Paris shares lower midday as Alcatel-Lucent losses drag down tech stocks

Paris shares lower midday as Alcatel-Lucent losses drag down tech stocks

	Published : Thu, 13 Sep 2007 11:41 By : Agencies Print this Story

PARIS (Thomson Financial) - Shares were lower at midday after Alcatel-Lucent's plunge on the back of a profit warning weighed on the technology sector.

At 12.16 the CAC-40 index was 23.47 or 0.43 pct lower at 5,484.54.

The euro was at 1.3902, against 1.3895 this morning.

However, 'defensive stocks are still doing well,' said one trader, adding that the market is still cautious over the US subprime crisis. 'The weakness of the dollar is also weighing on some stocks,' he said.

Alcatel-Lucent plunged after it warned that lower spending by North American wireless clients would weigh on sales and profitability in the third quarter. The stock traded down 0.93 or 12.83 pct to 6.32.

'The real problem with this profit warning is where its coming from - it's coming from the US, we believe specifically the CDMA market, which has historically been a major source of profit for Lucent,' said Vincent Rech, a telecommunications analyst at French bank Societe Generale.

'This is their cash cow, and attacking it will have a significant impact on earnings,' Rech added. 'The question now is, is this a temporary slowdown that can be made up in early 2008 -- or not,' said Rech, who rates Alcatel-Lucent a 'sell'.

Fellow technology stock STMicroelectronics was down 0.54 or 4.34 pct at 11.89 after Lehman Brothers cut its rating to 'underweight' from 'overweight', and as the Alcatel-Lucent profit-warning, described as a 'catastrophe' by one Paris-based dealer, weighed on the sector.

L'Oreal failed to hold on to yesterday's gains, on the back of speculation it would bid for Clarins. L'Oreal was down 0.90 or 1.04 pct at 86.02, while outside the CAC-40 Clarins was trading 1.24 or 2.07 pct lower at 58.76 after rising yesterday. Clarins is due to report its H1 results today after the market closes.

Banking stocks were lower. BNP Paribas lost 1.06 or 1.43 pct to 73.12. Societe Generale was 1.33 or 1.15 pct lower at 113.98, and Credit Agricole traded down 0.36 or 1.34 pct to 26.57.

Vallourec led gainers on the CAC-40, trading up 8.04 or 4.41 pct to 190.50 on the back of market rumours that it is the target of takeover interest from Russia. 'Vallourec is a natural target - the main shareholder Bollore doesn't hold even 4 pct so the shareholding is not locked up - there is plenty of availability,' said one dealer. Reports in the UK press that the French company is close to a deal with Gazprom, and that Lukoil is on the lookout for European acquisition targets, boosted its stock, the trader said.

Lagardere traded up 1.55 or 2.69 pct to 59.18 after reporting better-than-expected first half earnings in its press and radio division.

'The outperformance at Lagardere Active Media comes as a very positive surprise,' one analyst said. Magazines performed better than expected despite the difficult market conditions, thanks to strong growth in emerging markets, he added.

Danone rose 0.32 or 0.58 pct to 55.69 as investors continued to seek defensive stocks.

helen.beresford@thomson.com

hem/jlc

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