European markets close 2006 with year-long highs

MARKET OUTLOOK

- US: After a slight bounce in light trading volume, US markets ended the past week on a negative note for the last day of the year with a lack of market moving news and ahead of a long weekend. The NYSE, Nasdaq and commodity markets were closed yesterday while the Bond market had an early close. Stocks from telecom, automobile and food and staples retail outperformed the market while semiconductors and capital goods sectors lost ground. Technically, the risk for the short coming week should remain corrective.

- EUROPE: European markets had a strong start to a short trading week as almost all indexes ended 2006 with new year highs, helped by stocks from financial services, travel and leisure and industrial goods and services. Only the telecommunications sector had a real loss over the week. Technically, the outlook calls for caution as the risk might be corrective for the coming week.

COMPANY PREVIEW

ICI (GBp 452 ; 2.44% ; ICI ; ICI.L)

Imperial Chemical Industries surged last week on speculation Akzo Nobel may try to buy the group, according to the Times. After ICI sold its fragrance business Quest International to Givaudan for £1.2bln in November, the group became a better strategic target for Akzo Nobel and Akzo's CFO Rob Frohn had said in August the company was looking for acquisitions.

Sanpaolo Imi (EUR 17.6 ; 4.9% ; SPI ; SPI.MI)

As from Tuesday January 2, Sanpaolo IMI shares will be removed from the market following Banca Intesa's acquisition of the group, which took legal effect on January 1. Banca Intesa will adopt the new corporate name Intesa Sanpaolo and will increase its shares to 11.8bln following the issue of new stock to Sanpaolo shareholders. Furthermore, Intesa and Sanpaolo said that Credit Agricole will hold 9.06% of the combined bank. Buzzi Unicem will replace Sanpaolo IMI in Italy's benchmark S&P/MIB Index on January 2.

Suez (EUR 39.23 ; 3.81% ; SZE ; LYOE.PA)

French billionaire Francois Pinault may make a hostile bid of E70bln to buy Suez as early as next week. As part of the plan, Gaz de France, which has been seeking to merge with Suez, would buy Suez's energy business for appx. E40bln. Veolia Environnement would be interested in Suez's water and environment unit (Capital magazine).

Constellation Brands (USD 29.02 ; 3.46% ; STZ ; STZ.N)

On Thursday, Constellation Brands delivers its quarterly earnings before market opens. The Co is expected to reach 3Q/Nov EPS of $0.60 ($0.52 a year ago) on a revenue of $1.499bln ($1.267bln).

Monsanto (USD 52.53 ; 1.7% ; MON ; MON.N)

The same day before markets open, Monsanto is seen reporting 1Q/Nov EPS of $0.10 ($0.12 a year ago) on a revenue of $1.525bln ($1.405bln). Last Friday, the group said it is trying to persuade farmers to grow a special kind of soy bean that produces an alternative to frying oil laden with trans fat, which has been banned in restaurants by New York City (NYT).