(Updates with full report)
PARIS (Thomson Financial) - Share prices closed lower in hesitant trading as investors remained cautious following recent highs on the CAC-40 and ahead of tomorrow's public holiday in France, with Credit Agricole's leading the downward movement after disappointing the market with its first-quarter results, dealers said.
The CAC-40 index finished down 31.85 points or 0.53 pct at 6,017.91.
Volume for the day was 6.4 bln eur.
Among CAC-40 stocks, 17 closed higher and 22 closed lower.
On the Matif, May CAC-40 futures were trading down 28.0 points or 0.46 pct at 6,010.0.
On the broader indices, the SBF-80 index closed down 23.65 or 0.32 pct at 7,266.05 and the SBF-120 ended 21.91 or 0.50 pct lower at 4,391.84.
The euro was at 1.3531, down from 1.3599 usd late yesterday.
'There is a lot of wait-and-see,' a trader at a French brokerage said, arguing that in recent sessions investors have been bracing themselves for a correction that has yet to happen.
Shares had rallied mid-afternoon, just breaking into positive territory, as better than expected US figures for industrial output and housing starts helped lift Wall Street in early trading.
But profit-taking resumed towards the end of the session, encouraged by the prospect of Thursday's public holiday in France, which means many employees will be taking a long weekend.
Credit Agricole was the biggest faller in Paris, dropping 1.34 eur or 4.07 pct to 31.61 after reporting a below-consensus underlying net profit, excluding one-off gains and writebacks of provisions, of 1.181 bln eur.
ABN Amro said the net profit was about 5 pct below its own forecast, althougth praising Credit Agricole's corporate and investment banking unit for a strong performance.
French broker Raymond James agreed that corporate and investment banking drove growth, but was concerned with the numbers for French retail network LCL, which showed a fall in margins.
Other banking stocks suffered on the back of Credit Agricole's figures, with Societe Generale shedding 2.71 or 1.75 pct to 151.86, and BNP Paribas falling 0.86 or 0.92 pct to 93.11.
BNP Paribas' CEO Baudouin Prot also cooled takeover speculation yesterday by telling shareholders that the group is not interested in bidding for ABN Amro, preferring to pursue organic growth and 'targeted acquisitions'.
Steel group Arcelor-Mittal -- down 0.45 or 1.06 pct at 42.04 -- saw profit-taking as disappointment with the terms of its share exchange with Arcelor cast a shadow over solid first-quarter results.
The company set an exchange ratio of seven Arcelor shares for eight Arcelor-Mittal shares, which a London trader called 'very disappointing'.
On the second line, Atos Origin lost further ground following Monday's announcement that it has ended talks with potential suitors.
Shares in the IT services firm ended down 1.59 or 3.44 pct at 44.59, adding to the 13.79 pct drop on Monday.
Air France-KLM shed 0.75 or 2.06 pct to 35.59 after UBS analysts downgraded the stock to 'neutral' from 'buy' saying they no longer see enough upside to their price target of 40 eur to justify a 'buy' call.
In a research note out this morning, UBS told clients that, with the airline due to report results on May 24, it prefers to wait and see how Air France-KLM has fared in the fourth quarter.
Other falling stocks included oil giant Total, which lost 0.81 or 1.46 pct to 54.62 as crude prices continued to ease after weekly US government data showed a greater than forecast increase in gasoline stocks.
On the upside, Alstom led blue-chip gains, adding 4.72 or 4.20 pct to 117.00.
One Paris trader said rumours that Anne Lauvergeon may leave nucler power group Areva to become head of Electricite de France (EDF) -- replacing Pierre Gadonneix who will be 65 at the start of 2008 -- served to renew speculation about a possible tie-up between Alstom and Areva.
Lauvergeon is thought to be opposed to a privatisation of Areva, which analysts have suggested could involve Alstom and Bouygues, which has a 25 pct stake in Alstom and whose CEO Martin Bouygues is a friend of new French president Nicolas Sarkozy.
Bouygues ended up 0.64 or 1.03 pct at 62.70, EDF inched down 0.04 or 0.06 pct to 64.77, while fellow utility Gaz de France rose 0.18 or 0.50 pct to 36.25, with the same Paris trader dubbing them 'Sarkozy shares' given expectations that the new president's policies will support consolidation moves.
Auto stocks also continued their gains in the wake of DaimlerChrysler's sale this week of US unit Chrysler to private equity firm Cerberus.
European dealers also cited ongoing rumours of a Porsche bid for Volkswagen as well as vague talk of a BMW move for Renault.
In Paris, Renault rose 1.15 or 1.12 pct to 101.12, Peugeot added 0.14 or 0.24 pct to 59.71, while tyre maker Michelin gained 1.39 or 1.53 pct to 92.29.
Vivendi also gained ground, rising 0.33 or 1.07 pct to 31.18 after announcing last night first-quarter results well ahead of forecasts.
However, analysts warned the figures were not as good as they appeared given exceptional effects.
Separately, Vivendi denied a report in Les Echos that it made an informal offer of 11 bln eur for Vodafone's 44 pct stake in Vivendi's SFR mobile-phone unit
Outside the CAC-40, small-cap Carbone Lorraine rose 2.63 or 5.10 pct to 52.09.
CM-CIC Securities this morning issued a note to clients, naming Carbone Lorraine as a 'new growth stock' and reiterating its 'buy' recommendation with a raised target price of 62 eur.
In its view, Carbone Lorraine is reaping the rewards of its perseverance with its refocusing strategy and should see a 32 pct rise in operating profit in 2008, after a moderate increase in 2007.
Aeroports de Paris (ADP) jumped 5.00 or 6.23 pct to 85.30, taking its two-day gains to 11 pct, amid talk the new French government may move quickly to sell a further stake in the airport operator.
Challenges magazine reported yesterday that the government is considering an offering of ADP shares on the basis of a price of 95 eur per share, analysts at Natexis Bleichroeder said in a note to clients.
'This claim is rather early, as the new president (Nicolas Sarkozy) takes office today, the government has therefore not been named and parliament will change after the general elections on June 17,' the analysts said, keeping a 'hold' rating and 67 eur target.
Ipsos was another strong riser, adding 0.99 or 3.95 pct to 29.99, after reporting first sales of 204.7 mln eur, including organic growth of 10.3 pct.
Exane BNP Paribas reiterated an 'outperform' recommendation and 32.0 eur target in the light of the 'reassuring' figures, saying 'the valuation remains attractive in view of the potential for earnings upgrades and the stock's speculative appeal.'
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