European close: Auto stocks drag markets

Tue 5 Aug 2008
LONDON (ShareCast) - European markets finished deep in the red following a profit warning from carmaker BMW (Xetra: 519000) , while a poor start on Wall Street further compounded matters.

BMW said it will not reach its targets due to deteriorating business conditions. The group's second quarter profits fell to €507m from €753m last time.

Fellow carmakers Renault (Paris: FR0000131906) and Porsche (Xetra: 693773) fell in sympathy, while Volkswagen (Xetra: 766400) dropped after being downgraded to 'underweight' from 'equal-weight' at Lehman Brothers (NYSE: LEH) .

Poor results from General Motors (NYSE: GM) added to the gloom. The US firm saw revenues fall by 18% and reported a $15bn loss in the second quarter.

In M&A news, shares in British Energy (LSE: BGY.L) dropped after France's EDF (Paris: FR0010242511) pulled out of rumoured £12bn deal to buy the UK nuclear group. Two leading private shareholders in British Energy, thought to be Invesco and Prudential, reportedly vetoed the deal as they were holding out for a higher price.

On the results front, Belgian drugmaker UCB surged after it beat forecasts while Dutch supermarket firm Ahold (Amsterdam: AH.AS) also gained following its forecast busting results.

The German Dax slumped 83 points to 6,396 and the French CAC finished down 78 points to 4,314

In economic news, German retail sales fell 1.4% month-on-month in June and 3.9% compared to last year, according to preliminary data from the Federal Statistics Office.

Source: http://uk.biz.yahoo.com/080801/214/i47aw.html