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European stocks decline; Vodafone, Iberia shares pace retreat

European stocks decline; Vodafone, Iberia shares pace retreat
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First Published: Fri, Mar 30 2007. 04 50 PM IST
Updated: Fri, Mar 30 2007. 04 50 PM IST
Frankfurt: European stocks fell before a U.S. government report that may show personal spending in the world’s biggest economy slowed last month.
Vodafone Group Plc led telecom shares lower after saying competitive pressure won’t abate. Iberia Lineas Aereas de Espana SA slid after a possible takeover bid fell short of the carrier’s market price. UCB SA fell after Credit Suisse Group cut a price estimate on the Belgian drug maker’s stock.
The Dow Jones Stoxx 600 Index dropped 0.3% to 373.10 as of 11:26 am in London. The benchmark is headed for a quarterly gain of 2.1%, the worst performance for the first three months of a year since 2003.
The Stoxx 50 and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, both slid 0.4%.
“Investor nervousness is one of the factors weighing on the market,’’ said Ulrike Pfuhl, Frankfurt-based portfolio manager at JPMorgan Asset Management, which oversees $847 billion (Rs36,87,202 crore). “People will probably wait and see what the economic data will bring.’’
The Commerce Department will report that spending in the U.S. increased 0.3% following a 0.5% gain a month earlier, according to the median estimate in a Bloomberg News survey of 74 economists.
A separate release from the University of Michigan is forecast to show confidence among consumers fell this month to the lowest level since September. The U.S. is Europe’s biggest trading partner.
National benchmarks fell in 13 of 18 markets in western Europe. France’s CAC 40 slid 0.2%. Germany’s DAX was little changed. The U.K.’s FTSE 100 retreated 0.4%.
Vodafone Drops
Vodafone, the world’s largest mobile-phone company, slipped 3.7% to 136.4 pence after it said competitive and regulatory pressure will continue in Europe in fiscal 2008.
“The fact that one of the big guys in the sector is making negative noises in a historically high-margin business is clearly cause for concern.’’ said Jesper Kruger, who helps manage about $64 billion at ATP in Copenhagen.
For the five months ended February 2007, earnings before interest, taxes, depreciation and amortization as a percentage of sales at Vodafone’s U.K. unit was 26.6%. The margin was 30.8% in the fiscal year ended 31 March 2006.
Telekom Austria AG, the largest Austrian telephone operator, dropped 1.8% to 18.89 euros. Telefonica SA, Spain’s biggest phone company, retreated 0.7% to 16.38 euros.
Shares of Iberia Lineas dropped 1.3% to 3.95 euros. Spain’s biggest airline said private equity firm Texas Pacific Group is considering a bid of 3.6 euros per share and requested further information. The shares rose to a record 4 euros on takeover speculation yesterday.
May Sell
UCB fell 3.5% to 43.32 euros. Credit Suisse cut its estimate for the shares by 18% to 33 euros, citing a delay in U.S. approval for the Cimzia medicine for Crohn’s disease. Credit Suisse said it expects a delay of at least two years.
Aker Kvaerner ASA, Norway’s largest engineering company, slid 4% to 142.5 kroner after a report the company’s main owner may seek to sell its remaining 40.1 percent stake.
Aker ASA, a holding company controlled by billionaire Kjell Inge Roekke, may sell its stake in Aker Kvaerner, TV2 reported, citing unidentified “well-placed’’ sources. At least one potential buyer is interested, most likely an international industrial company, the television station said.
“There is nothing going on at the moment,’’ Geir Arne Drangeid, an Aker ASA spokesman, said today. Aker shares lost 5% to 388.5 kroner.
Resolution Plc, Britain’s biggest administrator of closed life-insurance funds, slumped 5.1% to 614.5 pence after talks that might have led to a sale of the company were terminated.
Man Group Plc slid 0.9% to 560 pence. The world’s largest publicly listed hedge fund manager announced plans for an initial public offering of its futures brokerage unit to concentrate on money management.
Alliance Boots Plc added 0.6% to 1,033.5 pence after Kohlberg Kravis Roberts & Co. and billionaire Stefano Pessina increased their bid for the largest U.K. drugstore chain by 4% to 1,040 pence a share.
Kingfisher Plc, Europe’s largest home-improvement retailer, rose 2% to 276 pence.
Goldman Sachs Group Inc.’s private equity unit may consider making an offer for Kingfisher, the London-based Times said, citing unidentified industry sources.
Kingfisher’s spokesman, Nigel Cope, wasn’t immediately available for comment. Simon Eaton, a spokesman for Goldman Sachs in London, declined to comment.
Rentokil Initial Plc gained 2.7% to 163 pence. United Technologies Corp. agreed to buy the burglar alarms unit of the world’s biggest pest-control company for 595 million pounds ($1.17 billion).
The disposal of Initial Electronic Security to Hartford, Connecticut-based United Technologies should be completed by the end of June, Rentokil said in a statement today.
“It’s almost merger mania,’’ said Achim Stranz, chief investment officer at AXA Investment Managers Deutschland GmbH in Frankfurt. “The takeover wave will continue to roll.’’
Mergers and acquisitions worldwide are surging as leveraged buyouts increase. About $1.04 trillion of takeovers have been announced so far this year, almost 10 percent more than the $950 billion of deals in the first quarter of 2006, according to data compiled by Bloomberg.
Commerzbank AG, Germany’s second-largest bank, and Deutsche Postbank AG, the nation’s largest consumer bank by clients, advanced after Citigroup Inc. said it’s interested in acquisitions in the country.
“Citigroup could imagine larger acquisitions in Germany if it makes sense,’’ Sue Harnett, chief executive of Citibank Privatkunden AG & Co. KGaA, the German consumer-banking unit of Citigroup, said, according to spokesman Bjoern Korschinowski, confirming a report by Reuters.
Commerzbank shares gained 3.3% to 33.49 euros. Deutsche Postbank added 1.9% to 65.07 euros.
Shares of Scottish & Newcastle Plc, the U.K.’s largest brewer, rose 0.6% to 598.5 pence after surging 12% yesterday on speculation the company may get a bid from Heineken NV yesterday.
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First Published: Fri, Mar 30 2007. 04 50 PM IST
More Topics: Money Matters | Equities |