Sun, Jul 11, 2004 - Page 10 News List

Europe's indexes finish the week flat on SAP gains


European equities bounced from the day's lows to end flat on Friday, supported by a rise in heavyweight oils, while software giant SAP rallied 3.4 percent after it forecast solid revenue growth.

Gains in Wall Street after conglomerate General Electric gave a bright outlook on the economy, also steadied the markets.

French cosmetics firm L'Oreal led the list of losers after its sales data fell short of expectations.

The world's largest beauty products maker said weakness in Europe led to a smaller-than-expected 3.6 percent rise in first-half underlying sales.

L'Oreal shares, downgraded to "neutral" from "buy" by UBS, fell 4.4 percent to 61.75 euros.

Energy stocks outperformed after oil prices held firm above US$40 a barrel. BP was up 2.0 percent, Shell gained 1.2 percent and rose 1.1 percent.

Standout gainers included British brewer and pub owner Greene King, which surged 5.8 percent after agreeing to buy 432 neighborhood pubs from privately owned Laurel for £654 million.

The FTSE Eurotop 300 index of pan-European blue-chips ended little changed at 985.0 points.

The index has fallen in seven of the past eight sessions as investors worry about slower corporate profit growth after a slew of US warnings, mainly from tech firms.

"The market trend seems to be down, and there's no real reason to be a buyer. The lower we trade, markets are attracting sellers," said Tom Hougaard, chief market strategist at financial bookmakers City Index.

He said technology stocks could, however, see some bounce-back after the sharp falls in the week.

Around Europe, the UK's FTSE 100 rose 0.3 percent, Frankfurt's DAX was down 0.2 percent, the Paris CAC 40 was flat, and the key Swiss index fell 0.5 percent.

Strategists said markets were expected to be under pressure due to concerns over earnings growth as the results season kicks off in earnest next week, with Nokia reporting figures on Thursday.

"We've changed our view for about the first time in 15 months on European equities to a more bearish stance," Credit Suisse First Boston strategist Bill McQuaker said.

Valuation concerns, particularly for volatile and economically sensitive stocks, plus a slight softening of recent data as well as negative newsflow from US companies had contributed to the weakness, he said.

"All these things are kind of marginal, but together they are having a bit of a negative impact," McQuaker said.

Meanwhile, British corporate telecom service provider Thus Group sank 19 percent to its lowest level in a year after issuing a cautious outlook statement and on concerns about its margins.

Europe's largest software maker SAP said it expected second-quarter revenue to rise 9.0 percent, defying a rash of warnings of lower results from rivals and boosting its stock by as much as 5 percent.

SAP's positive preliminary results came in contrast to a wave of profit warnings issued in recent days by mid-sized software names such as Siebel Systems, Computer Associates and SAP rival PeopleSoft.

"I would assume that the others' bad results had individual reasons, rather than a general weakness of demand," said Torsten Schellscheidt, analyst at brokerage West LB.

"We'll know if that's true when Oracle, IBM and Microsoft have reported as well," he said. IBM and Microsoft report results in the next two weeks. Oracle does not report its fiscal first-quarter results until September.

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