European Indexes Close in the Black

M&A were in focus in the UK and France as the continent built on Thursday's gains

From Standard & Poor's European MarketScope

Car data moved automotive stocks in Germany Friday as the European indexes traded higher at the close. The gains came as U.S. non-farm payrolls added 215,000 jobs, slightly higher than expected, but the news didn't inspire Wall Street.

Germany: The Xetra-Dax index ended Friday's session with solid gains. VW's (+1.86%) sales were up 4.8%, helped by its diesel line as well as the new Jetta and Passat. Sales of BMWs (+0.85%) rose 11%. Mercedes's sales fell 2.9%. DaimlerChrysler (unch.) reportedly will cut production of its premium Mercedes C-Class model at its Sindelfingen plant in Germany because of weak demand. Porsche (-0.19%) posted its best ever result in North America in November, up 9.7% to 2,794 units.

In other news, equities turnover on German stock exchanges rose 35% year-over-year in November to €114.1 billion. Deutsche Boerse's (+3.22%) Eurex derivatives exchange saw a volume increase of 23% to €114 million contracts. Munich Re (+2.84%) outperformed today after CSFB said the market appears to be becoming used to the possibility of price increases at the next renewal season. On the broker front, Lehman Brothers upgraded Commerzbank (+0.4%) to overweight from equal weight, and initiated coverage of Depfa Bank (+1.65%) and Hypo Real Estate (+0.27%) with equal weight ratings.

United Kingdom: The FTSE 100 index(+0.77%) ended trade well above the 5,500 level, building on Thursday's gains as M&A momentum continued. John Laing (+16.38%) said it has received an approach about a possible bid. News that Singapore's Temasek has bought a 3.24% stake in P&O (+11.51%) triggered speculation of a counterbid to Dubai. Whitbread (+0.42%) expressed interest in buying the Select Service Partner unit that Compass (+2.47%) is selling, according to the FT. SSP will fetch more than £1 billion, the paper said.

Primary index support came from mining stocks such as Rio Tinto (+4.29%), BHP Billiton (+2.73%), Xstrata (+2.81%) and Anglo American (+1.91%), which benefitted from a continuing surge in gold and other commodities, with gold above US$500 per ounce. Rise in oil lifted BP (BP )(+0.92%) and Royal Dutch Shell (RDS )(+0.78%). Vodafone (VOD )(-2.39%) was the largest loser as CSFB cut its rating to neutral from outperform. Wolverhampton & Dudley (-1.82%) said EPS rose 11.3%, but added that current like-for-likes are only marginally positive in weaker trading conditions. Serco (+3.31%) said it is on track to meet expectations. Fibernet (-2.03%) said bid talks have ended. Old Mutual (+2.94%) got the OK from Swedish authority for its Skandia bid.

France: The CAC 40 index (+0.56%) rallied in afternoon trading to close at a year high on a positive breadth of 28-10. Oil prices remain strong on forecasts of a cold spell in the U.S. Northeast boosting Total (TOT ) (+0.60%). Sanofi-Aventis (SNY )(+1.44%) led the French main index higher after the FDA granted priority review to its drug Taxotere. Insurers extended the previous day's gains. The ECB President's comments that Thursday's 25 basis points rate hike was a one-off supported Axa (AXA )(+1.37%), AGF (+1.87%) and Scor (+6.32%). Danone (DA )(+0.34%) got a boost from a Deutsche Bank upgrade to buy from reduce, with a €100 target.

GFI Informatique (+5.48%) climbed ahead of third-quarter results to be released on Monday. The stock has underperformed since a profit warning on margins on Nov. 8. Among the day's laggards, Satellite operator Eutelsat (-0.50%) made a disappointing debut. Shares spent the session lower than the €12 IPO price, set at the bottom of the indicative range. The company originally planned to float in October but cancelled the offering due to unfavorable market conditions. BNP Paribas (-0.44%) remained lackluster after past week's strong rally.

Elsewhere: Nordic markets maintained gains throughout the session. Oil prices provided a boost for Norsk Hydro (+3.18%) and Statoil (+0.99). Nokia (NOK )(+0.48%) was upbeat on business ahead, expecting industry volumes in 2006 to rise more than 10% from the 780 million units it estimated for 2005.

Piazza Affari ended Friday's session comfortably higher. In Milan, Fiat (FIA )(+3.35%) remained at the top of the SP/MIB after Italy's Transport Ministry confirmed that the car maker's market share rose above 30% in November, up 3.06% year-over-year, thanks to the launch of new models. Generali (+2.69%) benefitted from the European Central Bank's interest rate hike yesterday to 2.25%, domestic sources said, adding that the insurer is also recovering after having underperformed the life sector in Europe year to date.

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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