European Markets End Lower As Momentum Runs Out

European Markets End Lower As Momentum Runs Out

Friday 2 September, 5:00 PM BST (Thomson Financial): European markets lost momentum and ended the day flat-to-lower as U.S. non-farm payrolls grew by a lower than expected 169,000 in August, although data showed employers created 44,000 more non-farm jobs in June and July than previously estimated. Meanwhile, the unemployment rate fell to a four-year low of 4.9%. Elsewhere, there was some relief in the energy markets with crude oil prices falling as the International Energy Agency considered releasing emergency supplies to the U.S. to ease shortages.

The chemicals sector was the day's best performer, led by shares in BOC on renewed speculation that it might become a bid target. Meanwhile, Air France- KLM rose after it released its first quarter earnings and upgraded its full year guidance. Elsewhere, L'Oreal's slight rise in first half net profits still fell short of expectations, while JD Wetherspoon's full year pre-tax result declined in the wake of competition from supermarkets and duty-free imports. Rank Group's first half pre-tax profits also declined as its Blue Square betting business suffered from weak margins, with rising costs at its Mecca bingo arm. Finally, Old Mutual launched a takeover bid for Sweden's Skandia Insurance.

London's FTSE-100 Index ended barely lower, by 1.70 points or 0.03% to 5326.80, while Paris's CAC-40 Index fell by 19.20 points or 0.43% to 4404.95. Frankfurt's DAX Index slipped by 5.13 points or 0.11% to 4837.81 and Milan's S&P MIB Index dropped only slightly, by 17 points or 0.05% to 33,667. The pan- European blue chip Dow Jones Stoxx 50 Index declined by 8.11 points or 0.26% to 3127.07.

* Air France-KLM announced first quarter net income -excluding write-backs- of 110 million euros versus 87 million euros last year. Current operating profit rose by 27.4% to 223 million euros, while turnover rose by 5.5% year-on-year to 5.19 billion euros. Looking ahead, the airline raised its full-year 2005-06 operating profit guidance, with earnings expected to be significantly above the 2004-05 level restated under IFRS. Air France-KLM also expects a marked improvement in second-quarter results, with hedging to absorb significantly the current rise in oil prices.

* Cosmetics maker L'Oreal posted first half net profits of 892 million euros compared to 878 million euros in the same half last year, but short of market forecasts. Operating profit was unchanged at 1.12 billion euros on revenues of 7.16 billion euros compared to 6.92 billion euros in the prior year. Looking ahead, the company expects full-year earnings per share growth to be in the double-digit percentage range.

* U.K. pub chain JD Wetherspoon's full year pre-tax profits declined to 38.67 million pounds compared to 46.31 million pounds in the previous year, on turnover of 809.86 million pounds versus 787.12 million pounds last year. The company said pubs in general had experienced a considerable increase in competition from supermarkets and from duty-free imports from the continent. In addition the firm added that there had been a reduction in the number of

people visiting many town and city centres, as a result of unfavourable media coverage of problems associated with excessive drinking in some areas.

* Rank Group's first half pre-tax profits declined to 60.2 million pounds compared to 66.9 million pounds in the prior year, on revenues of 870.5 million pounds versus 757.7 million pounds last year. Its Blue Square betting business suffered from weak margins, while costs rose at its Mecca bingo arm. The company proposed a 5 pence per share interim dividend, up 4.2% year-on- year.

* Insurer Old Mutual launched a 43.60 Swedish kronor per share takeover bid for Sweden's Skandia Insurance, valuing the company at 44.9 billion kronor. Under the terms of the bid, Skandia shareholders would receive 1,650 kronor in cash and 137 new Old Mutual shares for every 100 Skandia shares they own.

* Shares in chemicals group BOC rose on renewed speculation that it might become a bid target.

* Hannover Re lowered its full-year earnings forecast in anticipation of a 250 million euros hit on claims related to Hurricane Katrina. It now expects net profits at least on a par with last year's figure of 309 million euros, compared to earlier forecasts of 430-470 million euros.

Simon.Tse@Thomson.com; Thomson Financial

This is Thomson Financial Corporate Services Europe Market Commentary. The information herein is believed to be true and accurate. If you have any questions please e-mail James Sang at james.sang@tfn.com. For more information about Thomson Financial, please visit our web site at www.thomsonfinancial.com. For more financial information at your fingertips, please visit www.irchannel.com.

PRNewswire -- Sept. 2

Source: Thomson Financial Corporate Group

Web site: http://www.thomsonfinancial.com/

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