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Zodiac Aerospace rockets after Safran bid, European shares retreat

Published 19/01/2017, 10:20
© Reuters. Traders work at their desks in front of the German share price index DAX board in Frankfurt
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By Kit Rees

LONDON (Reuters) - European stocks dipped on Thursday, though Zodiac Aerospace's (PA:ZODC) shares surged after a takeover offer by France's Safran (PA:SAF) and Moneysupermarket.com (L:MONY) also jumped after it reported strong results.

Zodiac Aerospace (PA:ZODC) rocketed 21.7 percent after Safran offered $9 billion to buy the aircraft seat manufacturer. Shares in Safran gained 1.9 percent.

"On a stand-alone financial basis, the acquisition of Zodiac appears pretty attractive, in our view. We venture (to suggest) the planned special dividend may also lend near-term support to the Safran share price," Sandy Morris, equity analyst at Jefferies, said in a note.

Earnings boosted shares in Moneysupermarket.com (L:MONY) by 6.6 percent to their highest level since March 2016 after the price comparison website reported better-than-expected fourth quarter and full year revenues. [nL5N1F9251

Dutch-Belgian food retailer Koninklijke Ahold Delhaize (AS:AD) also rose, up 3.2 percent after posting strong fourth quarter sales figures.

Royal Mail's (L:RMG) results were received less enthusiastically, its shares falling 6.4 percent and weighing on the blue chip FTSE 100 (FTSE) index, which dropped 0.7 percent. [nL1N1F90BJ]

Analysts flagged further weakening in Royal Mail's UK letters business as a concern.

The pan-European STOXX 600 (STOXX) index was down 0.4 percent in choppy trade. A 1.3 percent fall in oil stocks (SXEP) also weighed.

Downgrades were a drag, weighing on Gemalto (AS:GTO), Ingenico (PA:INGC) and Rightmove (L:RMV), which all fell between 3 to 3.8 percent.

"We're ... entering an earnings season, and I don't think it's going to be necessarily one of the strongest ones. I think we're going to see a continuation of the one that we had last quarter, which was very patchy for many industries," said Ken Odeluga, market analyst at City Index.

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A meeting of the European Central Bank later in the day was also in focus for investors. The ECB is expected to keep policy unchanged.

Overnight, Federal Reserve Chair Janet Yellen signalled that the U.S. central bank was poised to pursue a path of steady interest rate hikes.

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