Carlsberg down after earnings; CSR sinks after Zoran deal
By Aude Lagorce, MarketWatch
LONDON (MarketWatch) — European shares declined on Monday as investors nervously watched tensions spread across the Middle East and North Africa.
The Stoxx Europe 600 index (ST:STOXX600 289.12, -1.92, -0.66%) lost 0.7% to 288.95 in volatile morning trading.
The benchmark finished flat on Friday, though it closed at its highest level since August 2008 on Thursday.
Among the top regional indices, France’s CAC 40 (FR:PX1 4,128, -29.05, -0.70%) fell 0.7% to 4,126.31 and Germany’s DAX 30 (DX:DAX 7,377, -49.75, -0.67%) dipped 0.6% to 7,382.41.
The U.K.’s FTSE 100 index (UK:UKX 6,062, -20.92, -0.34%) fell only 0.2% to 6,070.05 as several of its miners got a boost from the rally in gold and silver prices.
U.S. markets are closed for Presidents Day on Monday.
Over the weekend unrest in the Middle East and North Africa spread to Morocco for the first time, defying predictions the 1,000 year-old monarchy would likely be spared calls for greater democracy. Crowds marched in the capital of Rabat this weekend, asking for changes.
Meanwhile, in Libya fierce clashes between protesters and security forces left at least 173 people dead, The Wall Street Journal reported.
The escalation of violence in Libya had repercussions on Italy’s FTSE MIB, which fell 1.5% to 22,713.7. Italy is one of the European countries with the closest ties to Libya. Companies with significant exposure to the dictatorship include aerospace and defense firm Finmeccanica SpA (IT:FNC 9.38, -0.11, -1.11%) , energy giant ENI SpA (IT:ENI 17.53, -0.84, -4.57%) and bank UniCredit SpA (IT:UCG 1.92, -0.06, -3.18%) . On Monday, ENI shares slumped 4.2% and UniCredit fell 3%.
The escalating violence in Libya also had an impact on oil prices, as it sparked concerns over a potential disruption to crude supplies from the North African nation. Crude futures rallied, with the Brent benchmark climbing 1.8% to top $104 a barrel. Read more about oil.
In the rest of Europe, a few companies reported earnings, including Danish brewer Carlsberg AS (CABGY 20.25, -0.63, -3.02%) , which posted a 21% drop in fourth-quarter net income. The shares fell 2%. Analysts at Matrix Group said earnings missed expectations because of higher-than-expected central costs but noted the shares remain “the bargain of the sector.”
Meanwhile, Dutch mail company TNT NV (NL:TNT 19.91, -0.52, -2.52%) said profit surged to 126 million euros ($172 million) from €25 million a year earlier, due mostly to charges in the year-ago period, but noted that poor weather also affected its performance. Shares of TNT fell 3%.
It was not all bad news on the earnings front, however. One of the top performers on the Stoxx 600 was German pharmaceutical company Merck KGaA (DE:MRK 64.95, +2.31, +3.69%) , which rose more than 4% after reporting stronger-than-expected results.
The drinks sector kicked off the week with news of a large deal. U.K. giant Diageo PLC (UK:DGE 1,202, +2.00, +0.17%) (DEO 78.06, +0.91, +1.18%) is buying Turkish spirits company Mey Icki for 3.3 billion Turkish lira ($2.09 billion) from private-equity firms TPG Capital and Actera. The deal will give Diageo a market-leading position in raki, the biggest spirits category in Turkey, as well as vodka. Shares of Diageo inched 0.3% higher.
The technology sector was also affected by M&A activity on Monday. British wireless technology specialist CSR PLC (UK:CSR 402.30, -31.70, -7.30%) said it will snap up U.S. imaging firm Zoran Corp. (ZRAN 9.32, -0.04, -0.43%) for $679 million in an all-share deal. The deal represents a 40% premium to Zoran’s closing price on Friday. CSR also said it plans to buy back up to $240 million of its ordinary shares over the next 12 months via an on-market buyback program. Shares of CSR sagged nearly 10%.
In the oil sector, Royal Dutch Shell PLC (UK:RDSA 2,190, -0.50, -0.02%) (RDS.A 71.01, +0.48, +0.68%) said it’s struck a deal to sell the majority stake in most of its downstream business in Africa to Vitol Holding BV and Helios Investment Partners for around $1 billion. The move is part of Shell’s announced effort to divest non-core assets.
A handful of rating changes moved shares Monday. TomTom NV (NL:TOM2 6.26, -0.21, -3.23%) , the maker of GPS devices, fell 2.7% after UBS downgraded it to neutral from buy, citing volume concerns and margin pressure.
Shares of Swiss engineering group Schindler Holding AG (CH:SCHP 101.10, -2.00, -1.94%) slipped 2.5% after UBS downgraded the stock to neutral from buy for valuation reasons.
Shares of UBS AG (CH:UBSN 18.97, +0.04, +0.21%) outperformed the rest of the banking sector, rising 0.2%. Goldman Sachs raised its rating on the Swiss firm to buy from neutral, citing its long-term tax advantage among other factors.
