Alstom shares are the worst performers on the CAC 40 index , sliding over 7 percent at the open after the company's 350 million euro capital hike to help pay for a 25 percent investment in Russia's Transmashholding.
Bank of America Merrill Lynch analysts say that while the move looks surprising to investors, who may question the strength of the balance sheet and cash flow performance, it is a sensible one since Alstom is keen to reduce its debt in the current fiscal year.
"We don't see a major impact from the share issue as it is relatively small and the proceeds are being targeted in what we think is an attractive investment and it looks like responsible balance sheet management," the analysts say.
The firm's shares trade 6.5 percent lower at 26.42 euros at 0740 GMT, underperforming the CAC40 index, down 0.5 percent.
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Keywords: MARKETS EUROPE STOCKSNEWS