FRANKFURT: A steep slide this year in the shares of the stock exchange operator Deutsche Bцrse, because of fears of lower trading volumes and tougher competition, looks out of step with the fundamentals of the company.

Nothing seemed to go wrong last year for the company as revenue grew strongly thanks to growth in trading volumes, and as profit increased from some adroit moves on property holdings and taxation.

The Deutsche Bцrse share price also almost doubled, helped on the way by a stock buyback.

With the rapid increase in its market capitalization, the exchange shares were admitted to the Dow Jones EuroStoxx 50 league of European blue chips, triggering a 27 percent rise in the shares between mid-October and the end of 2007.

By comparison, rivals like CME Group in the United States, the Spanish exchange operator BME and the London Stock Exchange saw share price gains of 34.5 percent, 48 percent and 51 percent, respectively, in 2007.

An index of world exchanges rose 70 percent, driven both by a rise in trading volumes and by sector consolidation. Deutsche Bцrses $2.8 billion bid for the International Securities Exchange, for instance, came with a nearly 50 percent premium.

Deutsche Bцrse, which runs the derivatives platform Eurex and the settlement and custody house Clearstream, bought ISE, the U.S. options exchange, in 2007, creating the first trans-Atlantic franchise in the rapidly growing derivatives trading segment.

“In 2007, everything was positive and still early in the first quarter this year only positive news was recognized in the market,” Martin Peter, an analyst at LBBW, said. But “the performance on the upside was overdone, now there is exaggeration also on the downside,” he added.

Thus far in 2008, Deutsche Bцrse shares have lost more than one-third of their value, underperforming other exchanges and the DJ EuroStoxx 50 index. The shares have fallen more than 15 percent in April, the latest drop driven by Morgan Stanley, which slashed its price target to \115, or $181, from \155, or $244.

“The price drop is absolutely not justified and has been triggered by negative sentiment due to feared trading volume declines,” said Felix Braune, an analyst at Crйdit Agricole Cheuvreux.

Morgan Stanley justified the reduction in the price target with a 7 percent cut in its 2008 earnings estimates, and a 9 percent cut in 2009, pinning those to “lower cash, derivative and settlement growth assumptions.”

Morgan Stanley and other analysts pointed out that stock exchange traded cash equity volumes account for less than one-fifth of Bцrse group revenue, with Clearstream making up some 40 percent and Eurex around 30 percent.

“The market has focused excessively on the volumes in early April which have been seasonally weak,” Credit Suisse said in a research note dated April 17. “The key for Deutsche Bцrse is its derivatives business,” Credit Suisse said. It reiterated its estimate of 21 percent derivatives volume and revenue growth in 2008 compared with revenue 2 or 3 percent higher at Xetra and Clearstream.

Deutsche Bцrse is to report its first-quarter results on May 6.

The rival electronic trading platform Chi-X on April 7 reported a 256 percent rise in first-quarter trading volumes, prompting speculation that it and other upstarts, notably the Project Turquoise due to begin later this year, will grab market share from established exchanges.

“Its highly questionable if these players can gain market share from Bцrse, so far they have not succeeded in doing so but rather taken on volumes” from the over-the-counter market,” said Braune at Cheuvreux.

Market consensus puts the Bцrse 2009 price-to-earnings ratio at 14.3 compared to an average 16.4 for global exchanges. The discount, now 210 basis points, has widened by 50 basis points in the past month as Bцrse shares have fallen.

The Credit Suisse analyst Rupak Ghose considers the shares “extremely attractive.” Morgan Stanley, whose bear scenario for Bцrse comes with a price target of \70 versus \160 in a bull scenario, reiterated its “overweight” rating on the stock.

(04-20) 04:46 PDT ROME, Italy (AP) —

The chief executive of Eni SpA said Sunday that the share of profits taken by governments of oil-rich countries is cutting international oil companies’ profits, in some cases below their capital costs.

“The average government take is now moving to overcome the critical barrier of 90 percent, which means that oil companies’ profitability is decreasing,” Paolo Scaroni, the CEO of Italy’s largest oil and gas company by revenue, said in a speech at the International Energy Forum.

Major Western oil companies have been forced to renegotiate contracts as hydrocarbon-rich countries aim for a bigger slice of profits on the back of surging crude prices.

International oil companies need to “profoundly rethink their business model in order to survive and prosper,” Scaroni said.

Government ministers from oil-rich nations and international oil company executives were meeting in Rome for a three-day energy conference that ends Tuesday. While the energy ministers of most OPEC states will be present, the group was not expected to announce any policy shifts during the International Energy Forum, which being is held as crude oil prices have reached a new high of $117 a barrel.

Italy’s outgoing Development Minister Pier Luigi Bersani told the conference in his opening remarks Sunday that the high price of oil will have an impact on inflation for all of 2008.

“The price of oil has had an impact on the inflation dynamic in many countries and it is reflected in part also on food stuffs in general,” Bersani said. “This dynamic will persist for all of 2008.”

On the sidelines of the conference, Eni signed a memorandum of understanding with Qatar Petroleum International to pursue key joint projects in Africa and the Mediterranean focusing on natural gas and crude oil. It also envisions cooperation in the petrochemical industry and power generation.

The government will “very vigorously” appeal against an immigration tribunal’s decision to allow the killer of the London headteacher Philip Lawrence to remain in the UK after he is released from prison, the justice secretary, Jack Straw, said today.

Mr Straw denied that ministers had misled Lawrence’s widow, Frances, who said this morning she had “always been given the impression” Learco Chindamo would be deported to Italy after he had been freed.

Mrs Lawrence said she understood the tribunal’s decision to allow Chindamo’s appeal against deportation, given the terms of human rights legislation, but she added that the move had left her “utterly devastated”.

“What I don’t understand, and what makes me so depressed, is how the Human Rights Act, which I’ve always been a staunch advocate of … [has] allowed someone who destroyed a life to pick and choose how he wants to live his,” she told BBC Radio 4’s Today programme.

Chindamo, 26, who came to Britain from Italy with his family at the age of five, is serving a life sentence for stabbing Lawrence to death outside the headteacher’s school in Maida Vale, north London, in 1995. His 12-year minimum prison term is due to end next year.

Lawrence, 48, was killed as he tried to defend a 13-year-old pupil whom Chindamo and several other boys were attacking outside St George’s Roman Catholic comprehensive.

Chindamo was part of a gang whose members were linked to other crimes, including the near-fatal stabbing of John Mills, husband of the then director of public prosecutions, Barbara Mills, in 1995, and the rape of an Austrian tourist on a canal footpath in 1997.

Judges at the immigration and appeals tribunal ruled yesterday that sending Chindamo, whose mother is Filipino and father Italian, back to Italy would breach his right to a family life.

The home secretary may order the deportation of prisoners to another EU country only if they pose “a fundamental threat to the interests of society”. Prisoners may be released on parole only if they are not seen as a significant risk.

The case is another controversy connected to the Human Rights Act, which was introduced into British law in 1998 to offer protection for the rights of the individual against the power of the state. Critics have argued the act has actually put the public more at risk.

Mrs Lawrence said today she was most upset by the “wider picture” implied by the fact that the judges appeared simply to be following the law in refusing Chindamo’s deportation.

“I totally understand that, and I think possibly, if I was one of three judges, I would have come to the same decision,” she said.

“I think it’s the fact that, again and again, this highlights that the voices of ordinary people don’t become part of the equation when these laws are considered.”

The decision had come as a complete shock, she said. “We have always been given the impression that he would be deported. That was part of the whole justice system for me.”

Mr Straw, who was shadow home secretary at the time of the crime and home secretary for four years from 1997, denied Mrs Lawrence had been misled and said he had offered to meet her later today.

“She was entirely right to say that was her expectation,” he told Today. “It was mine, too.”

The government would be “very vigorously appealing”, he said, adding: “This was not our expectation, that this man would be open to live in this country when he was released.

“We are absolutely on Mrs Lawrence’s side. We have to, however, await the process of the law.

“I want to talk to her about her feelings in this case. I want to assure her of the government’s full backing.”

Chindamo’s solicitor, Nigel Leskin, said yesterday it would be “disproportionate” to deport his client because he had no connections with Italy and did not even speak the language. He said Chindamo was a reformed character who was unlikely to offend again.

“He was involved in a gang when he was young. He was a kid trying to act up big. He was out of control and he thought he knew everything. He now realises how wrong he was.

“He has spent time in prison speaking to other people who have come in - younger people, quite often, who he sees have committed offences of violence, trying to tell them how stupid they are, they shouldn’t throw their lives away like he has thrown his away.”

Announcing the government’s decision to appeal last night, the Home Office minister Tony McNulty argued that Chindamo had forfeited his rights because of his crime.

“We think, given the nature of this crime, actually the individual has forfeited his right to remain in the UK and should be deported, as we asked for in the first place,” he said.

“I think the core principle must be absolute: that foreign nationals living in this country have rights but there are incumbent responsibilities that come along with them.”