European Stocks Advance; Zodiac Aerospace, Genzyme Gain
European Stocks Advance
Hannelore Foerster/Bloomberg
A trader speaks on a cell phone as he works in front of the DAX index curve at the Frankfurt Stock Exchange.
A trader speaks on a cell phone as he works in front of the DAX index curve at the Frankfurt Stock Exchange. Photographer: Hannelore Foerster/Bloomberg
European stocks closed little changed after three weeks of declines for the Stoxx Europe 600 Index as a resurgence of takeover activity offset a retreat in auto-industry shares.
Zodiac Aerospace SA jumped 10 percent after La Tribune reported that Safran SA is preparing another bid for Europe’s biggest maker of airplane seats. Sanofi-Aventis SA advanced after offering to buy Genzyme Corp. for about $18.5 billion. Valeo SA slid 2.4 percent after a report that France’s second- largest auto-parts maker expects a slowdown in demand at the end of this year.
The Stoxx 600 slipped less than 0.1 percent to 251.16 at the 4:30 p.m. close in London, having swung between gains and losses at least 11 times. The measure has climbed 8.2 percent from this year’s low in May as central banks around the world maintained record low interest rates and purchased debt securities to stimulate the economy.
“We have the full support of central banks,” said Robert Halver, head of research at Baader Bank AG in Frankfurt. “It’s difficult to end quantitative easing policies as confidence is the most important part for the U.S. economic policy at the moment.”
European Confidence
European confidence in the economic outlook improved to the highest in more than two years in August after surging exports helped the economy expand at the fastest pace in four years in the second quarter. An index of executive and consumer sentiment in the 16 euro nations rose to 101.8 from a revised 101.1 in July, the European Commission said today. That’s the highest since March 2008 and exceeded economists’ forecast for a reading of 101.6, based on the median estimate in a Bloomberg survey.
Federal Reserve Chairman Ben S. Bernanke said on Aug. 27 the central bank “will do all that it can” to ensure a continuation of the economic recovery, and outlined steps it might take if growth decelerates. The Stoxx 600 closed 0.6 percent higher after the announcement, trimming its weekly decline to 0.4 percent.
“Sometimes, all markets need are some reassuring words and Bernanke’s seem to have done just that,” said Ben Potter, an analyst at IG Markets Ltd. in Melbourne. “Price action following the announcement has been very positive, which is encouraging for further gains.”
The Bank of England will leave interest rates on hold until the second quarter of 2011 as government spending cuts increase the risk of a double-dip recession, the British Chambers of Commerce said today.
U.K. Holiday
National benchmark indexes rose in 9 of the 17 western European markets that were open today. Germany’s DAX fell 0.7 percent and France’s CAC 40 retreated 0.6 percent. U.K. markets were closed for a holiday.
Zodiac Aerospace, which rejected an approach from jet- engine-maker Safran last month, rallied 10 percent to 47.89 euros, the most since 2003. Safran will make a final decision on whether to table an offer in coming days and is willing to pay a premium of about 35 percent, La Tribune said, citing unidentified people.
Safran said in a statement that it’s not in the process of preparing an offer for Zodiac, adding that it “remains convinced of the industrial and strategic logic of bringing together the activities of both groups.” Safran dropped 2.3 percent to 18.89 euros.
Sanofi climbed 0.7 percent to 45.56 euros after saying it offered to buy Genzyme for about $18.5 billion in cash, taking its bid public after the world’s largest maker of medicines for genetic diseases refused to negotiate. Genzyme rejected Sanofi’s $69 a share bid as too low.
Meda, Orkla
Meda AB increased 4.8 percent to 58.65 kronor as Sweden’s second-largest health-care company said it will pay $350 million in cash for Alaven Pharmaceutical LLC to broaden its reach in the U.S.
Orkla ASA advanced 4.4 percent to 51.15 kroner after Reuters reported that South Korean steelmaker Posco is considering buying Norway’s Elkem ASA, a maker of silicon for solar panels owned by Orkla. The report cited Posco Chief Executive Officer Chung Joon Yang.
A total of $219 billion of takeover deals have been announced so far this month, making it the busiest period since September 2008, according to data compiled by Bloomberg.
Auto Stocks
Valeo slid 2.4 percent to 26.88 euros, leading a gauge of auto stocks to the biggest drop among 19 industry groups in the Stoxx 600. The company expects a sharp slowdown in demand at the end of this year as car-scrapping incentives are halted, La Lettre de L’Expansion reported, without citing anyone.
Michelin & Cie., the world’s second-largest tiremaker, dropped 2 percent to 58.82 euros. Bayerische Motoren Werke AG , the biggest luxury-car maker, slid 1.3 percent to 41.21 euros.
Infineon Technologies AG, Europe’s second-largest maker of semiconductors, fell 3.7 percent to 4.44 euros after Intel Corp. agreed to buy its wireless unit for about $1.4 billion. Infineon was seeking about $1.9 billion for the division, two people familiar with the talks said earlier this month.
Kemira Oyj surged 4.4 percent to 9.56 euros, the biggest advance since May. The Finnish maker of water-treatment chemicals was raised to “accumulate” from “reduce” at Danske Markets Equities.
To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.
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