The chemicals sector was sent into a spin yesterday as a profit warning from BASF was accompanied by speculation about a bid battle for Rhodia, the French-based speciality chemicals group.
BASF, Europe's leading chemicals company, said the worsening global outlook since last month's attacks in the US would lead to it missing profit targets for next year. It had aimed to raise operating income by 10 per cent a year on average for the period 2000 to 2002. While it achieved more than 15 per cent in 2000, the first half of this year has shown a fall of 5.1 per cent and BASF said the decline was continuing.
BASF shares were down 0.4 per cent to €37.83 by the close.
Meanwhile, Rhodia soared almost 19 per cent before being suspended amid signs of a bidding war for the company. Leading suspects were DSM of the Netherlands and BASF itself, although BASF rebuffed the suggestion, breaking its silence of recent weeks. BASF said it was being misused to support Rhodia's share price.
The French stock market watchdog Commission des Operations de Bourse has asked DSM, BASF, Rhodia and Rhodia's parent Aventis to disclose their intentions as to a possible deal.
Yesterday DSM's shares fell 3.4 per cent to €32.75 and Aventis inched up 0.3 per cent to €84. Rhodia closed at €11.31, having almost doubled from its €6.29 of two weeks ago.
Elsewhere in the sector the Swiss group Clariant, Rhodia's main rival in the specialty field, jumped 6 per cent to SFr26.55.
Technology and telecommunications were stronger as the Nasdaq inched upwards. Software group SAP was up 4.2 per cent to €115.99 and chipmaker STMicroelectronics was up 4.7 per cent to €31.10.
French telecom stocks benefited from hopes that the terms for 3G mobile licences may be sweetened, although traders said volumes were thin. France Telecom rose 3.6 per cent to €38.40 and Bouygues rose 2.7 per cent to €34.81.
