PARIS (Thomson Financial) - Share prices were lower at midday as investors remained nervous about problems in credit markets following Friday's plunge on Wall Street, although corporate bank Natixis reversed its heavy losses from the previous session after making reassuring comments about its exposure to subprime risks, market sources said.
At 12.39 pm, the CAC-40 index was down 38.04 points or 0.68 pct lower at 5,559.85.
On the Matif, August CAC-40 futures were trading at 5.576.
The euro was at 1.3805 usd compared to 1.3825 earlier today and 1.3793 late Friday.
The 280-point fall on the Dow Jones industrial average on Friday -- partly fuelled by gloomy comments from Bear Stearns' CFO -- cast a shadow over morning trading in Paris.
However, Natixis pulled off a spectacular rebound, rising 1.45 eur or 10.55 pct to 15.20 to recover all of its 9.90 pct losses from Friday.
The corporate bank reassured the market about its exposure to subprime credit and announced that its core shareholders are planning to raise their stakes.
In an interview with Les Echos this morning, managing director Dominique Ferrero said the company is sticking to its guidance for a full-year net profit of around 2.15 bln eur, stressing that its exposure to subprime credit is 'limited'.
He stated that the negative impact of the subprime market on Natixis' finance and investment division will be 'around 2 pct of half-year net banking income', he said, adding that the division represents half of Natixis' group net profit.
In a separate press release, Natixis added that its major shareholders, mutually-owned banks Caisse d'Epargne and Banques Populaires, have expressed an interest in increasing their stakes -- currently 34 pct each -- 'as a sign of their confidence in Natixis' fundamentals and outlook'.
A Paris dealer said Natixis' rebound showed that the market is now reacting to company comments and 'is correcting the excessive drop' caused by credit fears.
He attributed the gains for Dexia shares -- up 0.87 or 4.36 pct at 20.84 -- to the fact investors are expecting upbeat comments from its credit enhancement business FSA later today.
He noted that a similar update on Thursday from US peer MBIA had reassured the market.
A Dexia spokeswoman confirmed that the bancassurer will issue a statement shortly.
Dexia helped pull banking stocks higher, paring earlier losses stemming from concerns about credit risks.
Societe Generale was up 0.23 or 0.18 pct at 128.16, lifted also by an upgrade to 'buy' from 'hold' by Deutsche Bank.
BNP Paribas was down 0.40 or 0.50 pct at 80.06, while Credit Agricole was off 0.07 or 0.26 pct at 27.16.
In contrast, insurer Axa trailed the market, shedding 0.47 or 1.66 pct to 27.78.
Construction companies suffered from market nerves about credit problems, with Lafarge falling 2.49 or 2.07 pct to 117.61, Saint-Gobain down 1.23 or 1.51 pct at 80.46, and Bouygues off 0.96 or 1.72 pct at 54.84.
Ciments Francais, meanwhile, fell further than its peers -- down 5.65 or 3.75 pct at 144.85 -- after Cheuvreux downgraded the company to 'underperform' from 'outperform,' citing a disappointing full-year profit outlook.
The broker said the company's first-half results were better than expected but its forecast for full-year operating results in line with 2006 came in below the broker's expectations of a 6 pct year-over-year gain.
Property groups were also under pressure from subprime mortgage worries, with Unibail-Rodamco down 2.38 or 1.43 pct at 163.86 and Kaufman & Broad 2.40 or 4.57 pct lower at 50.17.
On the upside, Areva added 6.49 or 0.88 pct to 744.54 after the nuclear energy group announced a renewed agreement with the government of Niger to operate its uranium mines in the country, signalling an easing in tensions with the country's authorities.
The extension of the mine operating contract is 'good news', analysts at CA Cheuvreux said in a note to clients, although the broker cautioned that the Niger government's notification of tougher price negotiations next year is a 'serious warning', given that the country provides 40-45 pct of Areva's annual uranium output.
Still in the energy sector, EDF was lifted by the government's announcement that French regulated electricity tariffs will rise on Aug 16 by 1.5 pct for business clients and 1.1 pct for households.
The utility was trading up 0.10 or 0.20 pct at 49.40.
STMicroelectronics added 0.02 or 0.16 pct at 12.40. The chip maker benefitted from last week's strong results for Nokia, a major customer for STMicro.
Peugeot rose 0.84 or 1.35 pct at 62.89 after recent profit-taking that reflected disappointment with its second-half guidance.
Air France-KLM was also trading ahead of the market -- down 0.10 or 0.31 pct at 32.46. The group announced Friday that two of its units, Regional and KLM Cityhopper, have placed a joint firm order for 20 Embraer planes. The move represents the first combined order by Air France and KLM, which are currently moving to integrate further their operations.
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