European Indexes Decline

London

After an encouraging ascent yesterday, the FTSE 100 (-2.02%) fell deep into the red as weaker-than-expected US non-farm payrolls jolted Wall Street, which also traded lower. The jobs data made the spectre of stagflation reappear stateside, and close to half of the market appears to now be anticipating a 50bp cut by the Fed at the end of the month. In London, the market is bracing itself for some key trading updates next week, including M&S (-4.52%) and SIGNET (-5.86%), which have both been the recipients of some negative broker comments today after bleak updates from NEXT (-5.67%) and DSG (-1.28%) yesterday. CARPHONE WAREHOUSE (+2.64%) escaped unscathed on renewed speculation that VODAFONE (+0.75%) or BestBuy may be interested. The board of Australia's Resource Pacific rejected XSTRATA's (-1.48%) AUD2.85 per share bid, calling it neither fair nor reasonable. Some sources note talk that Brazil's Vale may have initiated due diligence. BA (-2.5%) said passenger traffic was up 1% in December; one analyst noted that a 6.5% rise in premium traffic was disappointing. Insurer ADMIRAL (-2.91%) fell as Merrill Lynch removed the stock from its insurance most preferred list. In the broader market, SHANKS (+2.17%) jumped on M&A hopes whilst NESTOR (+41.18%) rallied after confirming it received approaches and is in very preliminary discussions with potential offerers.

Frankfurt

Xetra-Dax (-1.26%) closed firmly below breakeven on Friday as Wall Street traded in the red after non-farm payrolls came in lower than expected. Key for the banking sector, Merrill Lynch may take an additional write-down of as much as US$10 billion, CNBC said. Among the outperformers, there was renewed talk of Dow Chemical being interested in LINDE (+4.38%). The deadline for bidding for a stake in Slovenia's largest telco, Telekom Slovenije, was extended until 14 January. DZ Bank reckons the group would fit in well with DEUTSCHE TELEKOM's (+0.67%) Eastern European portfolio. UNITED INTERNET (-1.67%) was reportedly thinking of buying all or part of Pipex, a UK
business broadband service with a market cap of £215 million. Hurting the auto sector today were GM CEO's comments that the US car market may see no growth this year. Sales of VW (-1.75%) cars and light trucks in the US were down 8.8% year-over-year in December, DAIMLER's (-5.95%) Mercedes-Benz Cars division saw a 3% slide, BMW (-2.83%) sold 1% more cars across the Atlantic, while PORSCHE (-7.54%) sold 2% more cars year-over-year in North America last month. Key on the broker front, Merrill Lynch added MUNICH RE (-0.02%) to its most preferred list and ALLIANZ (-1.97%) to its least preferred list. Citigroup removed POSTBANK (+1.24%) from its stocks to avoid list.

Paris

The CAC 40 (-1.79%) closed the session firmly in the red as Wall Street traded lower at European close after US non-farm payrolls rose less than expected and US unemployment rate rose to 5%, more than expected. in Paris, RENAULT (-7.58%) tumbled after Nissan Motor fell the most in more than six years on the Tokyo Stock Exchange, plunging 9.2% at the close, after Toyota Motor cut its forecast for US sales and as the JPY rises against the US$. PSA (-6.79%) and MICHELIN (-6.44%) also dived. France
TELECOM (+0.33%) has sold 70,000 iPhones since November, Les Echos reported. In the UK
, Carphone Warehouse rose on bid rumours surrounding Vodafone. VINCI (-2.30%) and AREVA (+0.94%) are in talks to bid together to build nuclear power plants, Bloomberg reported. Areva bought Nokian Capacitors Ltd, a Finnish manufacturer of power system components. No financial terms were disclosed. GDF (-0.31%) has spun off its natural gas distribution activities into a new fully consolidated subsidiary, Gaz reseau Distribution France. The move will have no impact on GDF's accounts. IPSEN (+2.01%) sees R&D spending reaching 19-21% of net sales this year. In broker news, Citigroup downgraded French banks to underweight and removed SOCGEN (-1.06%) from its buy focus list. UBS, however, upgraded SocGen to buy from neutral.

Italy

Italian shares ended lower on Friday, with the MIBTEL index down 1.84% and the MIB30 down 1.62%, in line with Wall Street's weak performance. US jobs figures for December, released today, pointed at a slowing US economy. In local news, TERNA (-2.32%%) declined after forecasting €1.085 billion tariff revenues for 2008, based on Italy's new 2008-2011 tariff system. FIAT (-7.29%) sunk deep into red on higher oil prices. Sources added that the Italian carmaker is under pressure after data revealed weak US car sales in December -even though FIAT's presence in the US market is marginal. ENI (-0.91%) and SAIPEM (-2.18%) fell as investors cashed in profits from Thursday. Negative sentiment weighed also on GENERALI (-0.36%) that snapped earlier gains and ended lower. The market had welcomed reports that the company's chairman Antoine Bernheim may move to an honourary position, to be replaced by Claudio Costamagna as the operating chairman. SAES GETTERS (-2.52%) announced it has acquired Shape Memory Alloys from Special Metals Corporation for US$30.2 million. In broker news, Morgan Stanley said INTESA SANPAOLO (-0.75%) is a 'must-have' in 2008.

Amsterdam

In line with other European markets, the AEX (-1.59%) closed firmly lower, mirroring negative trading on Wall Street as firmly lower-than-expected non-farm payroll data in the US along with a more-than-expected rise in US unemployment dampened sentiment. Back home, KPN (+2.76%) outperformed amid rumours of a takeover by Spain's Telefonica. WOLTERS KLUWER (+0.32%) also bucked the trend as it wants to acquire Stewart Lender Services. Defensive stock HEINEKEN (+0.57%) was up, while S&N said the Arbitration Institute of The Stockholm Chamber Of Commerce advised that the dispute with Carlsberg over the BBH shareholders' agreement will be resolved by 3 July 2008. S&N began arbitration in October after Carlsberg and HEINEKEN made an unsolicited offer. Financials were in focus, but all traded lower amid current fears about the state of the US economy: AEGON (-1.93%), ING (-1.61%), FORTIS (-1.71%). S&P Ratings Services removed Merrill Lynch Life Insurance, which AEGON has acquired, from CreditWatch. In an interview with the FT, ING Direct's CEO said he wants to add more products to cover the five major needs of consumers: savings, mortgages, brokerage, consumer credit and current accounts.