Investors waited on the central banks's decision on rates Thursday
From Standard & Poor's European MarketScope
European indexes gained Thursday as investors awaited word from the ECB. It was widely expected to raise rates to 3.75%. Oil trades at US$61.76 a barrel following a surprise draw in US crude and gasoline stocks. Wall Street was expected to open cautiously higher.
UK: The FTSE 100 index climbed at mid-session, led by mining, energy and banking stocks. The Bank of England left interest rates steady at 5.25% as expected.
In earnings, Royal & Sun Alliance (+1.56%) was marked higher after posting a forecast-beating 5% rise in fiscal operating profit to £780 million. The UK's second-largest commercial insurer unveiled a new dividend policy intending to grow future dividends in line with inflation. Drax (-0.41%) reported a 144% rise in fiscal core profit. The company, which runs Europe's largest coal-fired power station, also says that it will invest £67 million to go green.
Slough Estates (-0.92%) reported a 14% rise in diluted adjusted NAV to 775p/share, ahead of analyst expectations. In M&A talk, Tate & Lyle (+2.74%) roses on talk of private equity interest. In other news, software firm Misys (-3.01%) unveiled its new strategy and sold its stake in Sesame. Spirent (+3.80%) said CEO Anders Gustafsson has left with immediate effect and chairman Edward Bramson will be executive chairman.
The CAC 40 index (+0.85%) traded higher at mid-session. Total (TOT)(+1.18%) and BNP Paribas (+1.58%) boosted the index, together adding 13 points. The former enjoyed rising oil prices; the latter gained on news that JP Morgan upgraded the company to overweight from neutral.
Among those reporting, Pernod Ricard (-4.92%) posted operating profit of €886 million, up 20% year-over-year, but below consensus expectations. Carrefour (-1.44%) posted in-line fiscal 2006 net sales of €77.901 billion, +6.6%. Suez (SZE) (+2.01%) reported 2006 net profit of €3.606 billion, higher than expected. PPR's (+1.95%) 2006 net earnings were a better-than-expected €685 million vs. €535 million in 2005. Veolia (VE) (+2.27%) posted operating profit of €2.222 billion, a touch above consensus of €2.205 billion. Club Med (+1.22%) posted first quarter 2007 sales of €355.3 million, +2.3%.
Elsewhere, Schneider (+2.7%) will launch a €1 billion capital increase at one new share, priced at €73 each, for 17 existing. Alstom (+1.44%) bought Power Systems MFG from Calpine Corporation for US$242 million. Morgan Stanley upgraded Schneider (+2.77%) to overweight from equal weight and lifted its target to €115 from €93. The same broker also initiated Arcelor Mittal (+2.27%) with overweight and US$58 target.
Germany: The Xetra-Dax index (+0.8%) traded higher on Thursday after a late rally in Japan. Deutsche Boerse's (+2.05%) CFO, Mathias Hlubek, has resigned. Board member Ganz is also leaving. This is considered an indication that the exchange is planning to implement a holding structure. On the earnings front, BMW (+1.48%) reported 2006 group pretax profit of €4.124 billion, in line with expectations. The luxury cars group said it will again ask for authorization to buy back up to 10% of its share capital.
SGL Carbon (+3.12%) tabled better-than-expected full-year EBIT of €170 million and hinted at raising its mid-term goals. Salzgitter's (+4.03%) 2006 pretax profit before one-offs of €947.9 million was comfortably ahead of expectations. The steel and pipes group, meanwhile, has taken a 78% stake in machine and installations group Kloeckner Werke (+26.53%).
Non-binding offers for Merck's (+1.34%) generics unit, worth at least €4 billion, are due early next week. Carlyle is potentially looking to bid. Traffic for Air Berlin (+2.43%) rose 12.3% year-over-year to 1.3 million passengers last month. Key on the broker front, Bayer (BAY) (+2.93%) and Kloeckner & the company (+6.39%) gained from upgrades to buy at UBS.
Elsewhere: The benchmark indexes in Zurich and Madrid remained firmly higher as well.