European Markets Trim Early Gains on Weaker Commodities

Lucy Stoeva
21 Mar, 2016
New York City

European market indexes were little changed on Monday and weak commodities trimmed early gains. Telecom Italia gained 3% after chief executive was forced out. Bayer gained 4% on rumors about a potential acquisition of its crop unit by Monsanto.

[R]4:00 PM Frankfurt, Germany – European market indexes were little changed on Monday and weak commodities trimmed early gains. Telecom Italia gained 3% after chief executive was forced out. Bayer gained 4% on rumors about a potential acquisition of its crop unit by Monsanto.[/R]

European shares erased the early gains on Monday after commodities declined and offset the strong gains in Bayer and Telecom Italia.

Investors disregarded the gains in China, where the Shanghai Composite Index closed 2.2% higher after a change in regulations that facilitates investors to borrow funds for stock purchases.

The dollar gained 0.22% to 0.8894 euro and improved against most major currencies, thus putting pressure on the dollar-denominated commodities.

Among commodity shares, Sweden’s Boliden tumbled 5%, BHP Billiton lost 1.4%, and Anglo-American lost 1.1%.

Oil prices fell in early trading as Friday data showed a slight increase in the number of active U.S. oil-drilling rigs. However, Brent crude oil futures recovered to $41.31 in afternoon trading.

Shares of oil explorer Tullow Oil declined 1.4%, while volatile Norwegian company Seadrill tumbled 6.3%.

Telecom Italia surged 3.1% after the company announced the resignation of CEO Marco Patuano. Reportedly, the move is a result of a disagreement with shareholder Vivendi and could signify the growing influence of the French telecom.

Bayer''s shares gained 3.6% on unconfirmed reports that Monsanto had approached Bayer for a potential acquisition of its crop science unit, worth more than $30 billion.

In London, the FTSE 100 index fell 10.79, or 0.17%, to 6,178.85, while in Frankfurt, the DAX index shed 13.31, or 0.13 %, to 9,937.49.

In Paris, the CAC 40 index dropped 43.97, or 0.99%, to 4,418.54.

CVS Group Plc jumped 2.6% to 764 pence after the veterinarian services chain reported higher revenues and adjusted profit for the first half of its fiscal year.

Pre-tax profit dropped to £4.3 million for the six months ended in December, from £5.2 million a year earlier, due to the acquisition of 42 surgery practices. CVS also acquired Highcroft Veterinary Referrals to boost its referrals business.

Adjusted pre-tax profit, excluding the acquisition costs, rose 18% to £11.2 million in the first half of the fiscal year from the same period a year ago.

Revenue grew to £100.7 million from £81.9 million in the same period a year earlier, mainly driven by acquisitions. Comparable store sales increased 3% from a year ago.

J Sainsbury Plc added 1.2% to 276.40 pence after the grocer confirmed its offer of £1.4 billion for Home Retail Group.

The South African retailer Steinhoff International Holdings N.V. was also bidding for Home Retail, but dropped out of the bidding recently.

Valneva fell 1.4% to €3.50 after the company continued to generate losses in 2015.

Revenue, including grants, almost doubled to €83.3 million from €42.4 million in the previous year.

The company reported EBITDA loss of €8.5 million, compared to a loss of €7.4 million in 2014, driven by R&D spending in new vaccine candidates.

Net loss was €20.6 million in 2015, an improvement of 21.5% compared to the net loss of €26.3 million in 2014, driven mainly by acquisition effects.

The company expects revenues of €90 to €100 million in 2016. EBITDA loss is forecast at less than €5 million in 2016 due to investments of €25 million in research and development.

Valneva estimated revenues to increase to €250 million in 2020 through existing and future products.