Major European equity indexes moved higher near the midpoint of Monday's session. Traders were encouraged by positive newsflow from Europe, and looked ahead to an expected higher start on Wall Street.
Shares in Germany gathered speed at midsession, with the Xetra Dax index moving higher. Schering (SHR) (+2.74%) reported nine months net sales of €3.902 billion, up 8% on an organic basis. The pharma group raised its profitability goal and now expects operating margin for fiscal 2005 to be above 17%. RWE (+1.79%) also excited the Dax as the Berliner Zeitung reports the utility group plans to spin off its water divisions Thames Water in the UK and American Water in the U.S., looking to sell part of these businesses.
The auto sector also provided some positive headlines. Porsche (+1.44%) speeds ahead as it will reach its goal of selling more than 100,000 cars annually before 2008, its original forecast, according to AutomobilWoche. Meanwhile, BMW (+0.71%) reports nine-month Chinese sales up a whopping 36.4% and DaimlerChrysler DCX (+1.96%) jumped thanks to an upgrade from Merrill Lynch.
In the broader market, Hugo Boss (+5.74%) was back in fashion as it raised its fiscal 2005 guidance on the back of strong nine-months earnings progress. Deutsche Post (+1.79%) was higher after confirming fiscal 2005 EBIT guidance of at least €3.6 billion this year. HSBC upgraded Norddeutsche Affinerie (+2.39%) and Morgan Stanley raises MAN's (+1.40%) target.
In the UK, shares in the benchmark FTSE 100 index rallied at midsession, bouncing back from last week's drop, spurred by positive U.S. futures and softer oil prices. Oil stocks are higher, despite easing crude prices, after hurricane Wilma avoided key gas & oil installations in the Gulf of Mexico. Index heavyweight BP (BP) (+1.07%) kicks off the results season Tuesday with its third quarter report. Catering giant Compass (+3.43%) soared on press reports suggesting U.S. private equity group Clayton, Dubilier & Rice is considering a takeover bid. Morrison (-0.60%) underperformed, following a target price downgrade from CSFB.
On the telecoms front, Vodafone (VOD) (+1.23) and O2 (+1.62%) stay firm despite reports that rival 3 will seek to undercut them by offering 3G handsets for as little as £9. Also in the news is Marconi (+2.1%) on expectations two big names, Ericsson (ERICY) and Alcatel (ALA), are preparing rival bids for the group. The winner is largely expected to be announced tomorrow. Virgin Mobile (+0.17%) is to launch its brand in France with the Carphone Warehouse (+2.31%). Exel (+0.08%) reported a strong performance in 3the third quarter and says it remains confident of delivering another year of growth in the business.
The CAC 40 index (+0.76%) in France built on earlier strength at midday, with 35-4 positive breadth. In Paris, sentiment is upbeat after October French business confidence came in at 102 vs 100 in September. The energy sector also provides support. Index heavyweight Total (TOT) (+1.59%) is up after the company's head of refining told Investir he sees refining margins remaining wide for several years as refineries add equipment to handle heavier grades of crude oil. Technip (+2.78%) benefited from news it is bidding for a US$1 billion contract to build a natural gas treatment plant in Iran.
Goldman Sachs brings good news to the steel sector, expecting contract negotiations will lead to rising prices for steel producers. Arcelor (+3.28%) is stronger, with investors relieved the group did not overpay for Ukraine's Kryvorizhstal. Rival Mittal (MT) won the bid, but paying a toppy US$4.8 billion. Note Goldman upgraded Arcelor stock to outperform from neutral. JP Morgan's price upgrade boosted Business Objects (BOBJ) (+3.37%). Investors are also looking at earnings from Michelin (+0.81%), L'Oreal (+0.56%) and April Group (-1.17%), due out after the market close. Prepared by European MarketScope reporters Zaida Espana (France), Michael Sanderson (Germany), Mariella Mongio (Italy), Alexander Wisch (Netherlands), Holly Cook (Nordic), Emma Stevenson (Spain), Pawan Girglani (Switzerland), and Rocio Opazo-Aniotz (UK)