Paris shares close sharply lower on rising oil prices, insurers' results UPDATE

(updates with full report) PARIS (Thomson Financial) - Share prices closed sharply lower, with transport and financial stocks leading the retreat as oil prices surged to new highs and as financial results from key insurance companies proved disappointing.

The CAC-40 index closed down 95.02 points or 1.88 percent at 4,960.56.

There were 37 decliners and three gainers among the stocks in the index.

On the Matif, May CAC-40 futures were trading at 4,939.00.

The euro was quoted at $1.5447, against $1.5398 late on Thursday.

The biggest decliner among blue chips was Sanofi-Aventis, which faced a threat to its blockbuster blood-thinning drug Plavix in Germany when Swiss company Schweizerhall Holdings AG said it was poised to get approval to sell a generic version there.

Schweizerhall said it has already signed a licence agreement and that German sales of its version could start in the current quarter.

Sanofi-Aventis said it would vigorously defend its patent rights and others it has for the drug, but Landsbanki Kepler cut its target price for Sanofi to 46 euros on the back of the news, saying generic competition will weigh on the share and sales forecasts could be cut substantially.

Investors were spooked enough to send the stock down 2.95 euros or 5.85 percent to close at 47.50.

Air France-KLM, whose business is sensitive to oil prices, also suffered as crude oil surged to more than $125 per barrel, a new record, in a continued reaction to the current oil supply tightness and a Goldman Sachs analyst's prediction that oil could reach $150-200 per barrel within two years.

The airline company's stock slipped 0.63 euros or 3.10 percent to close at 19.67.

Credit fears continued to weigh on financial shares ahead of next week's first quarter earnings reports from the main French banks, exacerbated by disappointing results from insurers Allianz and American International Group Inc.

BNP Paribas shed 1.45 euros or 2.10 percent to close at 67.44, while Societe Generale slipped 1.51 euros or 2.04 percent to end at 72.60.

Insurance group Axa closed down 0.45 euros or 1.87 percent at 23.57, and Credit Agricole dropped 0.39 euros or 1.81 percent to 21.12.

Outside of the blue chips, insurer Scor closed down 0.76 euros or 4.63 percent at 15.67, and Euler Hermes ended down 1.95 euros or 3.02 percent at 62.60. Media group Publicis closed down 2.44 percent at 25.51, erasing yesterday's gain as ABN Amro downgraded it to 'hold' from 'buy'.

In a note Friday, the broker said the European media sector is in a "twilight zone", as the macro environment suggest a serious slowdown is imminent.

It slashed its target price for Publicis to 24.7 euros from 34.0 euros, and cut its earnings forecasts for 2009 and for the group by 9 percent and 15 percent respectively.

Among the few gainers on the CAC-40, Alstom closed up 1.56 euros or 1.04 percent at 152.15. It raised its operating margin guidance Wednesday as it reported that full year net profit was well above expectations.

Veolia Environnement rose 0.31 euros or 0.71 percent to 44.27, and EDF gained 0.20 euros or 0.30 percent to close at 66.90. EDF is expected to bid between 9.2 billion and 10.2 billion pounds for British Energy Group, according to the Daily Telegraph. EDF spokespeople were not able to provide immediate comment on the report.

Luxury goods company Hermes International rose 5.95 percent to close at 99.82 euros, building on yesterday's gains after reporting strong first quarter sales on Wednesday [e-mail] mjs/jlc/mjs/ejp COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved.

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