Nervous European Markets on Weakening Resource Sector

Lucy Stoeva
09 Dec, 2015
New York City

Europe extended losses on concerns about growth in China and pressure from commodity stocks. Alternative Networks net soared 42%. Stagecoach tumbled after profit declined 7% and earnings forecast deteriorated. Xchanging agreed to be acquired by Computer Sciences Corp.

[R]4:00 PM Frankfurt – Europe extended losses on concerns about growth in China and pressure from commodity stocks. Alternative Networks net soared 42%. Stagecoach tumbled after profit declined 7% and earnings forecast deteriorated. Xchanging agreed to be acquired by Computer Sciences Corp.[/R]

European markets continued to slide down on Wednesday on the deepening gloom in resource sector stocks and concerns about the slowdown in construction sector in China.

China''s consumer price index increased 1.5% in November, fueled by price jumps in food and services, according to the National Bureau of Statistics.

Consumer inflation remains under the government''s 2015 price target of 3% despite the fiscal stimulus and interest-rate cuts.

The producer-price index fell 5.9%, representing the 45th consecutive monthly decline.

In London trading, FTSE 100 index fell 16.89 or 0.3% to 6,129.87 and in Frankfurt the DAX index decreased 56.18 or 0.5% to 10,618.68.

In Paris, CAC 40 index slipped 42.35 or 0.9% to 4,639.51.

Ashtead Group Plc soared 8.6% to 1,120 pence after the U.K.-based construction and industrial equipment provider said revenues in the first-half ending in October surged 21% from a year ago to £1.27 billion.

Net profit in the period jumped 32.2% from a year ago to £218.9 million and diluted earnings per share increased to 43.4 pence from 32.8 pence.

Capital expenditure increased 18.4% to £696 million from the same period a year ago.

Alternative Networks Plc surged 11% to 449.72 pence after the U.K. cloud-based services provider reported preliminary revenues in the year ending in September jumped 9% from a year ago to £146.8 million.

Net profit in the period soared 42% from a year ago to £11.5 million and diluted earnings per share grew to 23.3 pence from 16.6 pence.

Balfour Beatty Plc jumped 2.7% to 269.40 pence after the U.K. home builder secured a new £400 million revolving credit facility and extend the current facility scheduled to expire in 2016.

The company expects to be net cash positive at the end of the year.

Stagecoach Group Plc tumbled 13% to 309.80 pence despite revenues in the first-half ending in October jumped 27.1% from a year ago to £1.97 billion.

The U.K. public transport company reported net profit of £74.2 million, down 7.1% from a year ago, and diluted earnings per share rose of 12.7 pence.

The transportation services provider lowered its earnings per share forecast for the year ending in April 2016.

“We believe that revenue has been adversely affected by the terrorist attacks in Paris discouraging people from travelling to major cities,” the company said.

Xchanging Plc gained 10.5% to 194.25 pence after the U.K. outsourcing company agreed to be acquired by Computer Sciences Corporation for 190 pence per share in cash, or a total of about £480 million.

The offer represents a premium of about 72% to the closing price of 111 pence on October 2, the day before the beginning of the offer period.

The company has also been an acquisition target of Capita, Ebix Inc and private equity firm Apollo Global Management LLC.

UBS Group AG fell 0.6% to 18.84 Swiss francs after the Postal Savings Bank of China divested its 17% stake in UBS Group AG and JPMorgan to raise about $7 billion ahead of an initial public offering next year.