Britain: Referendum to be shelved

Meanwhile:

EUROPE MARKETS



Europe ends higher after choppy day French banks support; automakers mixed after U.S. sales

By Kabir Chibber, MarketWatch
Last Update: 12:26 PM ET June 2, 2005

LONDON (MarketWatch) -- European stocks ended higher after choppy trading, with French banks in focus after income surged at Credit Agricole SA, that country's largest bank.

Germany's DAX 30 index finally committed to gains by the close, finishing up 0.1% to 4,532, while France's CAC index (FR:1804546: news, chart, profile) gained 0.1% to 4,183.

London's benchmark FTSE 100 (UK:UKX: news, chart, profile) shed 0.1% to close at 5,005, hovering just above the key 5,000 level, which has proved a tough resistance level. See London Markets.

The euro gained 0.6% against the dollar, last at $1.2276, reversing losses that occurred after the Netherlands rejected the proposed E.U. constitution in a referendum on Wednesday. It comes days after the French voted against the constitution, sending the euro to an eight-month low and raising concerns about the future of European integration. See London Calling and Outside the Box.

The European Central Bank kept its benchmark interest rate unchanged at 2%, as was widely expected. See full story.

It last cut rates in June 2003. The ECB also cut its forecast for economic growth in the 12-member euro zone for 2005 to 1.4% from 1.6%.

French banks higher

Credit Agricole SA (FR:004507: news, chart, profile) shares closed up 2% as first-quarter net income jumped 42% to 905 million euros, helped by a strong performance from its investment banking division and a fall in provisions. The result beat analysts' expectations. See full story.

Peer BNP Paribas SA (FR:013110: news, chart, profile) gained 1% and Societe Generale SA (FR:013080: news, chart, profile) added 0.4%, both reversing losses earlier in the day.

But with Credit Agricole placing a "greater reliance on domestic France and still playing catch up in investment banking," it is least well placed of the three leading French banks, Dresdner Kleinwort Wasserstein said.

Philips Electronics NV (PHG: news, chart, profile) (NL:00953: news, chart, profile) shares inched up 0.09%. Ahead of a presentation at the Credit Suisse First Boston European Technology Conference in Barcelona the company said it's on track to meet its medium-term targets.

Sugar refiner Tate & Lyle PLC (UK:TATE: news, chart, profile) shares dropped 4% on news it won't be giving an estimate of the impact on its European sugar business after the European Union lost a World Trade Organization dispute over sugar subsidies. The refiner said it will wait until the European Commission publishes its reform proposal in July.

Profit before tax, exceptional items and goodwill amortization for the fiscal year was 255 million pounds, topping broker forecasts of around 242 million pounds. Revenue rose 5.5% to 3.34 billion pounds, led by growth for its Splenda sucarlose and other ingredients.

The luxury goods sector gained as Swiss group Richemont (ZZ:001273145: news, chart, profile) touched its highest level since July 2002. Shares ended up 3.1% to SFr40.25 following a UBS upgrade of the stock to buy from hold. UBS said Richemont's discount to the luxury sector is too high, and lifted its price target to SFr44 a share from SFr40 a share.

French peer Lvmh Moet Hennessy SA (FR:012101: news, chart, profile) shares gained 0.7% and Pinault-Printemps Redoute SA (FR:012148: news, chart, profile) , the owner of Gucci, rose 2.1% in Paris.

Automakers, airlines

Carmakers were mixed following U.S. automobile sales figures for May, and as automaker BMW AG (DE:519000: news, chart, profile) was upgraded to buy from hold at Citigroup Smith Barney.

Shares in BMW gained 1.7% as Smith Barney said underlying profits and margins at BMW are benefiting as dollar weakness abates. It also upped its price target to 44 euros from 36 euros a share. Also, the carmaker showed a 3.1% decline to 26,926 vehicles during the month.

DaimlerChrysler AG (DCX: news, chart, profile) (DE:710000: news, chart, profile) shares gained 0.2% as Mercedes sales rose by 6.5% in May. But total sales fell 2% to 232,386 vehicles, against Wall Street's expectations of a gain.

Luxury carmaker Porsche AG (DE:693773: news, chart, profile) shares added 1.4% as it posted a 25% surge in May U.S. sales to 3,291 vehicles, combining with Canada sales to notch the best month for North America in Porsche's history.

On the flip side, German carmaker Volkswagen AG (DE:766400: news, chart, profile) had what analysts at Merrill Lynch called a "disastrous" month as VW-brand sales fell 37.1%, sending shares down 0.05% at the close.

Airlines declined as crude-oil prices stayed above $54 a barrel, with German carrier (FR:003112: news, chart, profile) Lufthansa Group AG (DE:823212: news, chart, profile) closing down 0.2%.

Oil stocks gained, with BP PLC (BP: news, chart, profile) (UK:BP: news, chart, profile) and Shell Transport and Trading PLC (SC: news, chart, profile) (UK:SHEL: news, chart, profile) both closing higher.

U.K. betting in focus

The British IPO market was lifted on news online betting company PartyGaming PLC said it will list on the London Stock Exchange by the end of June and sell up to 23% of the company.

Gibraltar-based PartyGaming owns and operates PartyPoker, which it says has the leading market share by revenue and players. See full story.

Gaming stocks gained after the announcement. FTSE 100-component William Hill PLC (UK:WMH: news, chart, profile) jumped 2.8%, with smaller betting groups Stanley Leisure PLC (UK:SLY: news, chart, profile) up 1.2% and London Clubs International PLC (UK:LCI: news, chart, profile) up 1.4%.

Also in the U.K, Next PLC (UK:NXT: news, chart, profile) shares slipped 0.3% after Morgan Stanley downgraded the retailer to equal-weight from overweight, questioning the company's long-term outlook.

The broker prefers Marks & Spencer PLC (UK:MKS: news, chart, profile) , in that it has an easier base for comparisons and more room to improve efficiency.

Marks & Spencer shares still fell 0.6%. Gus PLC, the U.K.'s second-largest retailer, (UK:GUS: news, chart, profile) slipped 1.1% and Boots Group PLC (UK:BOOT: news, chart, profile) fell 0.8%.

thank you

That's what I find so comical... the proposed Constitution requires UNANIMOUS approval... yet, EU leaders are proposing that the recent no votes simply be ignored and that the ratification process continue, as if nothing happened.

......Britain is unwilling to be the first country to declare the treaty dead.......

But it has to be said..... This will be the Straw that broke the camel's back.

You misunderstand.

A vote is a contract between a government and it's people. Idaho votes for President even though the result is pretty much a foregone conclusion. The people of GB have a right to be on the record.

The next British vote may well be in the Parliament.

They could borrow this one. Its worked out pretty well ... ;-)

The United States Constitution

The people of GB have a right to be on the record.

But the constitution as it stands is almost certainly dead. Any future constitution put to the British people would likely be different, so there would be very little basis for generalising from the result of a referendum on the old constitution to the new constitution. Meaning that this referendum would count for very little in terms of determining the fate of any future constitution. It'd be a colossal waste of time, and I suspect most people wouldn't bother turning out to vote if it was held for that very reason.

The proposed EU Constitution requires confirmation of BOTH 75% of the nations, AND 75% of the population represented by the confirming nations. My understanding is, therefore, that the EU Constitution is defeated now, so it has become a nullity which would not change regardless of whether or how Britain voted on it.

John / Billybob

RIP, you won't be particularly missed. The irony is, the British aren't responsible for any of this. The French are! ^_^ Would have loved it to have been us to bury this corrupt European Union but I think this way has a more romantic justice about it.