Milan shares close flat in volatile trading, Alitalia gains, BPM falls

Milan shares close flat in volatile trading, Alitalia gains, BPM falls - UPDATE

	Published : Mon, 30 Jul 2007 17:38 By : Agencies Print this Story

(updating with full report)

MILAN (Thomson Financial) - Share prices closed flat after a session of volatile trading on debt market worries, with gains in Alitalia on prospects for privatisation offsetting falls in BPM on earnings worries, brokers said.

The Mibtel index was down 0.02 pct to 31,137 points and the S&P/Mib was off 0.11 pct to 39,539.

Volume was an estimated 5.874 bln eur.

Brokers expressed mixed views on whether today's flat performance is the end to last week's sharp falls on worries over US sub-prime and other forms of lending, including to consumers.

One broker said US shares can fall a further 5-10 pct, given credit risks still remain sharply higher than a year earlier, and have not fully taken account of this factor.

Further hedge fund closures at the end of July can add to equity market problems, he said.

Another broker said earnings fundamentals remain firm and can support current share price levels.

Bank sector remained pressured by further details issued over the weekend on Banca Italease's derivatives exposure and write downs, which some brokers said were higher than expected.

Italease was down 3.62 pct to 15.18. Banco Popolare, Italease's largest 30 pct shareholder, was down 1.38 pct to 17.80.

One broker said derivative exposures can affect other banks.

BPM lost 2.56 pct to 10.40. One broker said an international bank had downgraded its earnings estimates on BPM. Another broker said BPM's failure to merge remains a negative factor.

Mediobanca lost 1.88 pct to 15.16 after Unicredito and Capitalia shareholders cleared their merger, paving the way for a cut in their combined near 20 pct Mediobanca stake.

Unicredito fell 0.20 pct to 6.07 and Capitalia eased 0.25 pct to 6.775.

Brokers said Unicredito comments on exceeding full year earnings and synergy targets, and absence of US lending exposure, supported the stock. The bank said its acquisition phase is completed.

Banca Generali rose 7.04 pct to 10.03 after higher results.

Elsewhere on the positive side, Alitalia rose 4.35 pct to 0.858 on ministry of economy comments suggesting a new tender procedure, rather than private negotiations, will be launched to sell the state's stake.

Luxury stocks rose after last week's market falls. Luxottica rose 2.45 pct to 26.79. Bulgari was up 2.26 pct to 11.31 ahead of its sales data. Tod's gained 8.38 pct to 65.97 after positive broker reaction to Friday's sales data.

Cements also rose after recent weakness. Brokers said today's move was 'technical'. Buzzi Unicem was up 2.04 pct to 22.49 and Italcementi up 1.39 pct to 20.19.

Seat PG ended down 0.98 pct to 0.406 after earlier rises on a report that Merrill Lynch is preparing a bid. A statement on behalf of Seat's private equity owners said there are no negotiations on a takeover.

Eni lost 0.27 pct to 25.46 on worries the company may have to renegotiate its oil field development contract with Kazakhstan authorities.

nigel.tutt@thomson.com

nt/slm/nt/gp

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

Milan shares close flat in volatile trading, Alitalia gains, BPM falls - UPDATE