Euroshares flat midday as Dow set for bumpy start; EADS falls, techs gain

Euroshares flat midday as Dow set for bumpy start; EADS falls, techs gain

	Published : Wed, 17 Jan 2007 15:04 By : Agencies Print this Story

LONDON (AFX) - Leading European exchanges were flat midday, with Wall St looking set for a mixed session and gains in the technology sector offset by a number of broker downgrades among financials, dealers said.

At 13.21, the STOXX 50 was down 3.13 points at 3764,74, and the STOXX 600 was up 0.26 points at 372.28.

Spread bettors IG Index said the the Dow looks set to add 6 points at the open after three consecutive record closes.

EADS fell 3.34 pct after it warned its Airbus unit will post a full-year EBIT loss for 2006, as charges related to the A380 project may be higher than previously expected. While it said this will be offset by EBIT gains in other divisions, analysts moved to cut their forecasts.

Shares in Continental were 0.29 pct lower after the company released a 'disappointing' forecast for full-year 2006, traders said.

'Continental's forecast was disappointing,' said one trader, adding that the market was used to stronger results.

Continental also announced its interest in acquiring Goodyear Tire & Rubber Co's Engineered Products business GEP.

And shares in electrical retailer DSG fell 10.55 pct as the market digested a mixed Christmas trading update, with weaker group margins and 'disappointing' sales in Currys offsetting an otherwise 'broadly in-line' set of figures, dealers said.

Among financials, Royal Bank of Scotland fell 0.44 pct after they were cut to 'neutral' from 'buy' at UBS, while Lloyds TSB -- down 1.36 pct -- was cut to are duce' from 'neutral'.

Shares in Alliance & Leicester were 2.03 pct lower in early deals after Merrill Lynch downgraded the stock to 'sell' from 'neutral'.

Aviva shares -- down 0.72 pct -- were cut to 'equal-weight' at Lehman Brothers, but shares in Legal & General -- up 0.78 pct -- were upgraded to 'equal-weight' by the US broker.

Shares in Capitalia fell 1.85 pct after it was downgraded to 'underperform' from 'outperform' at CA Cheuvreux. Bankinter -- up 0.17 pct -- was upgraded to 'hold' vs 'sell' at Citigroup, and Bank Sarasin -- up 2.47 pct -- was upgraded to 'outperform' from 'neutral' by Credit Suisse. BBVA -- up 0.47 pct -- was raised to 'buy' from 'hold' at Deutsche Bank.

But the tech sector was higher, despite a disappointing update from Intel overnight, thanks to better-than expected-numbers from ASML and Sony Ericsson.

ASML added 5.79 pct after it reported a net profit in the fourth quarter of 206 mln eur, above the 184 mln-186.3 mln eur forecast by analysts, while sales were 1.068 bln eur, well above the 1.015 bln consensus.

ABN Amro upgraded ASML to 'buy' from 'sell'.

Ericsson added 0.68 pct after Sony Ericsson reported a solid set of fourth-quarter results,.

'An improving mix has driven margins higher and helped to offset industry weakness in average selling prices,' one dealer at a major European brokerage said.

He said the numbers add 2 pct to Ericsson's bottom line.

Nokia added 0.78 pct.

The chemicals sector was in focus amid talk that Akzo Nobel -- down 0.04 pct -- could be interested in buying Rhodia, which was up 4.87 pct.

Clariant was 1.52 pct higher as talk circulated it is planning a merger with Lanxess, which was up 1.63 pct. But dealers think it is unlikely the two would merge. Instead one thought Lanxess might be interested in buying some of Clariant's businesses.

Bayer added 3.24 pct. Morgan Stanley increased its target price to 50 eur from 43.20 eur.

A.P. Moeller Maersk was down 0.69 pct as talk it is planning to buy TUI's shipping division re-emerged. This offset news that Dresdner Kleinwort has upgraded the shares to 'hold' from 'sell'.

Shares in Ascom added another 5 pct after key investor Tito Tettamanti confirmed media reports he has sold his 9.9 pct stake in the group, fuelling further takeover speculations.

Elsewhere, shares in SEB soared 8.75 pct after the kitchen-appliance maker reported a higher-than-expected rise in full-year sales.

In other news, Beiersdorf fell 2.99 pct after reports that Deutsche Bank placed Hamburger Beteiligungsgesellschaft (HGV)'s 10 pct stake in the company with investors this morning.

M6 fell 2.48 pct after traders noted talk that Morgan Stanley has placed 2.8 mln shares in the French broadcaster.

And UBS has reportedly placed 2.75 mln shares -- or a 5.3 pct stake -- in Eurazeo, which was down 4.85 pct.

deborah.hyde@afxnews.com

dlh/ic

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