Philips, Electrolux, BP all lower; Tomkins shares soar
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares moved off early lows on Monday, with miners gaining and deal speculation helping support sentiment.
The Stoxx Europe 600 index (ST:SXXP 249.01, +0.90, +0.36%) declined 0.2% to 247.58, having dropped 3.1% over the past three sessions as investors fretted about the economic outlook at the start of the second-quarter earnings season.
Shares of Royal Philips Electronics (NL:PHIA 24.16, -0.75, -2.99%) (PHG 31.94, -1.38, -4.14%) fell 3.3% after the Dutch firm reported a surge in second-quarter profit to €262 million, but warned sales growth will slow in the second half of the year.
Societe Generale analysts said the company's consumer lifestyle division had "disappointing" organic sales growth of 20%. See more on Philips.
Also, shares of Electrolux (SE:ELUXB 153.40, -13.60, -8.14%) dropped 6.3%, after the Swedish electrical appliance maker said that its second-quarter sales slipped 0.6% to 27.31 billion kronor. Net profit rose 56% to 1.03 billion Swedish kronor ($140 million), beating analyst forecasts.
Still, overall "earnings have been reasonably positive" said Stephen Taylor, strategist at Dolmen Stockbrokers. "There is value in some names. We are recommending that on days of weakness investors look at companies that have issued strong outlooks," he said.
Of the regional benchmarks, the U.K. FTSE 100 index (UK:UKX 5,194, +35.57, +0.69%) rose 0.2% to 5,169.38, the German DAX index (DX:DAX 6,075, +35.20, +0.58%) rose 0.52% to 6,051.18 and the French CAC-40 index (FR:PX1 3,526, +26.16, +0.75%) moved up 0.2% to 3,505.30.
Asian shares lost ground, while U.S. stock futures were pointing to a modest rebound on Wall Street, with Dow Jones Industrial Average futures up 25 points.
Deal speculation helped support sentiment, with shares of U.K. electricity generator International Power (UK:IPR 347.50, +30.70, +9.69%) up 9.1% to 346 pence a share. It said it's in talks over a possible combination with the international operations of GDF Suez (FR:GSZ 24.74, +0.41, +1.69%) . GDF Suez shares rose 1.5%.
Shares of engineering firm Tomkins (UK:TOMK 304.20, +73.90, +32.09%) surged 32.8% to 306 pence per share after it said it has received a takeover proposal from Onex Corporation (CA:OCX 25.07, 0.00, 0.00%) and the Canada Pension Plan Investment Board, of 325 pence per share in cash.
Miners advanced along with metal futures and the euro, with Rio Tinto (UK:RIO 3,078, +72.50, +2.41%) (RTP 46.89, +1.13, +2.47%) shares up 1.8% and Xstrata (UK:XTA 932.70, +24.10, +2.65%) shares up 2%.
Moody's Investors Service on Monday cut Ireland's sovereign debt rating by one notch to Aa2 from Aa1, citing the government's "gradual but significant loss of financial strength."
However, the agency also lifted the outlook on Irish government debt to stable from negative, saying the risks are now evenly balanced. Read more on Ireland.
"This may signal the end of downgrades for Ireland," said Taylor. "It's a slight positive," he added.
Banks were mixed, with UniCredit (IT:UCG 1.99, -0.01, -0.35%) shares down 0.9%.
Negotiators for the International Monetary Fund and European Union walked away from talks with Hungary over the weekend over differences on government budget cuts. Read more on Hungary.
Of other movers in Europe, oil giant BP (UK:BP. 399.00, -8.15, -2.00%) (BP 36.55, -0.55, -1.48%) fell 2.7%.
BP's talks to sell half its Prudhoe Bay stake to Apache stalled twice over the weekend, Bloomberg News reported, citing a person familiar with the matter.
BP said that cost of the response to the oil spill in the Gulf of Mexico to date amounts to approximately $3.95 billion.
