European Indexes Gain

M&A fired up the markets Wednesday morning

From Standard & Poor's European MarketScope

European indexes registered slight gains Wednesday morning. US futures pointed to a flat open on Wall Street. A mood of caution prevailed ahead of the US ISM manufacturing survey for October. Oil stayed under US$59/barrel as OPEC's output curb took effect, but with remaining questions about compliance. EIA inventories were due today.

UK: The FTSE 100 index inched higher at mid-session, supported by rising mining and banking stocks. Growth in British manufacturing activity fell last month, but companies raised their charges, the sharpest in three months.

In company news, Tate & Lyle (-1.33%) reported a 27% rise in first half underlying pretax profit and said it expects further year-over-year progress in the second half. Cairn Energy (+1.65%) expects proceeds of US$1.8 billion from the flotation of Cairn India.

Engine-maker Rolls-Royce's (-0.53%) current trading was consistent with existing guidance. Hanson (+2.41%) rose on speculation that Mexican firm Cemex has pulled out of its bid for Rinker and may bid for the building materials firm. Reports said Corus (CGA) (+0.05%) and Tata Steel are interested in acquiring CSN of Brazil, which was denied by the Indian steelmaker. Royal Dutch Shell (RDS) (-0.53%), Glaxo (GSK) (-0.93%) and Smiths (-1.48%) traded ex-dividend.

France: The CAC 40 index (+0.17%) pared earlier losses to trade slightly higher at mid-session. Michelin (-0.63%) fell after disappointing results from peers Continental and Bridgestone. Conversely, Lagardere (+1.95%) took off and led the gainers. EADS (-0.19%) named current Eurocopter's head Bregier Airbus's COO. Elsewhere, investors shrugged off S&P cutting PSA's (+0.89%) rating to BBB+ from A-, outlook stable.

In M&A news, Thomson (+0.69%) and TCL agreed to allow the French company to sell its 29..3% stake in TCL Multimedia Technology. Areva (+1.19%) acquired a stake in Northern Uranium. Danone (DA) (+0.09%) could buy a minority stake worth US$34 million in India's Avesthagen, or Avestha Gengraine Technologies, the Economic Times said.

LVMH (unch.) is to raise Japan retail prices of Louis Vuitton products by about 2.5% because of the &euro's rise against the yen. The NYSE (NYX) will ensure its bid for Euronext (+0.13%) is more valuable than other offers, the group's CEO reportedly said, suggesting that it is ready to raise its bid before the shareholder vote in mid-December.

Germany: The Xetra-Dax index (+0.09%) remained a touch above breakeven at mid-session Wednesday as Deutsche Bank's (-0.14%) earnings update took center stage. Third quarter net income of €1.24 billion was firmly ahead of expectations. But the result included a €125 million insurance payout and €92 million from a stake sale. What's more, quarterly net trading revenues at €1.54 billion were lower than expected.

In other earnings news, Continental (-1.16%) reported lower-than-expected third quarter adjusted EBIT of 410.3 million against €414.2 million for the same period a year ago. Away from results, Sistema is looking to acquire 10-20% of Deutsche Telekom (DT) (+0.07%), according to FTD. The Russian conglomerate was said to be targeting an asset swap. In exchange, DT would receive a share in Russia's largest mobile operator, MTS. Sistema, however, declined to confirm that talks are under way.

In other news, Leoni (+2.92%) said it has orders from several car producers worth around €400 million in sales. Medigene's (+5.28%) drug to treat genital warts has been given marketing authorization from the US FDA. Polyphenon E Ointment's US market launch is expected in the second half of 2007.

US antitrust authorities have approved Merck's (+0.88%) takeover of Swiss biotech group Serono (SRA). Key on the broker front, Kloeckner (+4.49%) benefited from a target hike at Deutsche. Credit Suisse lifted its price objective on RWE (-0.46%) as it expects results on Nov. 9 to serve as a positive catalyst.

Elsewhere: The SMI index (+0.41%) and Nordic markets remained in positive territory ahead of the US opening bell.

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