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European equities fall to profit taking

21/08/2006 13:18
European equities tracked lower on Monday as banks eased back following a recent strong run, with gains limited by a slowdown in corporate earnings and a 1 per cent gain in crude prices.

By mid morning, the FTSE Eurofirst 300 was 0.1 per cent lower at 1,456.59, while Frankfurt’s Xetra Dax fell 0.4 per cent to 5,791.26. The CAC 40 in Paris shed 0.5 per cent to 5,111.27, while London’s FTSE 100 was flat at 5,900.3.

Oil stocks were biggest positive influence on the market. Crude oil prices rose more than 1 per cent, lifting the benchmark US Nymex WTI front-month contract to $72 a barrel after Iran said it was determined to carry on with its uranium enrichment programme.

Norsk Hydro gained 1.8 per cent to NKr171, while domestic rival Statoil added 1.8 per cent NKr174.50. Finnish refiner Neste Oil climbed 2.3 per cent to €25.89 and French producer Total added 1 per cent to €53.45.

Financial stocks were subjected to profit taking after a recent strong run. France’s BNP Paribas fell 1 per cent to 82.40, Germany’s Commerzbank shed 0.7 per cent to €25.58 and Spain’s BBVA lost 1 per cent to €17.58.

The technology sector, which was last week’s star performer with a rise of 8 per cent, also suffered profit taking. Ericsson, the mobile telecoms and systems manufacturer, fell 0.4 per cent to SKr23.20. It said it had signed a deal to build and manage a mobile networks system for Malaysia’s MiTV Corporation although no financial details were given.

Also in the sector, Alcatel fell 2.2 per cent to €9.43 and STMicroelectronics shed 1 per cent to €12.67.

Syngenta, the Swiss chemicals manufacturer, fell 2.4 per cent to SFr178.90 after broker Goldman Sachs removed the stock from its “buy” list and downgraded it to “neutral”.

“Over the last 12 months, Syngenta has risen 35.2 per cent and is now trading at our previously published 12-month, sum of the parts-derived price target of SFr184,” said strategist Carys Naylor.

Sika, the Swiss glue and speciality chemicals maker, climbed 2.8 per cent to SFr1,468 after reporting a forecast-beating 34 per cent rise in first-half net profit. The company said raw materials price increases were a concern, but that it would try to pass these on to customers.

Deutsche Bank said that recent price weakness in Dutch food group Numico represented an attractive entry point.

“Second-quarter results were good and long-term fundamentals remain intact,” said analyst Sara Welford. “Investors should be taking advantage of the dip to build positions,” she added, maintaining a “buy” recommendation on the stock. The shares were flat at €35.57.