europe, Sanofi-Aventis was one of today's steepest fallers, down 4.7 percent following news Swiss rival Schweizerhall is close to receiving approval for a generic version of Sanofi's blockbuster drug Plavix. Schweizerhall shares rallied 8.49 percent.
Schweizerhall has announced that it expects approval of its generic Plavix very soon and is planning to launch the compound throughout the European Union via partner generic firms.
Another dealer at a European brokerage said the news represents a major threat to Sanofi, which generates some 2 billion euros of sales from Plavix, its blockbuster blood-thinning drug.
Shares in Schweizerhall soared 9.05 percent.
Regarding earnings news this morning, Allianz said it will be hard to achieve its mid-term targets in the current environment. The stock fell back 1.5 percent, with slightly better-than-expected first-quarter numbers capping losses.
Staying in Germany, chemical group Linde (Xetra: 648300 - news) lost 4.15 percent after the industrial gas giant released a mixed set of first-quarter results which prompted a downgrade to 'hold' from 'add' at Commerzbank (Xetra: 803200 - news) .
In a note to clients this morning, Commerzbank said it is downgrading the stock after the group disappointed with its first-quarter results.
It said both sales and earnings were below expectations, but added that, on the positive the outlook was left unchanged.
Meanwhile, in Spain, Grupo Ferrovial (Madrid: FER.MC - news) lost 3.08 percent on concerns that the planned refinancing of around 10 billion pounds of its BAA unit's debt could be delayed. Earlier, Ferrovial said BAA shareholders have agreed to put up 400 million pounds as part of the refinancing process, which the Spanish builder said last month it hoped to complete in the third quarter.
Turning to the gainers board, Ahold (Amsterdam: AH.AS - news) shares were volatile, with investors cheering the group's first-quarter sales report, which came in at the top end of analyst expectations but also voiced concerns over a weakness in growth in the North American market. At last check, the stock was up 0.57 percent at 9.68 euros, having traded between 9.52-968 euros throughout the morning.
Also in the Netherlands, AMG soared 8.7 percent, boosted by strong first-quarter results which prompted Petercam to upgrade the stock to 'buy' from 'add'.
In a note, Petercam said the reported net profit of $22.5 million exceeded its estimate of $19.3 million and was driven by a better-than-expected EBIT.
The broker said it expects to modestly raise its EPS estimates (5 percent to 10 percent), which currently stand at $3.93 for 2008 and $7.42 for 2009.
In the UK, IMI (Milan: ISP.MI - news) jumped 6.22 percent as investors welcomed the engineering group's interim management statement, which prompted both Evolution Securities and Numis Securities to raise their target prices.
Turning to M&A-related market moves, Deutsche Telekom (Xetra: 555750 - news) added 1.5 percent on the back of rumours that private equity firm Blackstone (NYSE: BX - news) might increase it stake in the telecom giant to above 10 percent.
'The rumour is that Blackstone may increase its stake to above 10 percent from its current stake of around 4.40 percent before the next AGM on May 15th to play a more active role in strategic decisions,' said a Frankfurt-based trader.
Over in Vienna, Telekom Austria (Vienna: TKA.VI - news) was up 0.8 percent, following a report in daily Der Standard, which said the group's principal shareholder, Austria's state industrial holding OIAG, is mulling the merits of splitting the group into separate mobile phone and fixed-line companies.
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