PARIS (Thomson Financial) - Shares were slightly lower at midday as Home Depot's decision to cut its full-year guidance cast a cloud over the earnings season, while Air Liquide held on to some of its early gains fuelled by renewed talk of a private equity bid.
At 12.32 pm, the CAC-40 index was down 36.72 points or 0.60 pct at 6,067.94. Thirty CAC-40 stocks were down, nine were up and one was unchanged. The euro was at 1.3620 against 1.3634 late yesterday.
'The market is starting to worry' about second-quarter results, one Paris dealer said, with Home Depot's reduced guidance coming after Alcoa kicked off the earnings seasons with a 4 pct drop in quarterly income.
The US news helped push down the Paris bourse after hesitant morning trade ahead of the first second-quarter reports from French bluechips.
Retailer Carrefour, down 0.60 eur or 1.11 pct at 53.50, saw mild profit-taking before its quarterly sales update this evening.
Groupe Danone shed 0.43 or 0.72 pct to 59.05 on top of yesterday's 3.28 pct decline as the market factored in the high premium the company is offering in its 55 eur a share bid for baby food maker Numico.
Merrill Lynch downgraded Danone to 'neutral' from 'buy', with a reduced 12-month fair value estimate of 60 eur, against 68 previously, while Lehman Brothers lowered its price target to 58.50 eur from 62.50 with an unchanged and 'equal-weight' rating.
Today's losses for Danone shares were limited as investors saw the deal as attractive in terms of the high growth and margins that Numico can bring Danone, which is in the process of selling its less-profitable biscuit business to Kraft Foods.
Air Liquide stood out as the big climber of the morning as it reacted to renewed speculation private equity firm KKR is mulling a bid. At midday the shares were up 2.90 or 3.01 pct at 99.12 after climbing as high as 102.12.
A London-based analyst said Air Liquide is an interesting acquisition target thanks to solid earnings, but that 'a financial perspective I would say that the business does not throw off enough cash to attract a private equity (bidder)'.
Among the majority of falling shares on the CAC-40, ArcelorMittal saw the biggest drop, shedding 1.18 or 2.41 pct to 47.79. The steel maker was affected by US peer Alcoa's quarterly results, which similarly weighed on tube maker Vallourec -- down 3.51 or 1.56 pct at 222.15.
Car maker Peugeot -- down 1.39 or 2.12 pct at 64.05 -- saw profit-taking after surging 6 pct in the previous two sessions following improved first-half trading figures on Friday.
Rival Renault, which has also surged this year on expectations of a recovery, gave up 1.57 or 1.32 pct to 117.51.
Among the few bluechip risers, EDF added 0.89 or 1.17 pct to 77.20. A Paris dealer said the shares were recovering from yesterday's 2 pct fall when investors reacted to a press report that EDF may buy Belgian gas operator Distrigaz from Suez -- down 0.39 or 0.93 pct at 41.36 -- as part of a deal to finalise the stalled merger between Suez and Gaz de France -- down 0.27 or 0.73 pct at 36.85.
Finance minister Christine Lagarde, meanwhile, said on French radio that a sale by the government of a stake in EDF is 'not on the agenda at the moment', countering growing speculation that the authorities are preparing to divest a portion of their 87 holding.
French president Nicolas Sarkozy said in an interview with the Algerian press he is in favour of closer ties between Algerian state-owned gas producer Sonatrach and French energy groups Gaz de France, Suez and Total.
Sarkozy had said in a weekend interview in the French press that he will announce shortly his decision regarding the merger of GDF and Suez, with a Sonatrach tie-up seen as potentially part of a solution.
Oil major Total was trading down 0.26 or 0.42 pct at 62.00 in line with the market and as crude prices fell back slightly from yesterday's 11-month high.
Elsewhere, Alstom rose 1.13 or 0.88 pct at 129.58 on the back of several news developments. The group announced a 150 mln eur order to supply five gas turbines for a power generating plant in Kuwait. In China, it won regulatory approval to acquire a 51 pct stake in Wuhan Boiler Co Ltd from the latter's parent Wuhan Boiler (Group) Co Ltd.
In Finland, Alstom said it has paid an undisclosed sum to acquire RMG-Yhtiot, an industrial maintenance and services company with customers in the metals, chemicals and forestry industries.
Another riser was Essilor International, up 0.97 or 1.12 pct at 87.95, after it was upgraded to 'outperform' from 'neutral' at Exane BNP Paribas, which cited improving medium-term growth.
EADS was down 0.27 or 1.11 pct at 24.15. The aeronautics group said talks among shareholders are still underway in preparation for the July 16 meeting between Nicolas Sarkozy and German chancellor Angela Merkel, but that 'no decision has been taken yet, neither about management structures of the EADS group nor about nominations for executive positions'.
Various press reports have claimed the two sides have agreed to adopt a single management structure, with a German-appointed chief executive and French-nominated chairman to replace the current system of co-chief executives and chairmen.
Outside the CAC-40, Fininfo was suspended at the request of the company pending a statement, Euronext Paris said.
Swiss financial data provider Telekurs has called a news conference for 2 pm in the wake of a report in La Tribune it will buy a majority stake in Fininfo.
Orpea added 0.78 or 0.99 pct to 79.80 after the private healthcare group said it will implement a proposed two-for-one share split on July 30.
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