The Financial Times:14 March 2013

Author:Unknown
Language: eng
Format: mobi
Published: 0101-01-01T00:00:00+00:00

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MARKETS - BACK SECTION: Commerzbank hit by capital increase; EUROPE

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Commerzbank surprised the market with its plan for a €2.5bn capital increase , sending its shares down sharply.

The news came a day after the market speculated that Germany's second-largest bank by assets would raise €800m .

The move is part of the lender's plans to repay the government for the aid that it received during the financial crisis.

"We are surprised and cannot really understand this move," said Christoph Bast, analyst at DZ Bank.

The capital increase will mean the equivalent of a 43 per cent increase of the company's current share base.

Its shares tumbled 9.7 per cent to €1.26 against a 0.1 per cent gain on Frankfurt's benchmark Xetra Dax index to 7,970.91.

Disappointing news from Enel also prompted a sell-off in its stock.

The Italian utility said that it expected earnings before interest, tax, depreciation and amortisation to fall from €16.7bn last year to €16bn in the current fiscal year.

It also said it would slash costs and sell €6m of assets amid what it called a "particularly unfavourable macroeconomic and regulatory environment".

The company's shares slipped 6 per cent to €2.61. Italy's benchmark FTSE MIB index fell 1.7 per cent to 15,745.34.

French aircraft maker Safran received a fillip after analysts at UBS raised their price target on the shares from €36 to €44.

Its shares gained 1.9 per cent to €35.75.

Meanwhile, news that Renault had successfully resolved a dispute with French unions over its plans to cut at least 7,500 failed to lift the shares in the automotive group..

The carmaker was the best performing stock in Europe last week as news that it was edging closer to a deal prompted investors to buy into the stock ahead of yesterday's announcement.

Its shares slipped 1.3 per cent to €53.52 amid a 0.1 per cent fall on the CAC 40 index to 3,836.04.

The wider pan-European FTSE Eurofirst 300 was mainly flat at 1,194.11.

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