BP rises after Rosneft deal; Richemont, Santander among fallers
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European stocks held to a tight range Monday as finance ministers prepared for a meeting to discuss the sovereign-debt crisis.
Meanwhile, shares of oil giant BP PLC climbed after it struck an exploration agreement with Russia’s Rosneft.
The Stoxx Europe 600 index (ST:STOXX600 284.29, +0.52, +0.18%) was flat at 283.80 in late morning trading.
U.S. markets are closed for a public holiday.
Euro-zone finance ministers are expected to discuss measures to strengthen the region’s rescue fund Monday. There are continuing fears that Portugal and possibly Spain may require a bailout from the fund.
“There has been much speculation over an enlargement of the [fund] and the possibility of changing the fund’s mandate to allow it to intervene directly in bond markets,” said Gary Jenkins, head of fixed income research at Evolution Securities, in a note.
No final decision is expected from the meeting, but markets will be hoping for some comments on the progress of the talks, Jenkins said.
Ahead of the meeting, however, German Finance Minister Wolfgang Schaeuble reportedly said in a radio interview that he sees no need to discuss an increase in funding.
Spain’s IBEX 35 index underperformed the rest of the market ahead of the euro zone meeting. The index dropped 1% to 10,284.30 as Banco Santander SA (ES:SAN 8.40, -0.09, -1.05%) (STD 11.48, +0.12, +1.06%) shares weighed.
The bank fell 1.8% after a report in El Mundo that Chief Executive Alfredo Saenz may need to leave his job following a ruling by Spain’s supreme court. The newspaper said the court has barred Saenz from working for a bank after he was found guilty of fraud while at a previous role as chairman of Banco Espanol de Credito.
Television broadcasting firm Gestevision Telecinco (ES:TL5 8.76, -0.32, -3.51%) was another big faller in Spain, dropping 3.6% after it was downgraded to neutral from outperform by Credit Suisse, which cited a more cautious view on Spain’s advertising market.
Among other stocks on the move, shares of Smiths Group (UK:SMIN 1,412, +130.00, +10.14%) jumped 11% in London after technology firm said late Friday it had rejected a 2.45 billion pounds ($3.88 billion) takeover bid for its medical business from buyout group Apax Partners.
Shares in BP (UK:BP. 506.80, +7.30, +1.46%) (BP 49.25, +1.71, +3.60%) rose 1.8% after the oil giant late Friday announced a share-swap deal with Russia’s Rosneft. The deal will allow the two firms to jointly drill in the Arctic Ocean.
Gains for the oil giant helped offset losses for the banking sector, including a 2.1% drop for Barclays PLC (UK:BARC 306.20, -4.80, -1.54%) (BCS 19.77, +0.46, +2.38%) as the industry gave back some of its strong gains from the previous week.
The U.K.’s FTSE 100 index (UK:UKX 6,006, +4.27, +0.07%) fell 0.1% to 5,998.63.
Banks were also lower across the rest of Europe, with Societe Generale (FR:GLE 44.44, -0.74, -1.63%) dropping 2.1% in Paris and Deutsche Bank (DE:DBK 42.84, -0.46, -1.05%) (DB 57.96, +1.12, +1.97%) down 0.8% in Frankfurt.
Among the other main indexes, the French CAC 40 (FR:PX1 3,975, -8.45, -0.21%) slipped 0.3% to 3,971.59 and the German DAX 30 index (DX:DAX 7,066, -9.53, -0.14%) dipped 0.2% to 7,060.79.
In the peripheral markets, Portugal’s PSI 20 index (XX:PSI20 7,569, -12.74, -0.17%) fell 0.2% to 7,569.20, while the Greek ASE Composite index rose 1.3%.
On the Swiss market, shares in Compagnie Financiere Richemont SA (CH:CFR 55.25, -1.35, -2.39%) dropped 2.8% after the luxury-goods group reported strong sales growth in Asia, but also said the final quarter of the financial year will be more challenging.
Also in Switzerland, drug maker Roche Holding AG (CH:ROG 139.60, +2.20, +1.60%) rose 1.6% after the company appointed Alan Hippe as its new chief financial officer.
In the U.K., shares in fund manager Schroders PLC (UK:SDR 1,841, -45.00, -2.39%) dropped 2.7% after the group was downgraded to neutral from buy at UBS on valuation grounds.
The London Stock Exchange Group (UK:LSE 868.00, -13.50, -1.53%) was also hit by a broker downgrade, with shares in the exchange operator slipping 1.8% after it was cut to sell from hold at Citigroup.
