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Tuesday July 06, 04:08
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Bourses lower as investors remain cautious
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After a brief flurry of buying, European equity markets turned lower by mid-morning on Tuesday as caution over the economic impact of rising oil prices ensured a lid was kept on any gains.
Early gains were reversed, and the FTSE Eurotop 300 was down 0.4 per cent at 984.11, while Frankfurt’s Xetra Dax shed 0.8 per cent to 3,964.61. In Paris, the CAC-40 fell 0.6 per cent to 3,667.64 and London’s FTSE 100 was 0.4 per cent lower at 4,386.4.
Caution over rising crude oil prices kept markets in check on Monday, and helped drive the bourses lower on Tuesday as Nymex crude climbed above $39 a barrel following news that Iraqi exports had been halved by sabotage.
US markets were closed on Monday for the Independence Day holiday, but early futures trade suggested opening losses for cash stocks on Wall Street.
Henkel, the German household products group, was down 5.3 per cent to €65.69, making it the FTSE Eurotop’s biggest faller, after cutting its full-year sales target due to sluggish consumer demand and increased competition from groups like Proctor and Gamble and Unilever.
The UK Takeover Panel has told Philip Green, the retail tycoon embroiled in a bitter bid for Marks and Spencer, that he must launch a formal bid by August 6 or abandon his attempted takeover of the high street chain. Mr Green has requested a meeting with the retailer’s pension scheme trustees in order to clarify the fund’s liabilities. M&S shares were down 0.5 per cent to 357¾p.
Carmakers were in the spotlight. Renault, the French manufacturer due to release its interim sales figures at 1030 GMT, was down 0.8 per cent at €61.30. Last week, the company reported a 12 per cent rise in domestic new registrations for June, but the impact of rising fuel prices drove most motor manufacturers lower.
DaimlerChrysler failed to benefit from a portfolio rejig by JP Morgan. The German carmaker was down 0.6 per cent at €36.73 despite the investment bank adding the stock to its European portfolio.
Eni, the Italian energy group, and Lafarge, the French building materials company, were both removed from the portfolio. Eni fell 0.5 per cent to €16.43, while Lafarge fell 0.1 per cent to €71.05.
French market heavyweight Vivendi Universal was down 0.7 per cent to €22.42 after Lehman Brothers cut its rating on the media group to "equal weight" from "overweight".
The stock has enjoyed a recent run on the back of speculation that Vodafone, the UK mobile operator, would bid for its mobile unit SFR. "The potential Vodafone bid provides a floor for the stock price, but we believe such a bid unlikely," Lehman said in a research note.
Financial stocks were under pressure, with insurance stocks bearing the brunt of the selling. Munich Re, the German reinsurer, was down 1.7 per cent to €86.52, while Swiss Re shed 0.6 per cent to SFr78.95 and Hannover Re fell 0.9 per cent to €27.17. Allianz was down 1.2 per cent to €87.17 and Axa fell 0.9 per cent to €17.58.
Altana, the German drugmaker, was down 2.6 per cent to €47.98 after its head of pharmaceuticals told a German newspaper that sales of a key anti-ulcer treatment could be hit by government plans to cap the prices of some drugs.
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