European Market Reports

Bleak morning session for Europe
European bourses are a sea of red, with many leading indices looking at suffering treble-digit falls, while others are already experiencing them. Investors are keen to close down positions ahead of a week-end which could see unwelcome developments in the Korean conflict and a worsening of sentiment over the future of the euro-zone. 

Reports indicate that North Korea fired on South Korea’s Yeonpyeong Island today, although South Korea has opted not to confirm the reports, citing military policy. 

Meanwhile, South Korean president Lee Myung-bak has appointed Kim Kwan Jin as his new defence minister after Kim Tae-young tendered his resignation yesterday. The new defence minister was formerly chairman of South Korea’s joint chiefs of staff and has been in the military for more than four decades. His first task is likely to be to beef up the military presence in Yeonpyeong. 

In Paris the CAC 40 is down 66 points at 3,694 while in Germany the DAX is down 92 at 6,787. Spain and Italy remain the hardest hit of Europe’s major bourses, with Spain’s IBEX 35 down 255 points at 9,466 while Italy’s MIB index is 324 points lower at 19,621. 

European sovereign debt worries are once again a drag on banks. In France BNP Paribas, SocGen andCredit Agricole are all lower, while in Germany Commerzbank leads the market down. 

Spanish banking giant Santander is sharply lower, as are Spanish peers Bankinter, Banco Popularand BBVA; all are 4% or more down from last night’s close. 

Not to be left out, Italian banks Banco Popolare, Mediobanca and Banca Popolare Milano have all found reverse gear, though in percentage terms the falls are about half those of their Spanish counterparts. 

Elsewhere in the banking sector Deutsche Bank said it now controls more than 50% of the shares of rival Deutsche Postbank following the latest totting up of acceptances of its bid for the Bonn-based bank.

Swiss biotechnology company Actelion is under the weather after UBS cut its rating on the stock from “buy” to “neutral”. 

Broker downgrades, this time from Morgan Stanley, are also weighing on sportswear manufacturerPuma, flavour and fragrance maker Givaudan and Ray-Ban sunglasses maker Luxottica; all have been downgraded to “underweight”. Oilfield services provider Technip, meanwhile, has been cut by Morgan Stanley to “equal weight” from “overweight”. 

The broker is sending some love the way of Sky Deutschland, however, upgrading the stock to “overweight” after the recent slide in the company share price. 

Spanish property firm Realia Business is to increase its exposure to the French commercial property market by means of an asset swap deal with French counterpart Societe Fonciere Lyonnaise. 

Realia is to transfer 29.99% of its French real estate investment trust (REIT), SIIC de Paris, to Societe Fonciere Lyonnaise in exchange for €287m of property assets. The deal reduces Realia’s stake in the REIT below 60%, enabling it to continue to enjoy French tax benefits from its holding. 

CAC 40 - Risers 
ST Microelectronics (STM) € 6.93 +1.55% 
Accor (AC) € 33.71 +0.28% 
Carrefour (CA) € 36.30 +0.19% 

CAC 40 - Fallers 
BNP Paribas (BNP) € 47.67 -4.32% 
Societe Generale (GLE) € 37.33 -3.74% 
AXA (CS) € 11.70 -3.58% 
Alcatel-Lucent (ALU) € 2.13 -3.06% 
Credit Agricole (ACA) € 9.85 -3.03% 
Peugeot (UG) € 30.39 -2.88% 
Technip (TEC) € 61.14 -2.67% 
Veolia Environnement (VIE) € 20.98 -2.49% 
Vivendi (VIV) € 19.38 -2.39% 
Renault (RNO) € 42.88 -2.37%