Europe Market Report

European close: Stocks relinquish gains European markets were unable to hold on to the morning’s gains, Energy and tech stocks are keeping Europe's leading exchanges in the blue in midday dealings. In Frankfurt, there were marginally more risers than fallers among DAX constituents, but the index still dipped 13 points to 5,831, as banks and motor manufacturers fell back. In France, the CAC 40 fell 36 points to 3,794 while in Switzerland, the Swiss market index retreated 24 points to 6,464. Volkswagen (VW) was the worst performing blue-chip. The car manufacturer faces the prospect of being ejected from the DAX index after the percentage of its shares available for trading in the market (the free float) dropped below 10%, after Qatar’s sovereign wealth fund exercised an option to increase its stake in VW to around 17%. In general, stocks with a free float of less than 10% are ejected from the index. Qatar stands third in the list of big VW shareholders, behind the state of Lower Saxony, which has a 20% stake, and the performance car maker Porsche, which has a 53% stake. Elsewhere in the sector BMW was also friendless but Daimler headed higher. Auto parts maker Continental fell for the third day in succession as it gets set to ink a new refinancing deal. German banks such as Commerzbank and Deutsche Bank were out of favour. The latter said today that it would compensate UK staff hit by the recently introduced UK bonus tax. ‘It would be unfair to treat the UK bankers differently,’ said chief executive Josef Ackermann in an interview with the Financial Times. French banks were also under pressure. Credit Agricole was marked down severely after being downgraded to ‘neutral’ by Merrill Lynch in the wake of the harsher than expected recommendations from the Basel Committee yesterday. The Basel Committee said banks will have to accept a significantly lower return on equity in future to rebuild their financial strength. Public finance lender Dexia was also badly hit by the Basel verdict, while Societe Generale’s 2.5% fall looked mild in comparison. In the tech sector, Infineon Technologies received a lift from Commerzbank, which upgraded the semiconductor maker, while database software firm SAP was on many traders’ shopping lists after US peer Oracle reported earnings of 39c a share versus 34c year ago. French telecoms company Iliad advanced after mobile phone regulatory body granted it a licence to become France’s fourth mobile phone network operator. The company, which paid €240m for the licence, will invest around €1bn in to its mobile network, the company said. E.ON and RWE tended firmer after Credit Suisse said the utility companies were set to carry on rising to the end of the year. In economic news, German business sentiment rose to 94.7 in December, beating expectations of 94.5. CAC 40 - Risers Sanofi-Aventis (SAN) € 54.70 +2.36% Unibail-Rodamco (UL) € 151.20 +1.31% Accor (AC) € 37.62 +0.90% Technip (TEC) € 48.43 +0.63% Essilor International (EI) € 41.11 +0.59% EADS (EAD) € 13.01 +0.50% ST Microelectronics (STM) € 5.99 +0.10% Suez Environnement Company (SEV) € 16.11 +0.03% CAC 40 - Fallers Credit Agricole (ACA) € 11.98 -7.13% Dexia (DEXB) € 4.27 -7.07% Peugeot (UG) € 22.89 -3.01% Societe Generale (GLE) € 46.30 -2.53% Renault (RNO) € 34.62 -2.48% L'Oreal (OR) € 73.35 -2.28% AXA (CS) € 15.98 -2.11% Vinci (DG) € 38.59 -1.93% Cap Gemini (CAP) € 31.05 -1.90% Total (FP) € 42.52 -1.82%