European Indexes Close Higher

The European Central Bank raised its interest rate by 25 basis points, as expected, and major indexes gained

European indexes climbed in afternoon trading, boosted by strong trading on Wall Street. U.S. shares rose on strong November sales reports from retailers, including Wal-Mart. And U.S. economic data signaled that inflation might be under control. Meanwhile, the continent's central bank raised interest rates by 25 basis points in a rare but widely expected move. Bank president Jean Claude Trichet indicated that the raise was just a one-off.

France: The CAC 40 index (+1.49%) rallied near year highs with a positive breadth of 36-4. In Paris, Total (TOT )(+2.50%) led advancers. Carmakers Renault (+3.39%) and Peugeot (+2.15%) shrugged off declines in car sales of 13.2% and 3.3% respectively in November; analysts said figures were not as bad as they feared. Technology stocks got a lift from an upbeat trading update by Fairchild Semiconductors; peer Cap Gemini (+2.56%) rose.

Also, Alcatel (ALA ) (+2.76%) and STMicroelectronics (STM ) (+3.54%) spoke to investors at a CSFB Technology conference in Phoenix. Mobile operators Vivendi Universal (V ) (+2.72%), France Telecom (FTE ) (+1.60%) and Bouygues (+0.89%) said they would appeal against a record €534 million fine for market collusion.

United Kingdom: The FTSE 100 index (+1.16%) ended higher. Heavyweights BP (BP )(+2.44%) and Vodafone (VOD )(+0.8%) rebounded after recent weakness, as rising oil prices and M&A momentum continued to underpin the market. HSBC (+1.13%) issued a solid trading update and said third quarter pretax profit was higher in all customer groups. Punch Taverns (+3.73%) announced the acquisition of rival Spirit for £2.679 billion. Prudential (PUK ) (-0.47%) made a £973 million offer for Egg (+13.9%) minorities, swapping 0.2237 Prudential share for each share. The bid values Egg at 118p per share.

An oncology report from Glaxo (GSK ) (+1.47%) was received positively. AWG (+2.4%) said first half turnover rose 6.6% to £889.6 million, operating profit was up 28.8% to £192.1 million, ahead of estimates. Old Mutual (+1.16%) said it was lowering the acceptance level required for its Skandia bid. United Utilities (-0.15%) reported in-line earnings, and will speed up disposal of telecoms unit. An MFI (+2.34%) update showed the poor state of the UK retail market. The company said operating profit will be at the low end of market estimates. Kingfisher (-0.89%) suffered a downgrade from JP Morgan but Corus (CGA )(+6.28%) rose on the back of a slew of upgrades.

Germany: The Xetra-Dax index also closed positively. In Frankfurt, financials fared especially well: Munich Re (+5.19%), Allianz (AZ ) (+1.91%), Deutsche Bank (DB ) (+1.58%). Munich Re also got a boost from market talk that it is considering placing its 4.7% in Allianz. ThyssenKrupp (+0.23%) posted pretax profit of €1.8 billion, a tad higher than market estimates of around €1.74 billion. Revenues came in at €42.1 billion, in line with estimates. The steelmaker said it is on track to meet its mid-term €50 billion revenue target and forecast fiscal 2006 pretax profit of around €1.5 billion, ex items. It plans a €0.80 dividend.

Meanwhile, MediGene jumped 5.89% thanks to the FDA application acceptance for polyphenon E ointment, which is used to treat genital warts. Porsche (+2.06%) sped along thanks to its strongest ever November sales. In addition, the automotive firm sold its roof business to Magna for €170 million to focus on core businesses.

Elsewhere: Nordic stocks posted strong gains. Newsflow focused on analyst presentations at several groups, with Nokia's (NOK )(+0.72%) CMD in New York taking centre stage. Analysts feared that the Finnish group may adjust or push-out margin targets for the devices and networks businesses.

The SMI (+1.75%) settled firmly above the 7,500 mark, supported by better-than-expected Swiss third quarter GDP. Among SMI stocks, Swiss Life (+4.28%) led the gainers as it confirmed its goal of posting a net profit of CHF1 billion by 2008 and a return on equity of over 10%.

Prepared by Zaida Espana, Valerie Vidal, Michael Sanderson, Mariella Mongio, Alexander Wisch, Holly Cook, Emma Stevenson, Pawan Girglani, Julien Manrique, and Rocio Opazo-Aniotz (Standard & Poor's); Alex Halperin (BusinessWeek Online)

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