Europe Higher, Asia Mixed

European stock markets gained on Wednesday as Wall Street's broad-based rally continued on announced merger plan between retail giants Kmart and Sears, better-than-expected October IP, capitalization utilization, and housing starts data. Sentiment was improved after a Labor Dept. report showed that US CPI rose more slowly in October than September easing concerns about inflation. In London, the Financial Times-Stock Exchange 100 gained 25.50 points, or 0.53%, to close at 4795.90. At home, mm02 closed 5.19% higher after the company said it will pay a final dividend in May 2005, as expected, targeting a medium term payout ratio of 50%. The mobile operator's EBITDA jumped 37% to 851 million pounds, ahead of expectations, with group turnover also rising more than forecast, up 23% to 3.285 billion pounds. Troubled retailer Sainsbury reported first half pretax profits of 131 million pounds, vs 366 million pounds, in line with downgraded expectations. The company said its business review will incur operating costs of 401 million pounds and property write-downs of 25 million pounds, but noted there is no change in its previously announced outlook. Unilever gained 0.10%, after Lehman cut its rating to underweight. Dixons Group said LFL sales rose 5% for the 28 weeks to Nov. 13, but is cautious about its sales growth outlook. Land Securities forecast an 8.2% rise in first-half pretax profits to 196.6 million pounds, vs 181.7 million pounds, but said as a result of its debt refinancing, it is likely to post a loss for the year.

Germany's DAX gained 66.19 points, or 1.61%, to close at 4183.41. Frankfurt extended gains, shrugging off concerns that the dollar's continued weakness against the euro, which will hinder exporters. Locally, Infineon gained 4.3%, after Hewlett-Packard reported sales of PCs and servers setting a record. Siemens extended earlier gains after the Austrian monopoly agency made positive comments regarding the VA Tech takeover, and Motorola said it sees 3G sales quadrupling next year. Deutsche Telecom is reported to be selling its remaining 7.3% stake in SES Global. It also benefits from Morgan Stanley which increased its benchmark weighting. Auto stocks lagged on the dollar's weakness, but DaimlerChrysler recovered later as the overall market tracked higher. KarstadtQuelle gained 2.6% after saying it has got the green light from creditor banks regarding an extension to existing loans. Metro provided details of how it will dispose of 137 Extra supermarket stores. Linde said it has lost a patent to supply nitric oxide to hospitals. Techem gained 2.6% after it said fiscal 2004 profit will rise.

In France, the CAC-40 gained 49.87 points, or 1.31%, to close at 3844.14, helped by advances on Wall Street. At home, tech plays Cap Gemini, Alcatel, and STM were amongst the strongest percentage gainers, as positive guidance from Motorola 3G sales for 2005 gave support to chipmakers. Carrefour and Casino continued to build as it appeared less likely that reform of the Galland law would be as dramatic as at first feared. On the results front, Vivendi's dipped 0.09% despite solid third-quarter numbers, and increased 2004 adjusted net profit guidance. Dexia disappointed, as in-line third-quarter net profit of 386 million euro was flattered by the absence of provisions versus expectations of 30 million euro in provisions. Credit Agricole posted third-quarter results after the close. After succumbing to sharp declines, Alstom rebounded 10.64%, ahead of interims tomorrow before the open. Figures from Sodexho and Technip are also due.

Asian markets finished mixed, with Japan's Nikkei ending fractionally lower while South Korea's KOSPI rose on the back of a strong rally in technology names. The Nikkei average fell 30.46 points, or 0.27%, to 11131.29, mirroring losses on Wall Street overnight. Exporters dropped on worries over a stronger yen, with Honda Motor sliding 2.44% while Toyota Motor shed 1.44%. Oil explorer INPEX, which debuted on the Tokyo Stock Exchange today, rose to 549,000 yen compared with its IPO price of 465,000 yen. Electronics maker Pioneer fell 0.72% after a local newspaper reported it would invest about 27 billion yen to build a new production line for plasma TVs.

Hong Kong's Hang Seng Index was up a touch, with properties, industrials and utilities posting gains. The benchmark gained 78.90 points, or 0.57%, to close at 13,824.98. S&P Asian Equity Research downgraded Lenovo Group to 2-STARS (SELL) from 4-STARS (Buy) with a 12-month target price of $2.50 Hong Kong.

Canada's benchmark TSX/S&P gained 35.60 points, or 0.40%, to close at 8,987.60.

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