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Financial Times: Shell prompts oil groups retreat

By Neil Dennis
Published: February 3 2006 02:00
European stock markets fell yesterday as oil stocks retreated in the face of a slide in crude prices. The FTSE Eurofirst 300 index fell 1 per cent to 1,319.80.
More bad news on reserves for Royal Dutch Shell overshadowed the Anglo-Dutch oil group's record-breaking full-year results and prompted a retreat for the sector. Spain's Cepsa lost3.8 per cent to €44.00, while Austria's OMV shed 3.3 per cent to €57.84 and the Finnish refiner Neste Oil fell2.9 per cent to €25.75.
Atlas Copco rose 6.4 per cent to SKr175.00, an all-time high, after the Swedish engineering group reported record fourth-quarter profits and promised a significant cash return to shareholders from the sale of its US rental services unit that could raise more than $3bn.
Domestic rival Sandvik, which reports its results on February 8, gained 3.8 per cent to SKr392.5.
Vivendi Universal fell2.4 per cent to €24.80 after the French media giant spent $1.154bn to complete 100 per cent ownership of Universal Studios by buying out the remaining 7.66 per cent minority stake owned by Matsushita Electric Industrial of Japan. The biggest casualty of the day was Thomson after the French media services group reported an 8.5 per cent rise in full-year core sales, but missed expectations due to slowing sales of DVD players and set-top boxes. Shares fell 16.1 per cent to €14.09.
“The market is likely to question whether Thomson can organically grow revenue,” said Sandeep Deshpande at Dresdner Kleinwort Wasserstein. “There were contributions from the acquired companies in 2005 in services and in systems and equipment, but organically the company showsvirtually no growth.”
SolarWorld had good news with the acquisition of Shell's lossmaking solar wafer and cell manufacturing business for an undisclosed price. The deal puts the German solar energy group in a leading position in the US, where interest in renewable energy is soaring. Caroline Slama, at SociétéGénérale, said takeover speculation might increase as General Electric and Siemens were likely to target market leading companies. SolarWorld jumped17.4 per cent to €218.85
Henkel, the German consumer goods manufacturer, struggled after reporting weak growth in its core divisions. The shares fell 3.3 per cent to €30.81 after it showed slowing growth at its cosmetics, laundry and homecare units, causing its fourth-quarter earnings to miss expectations.
Early in the session, investors focused on the upbeat results of Alcatel. The French mobile phone equipment maker, gained 3.3 per cent to €11.58 after it announced a forecast-beating 16 per cent rise in fourth-quarter operating profit and provided an optimistic outlook on first-quarter sales.

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