Healthy Skepticism Library item: 7238

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Publication type: news

Turner S.
Europe shares edge lower on Democrat wins: Election outcome sparks fears for U.S. drug prices; EADS posts loss
Market Watch.com 2006 Nov 8
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA11D4DC1%2D79C0%2D4040%2DB4D4%2D367CA7EF181B%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

Abstract:

European shares closed slightly lower on Wednesday, with investors holding back as the battle for the U.S. Senate hung in the balance while eyeing earnings from companies such as EADS.
The pan-European Dow Jones Stoxx 600 index lost 0.08% at 359.56, with drug makers, including GlaxoSmithKline, AstraZeneca, Roche and Novartis among the weakest performers.
Shares of GlaxoSmithKline lost 1.6%, AstraZeneca declined 2%, Roche slipped 0.5% and Novartis lost 1% on fears the Democrats might enforce lower U.S. drug prices.
The Democrats won the House, but the Senate race was a nail-biter, with the outcome dependant on Virginia and Montana. See complete U.S. election coverage.
If the Democrats win both the House and the Senate, they might enforce lower drug prices, noted David Buik at Cantor Index, which he said could pressure the drug industry.
“We’ll see a level of inertia until we know what’s happened with Montana and Virginia. If the Democrats do get control of the Senate as well as the House, that’s a more serious situation for the U.S. economy,” said Buik.
U.S. stocks started in the red on Wednesday following the election. See full story.
The German DAX Xetra 30 index decreased 0.2% at 6,349.26, the U.K. FTSE 100 index lost 0.1% at 6,239.00 and the French CAC-40 index dipped a fraction of a percentage point to close at 5,437.10.
Mining shares such as BHP Billiton and Rio Tinto were also weaker during the day as gold prices slipped after traders locked in gains. See metals story. See London Markets.
Earnings in focus
Shares in European defense giant and Airbus owner EADS rose 3.2% in Paris as investors looked past bad news on profit and focused instead on sales. EADS confirmed it expects sales of well above 37 billion euros in 2006.
On the earnings side, EADS swung to a third-quarter net loss of 195 million euros, or 0.24 euros a share, hit by charges related to setbacks in its A380 superjumbo flagship program. In the same period a year ago the company reported a profit of 279 million euros, or 0.35 euros a share. See full story.
Also, shares in German retailer KarstadtQuelle rose 2.7% after the operator of Karstadt department stores and holiday operator Thomas Cook said its quarterly loss before tax, depreciation and amortization narrowed to 2.4 million euros from 25.6 million euros.
Shares of Europe’s two largest automakers traded mixed following executive shake-ups.
Shares in Peugeot rose 1.8% after finding a replacement to Jean-Martin Folz, who already had said he’s quitting. Christian Streiff, who lasted as CEO of Airbus for just three months, was named as Folz’s replacement.
Also, Societe Generale upgraded the company to hold from sell, citing Streiff’s reputation as a good industrial specialist and a very outspoken leader.
Shares of Volkswagen slipped 1.5% after Bernd Pirschetsrieder announced he was quitting, to be replaced by Audi CEO Martin Winterkorn. The company was downgraded to hold at Citigroup on the move.
Shares of Porsche, which already owns 21% of VW, lost 0.2% amid speculation it may boost its stake further. See full story.
Deals in the spotlight
Shares of chemicals firm Lonza rose 5.2% in Switzerland following a deal to buy a Genentech plant and make drugs for the biotech. Lonza is paying $150 million for Genentech’s manufacturing facility in Porrino, Spain.
Also, shares of French advertising group J.C. Decaux lost 2.3% after The Wall Street Journal reported it’s expressed interest in buying its larger rival Clear Channel Outdoor Holding, a majority-owned unit of Clear Channel Communications

Scottish Power shares jumped nearly 9% after the utility said it’s received a takeover approach, though it didn’t disclose from which company.