European Indexes Climb in Afternoon Trade
European indexes built on the morning's gains. US markets opened higher on M&A news (Seagate/Maxtor) and hopes that there could be a Christmas rally. Crude remained comfortably above US$58.0 as EIA inventories showed a steeper-than-expected fall in distillates.
United Kingdom: The FTSE 100 index ended higher, with 7-3 positive breadth and key support from energy, mining, a recovery in banks and confirmation of a major deal benefiting BAE Systems (+6.40%). The pound fell slightly after minutes from the Bank of England showed committee member Nickell had voted for a cut in interest rates earlier this month. Royal Dutch Shell (RDS )(+1.20%) and BP (BP )(+0.81%) rose on crude prices.
Miners also sustained gains as gold prices were back on the rise after recent pause: Rio Tinto (+2.46%); BHP Billiton (+1.55%). The latter was also higher on news of an oil discovery in the Gulf of Mexico. BAE Systems topped the FTSE charts on confirmation Saudi Arabia will sign a Eurofighter contract.
Among fallers, Compass (-1.59%) was a sore point today as Citigroup was said to have placed nearly 30 million shares in the group at £2.16. Neither Compass nor Citigroup commented on the matter. A share price below £2.16 suggested the placement may have not gone very well. On the broker front, CSFB raised the target price of Hanson (+2.84%) to £5.20 from £4.90.
France: The CAC 40 (+1.04%) closed on a fresh year-high, mirroring other major European markets. Breadth was assuredly positive at 38-2. In PAris, Technip (+3.65%) was one of the best performers after its joint venture with Chiyoda landed a €3.3 billion contract in Qatar for two LNG trains.
Defense stocks were also higher against a background of consolidation talk. EADS (+2.14%) rallied on reports of a Saudi order for Eurofighter jets, which was confirmed by the UK embassy in Riyadh in the late afternoon. Earlier, DaimlerChrysler (DCX ) had said it does not exclude a sale of its 30% stake in the company.
Thales (+3.60%) stormed back from three days of losses after a DCN win of a €406 million order yesterday. Investors had heard the day before that EADS's CEO told the Senate a tie-up between EADS and Thales makes strategic sense. Infogrames (-2.86%) was the day's worst performer, hit by a profit warning from Electronic Arts (ERTS ). Peer Ubi Soft (-1.51%) narrowed earlier losses of 6%.
Germany: Xetra-Dax ended Wednesday's session comfortably higher. Key for Adidas, (-0.71%), Nike (NKE ) posted results after the bell Tuesday. The world's No. 1 sportswear group posted a 15% jump in quarterly profit amid solid US demand for high-end athletic footwear, but global orders and gross margins disappointed. Bayer (BAY )(+2.76%) was marked higher after the FDA approved its Nexavar kidney cancer drug. In another development, Europe's competition authority has fined Bayer €58.9 million for being part of a rubber chemicals cartel.
VW (-0.76%) is selling its IT business Gedas to T-Systems, a unit of Deutsche Telekom (DT )(+0.43%), for an undisclosed sum. Siemens (+0.15%) (SI ) has offloaded part of its SBS unit to Fujitsu Siemens Computers for an undisclosed sum. It expects a one-time positive effect in second quarter from the transaction.
Premiere (-41.75%) slumped on losing the right to broadcast German football matches on its channels, with the German Football League (DFL) having awarded pay-TV rights to Kabel Deutschland. The Bundesliga Internet rights go to Deutsche Telekom. EM.TV's (+11.47%) DSF unit was awarded TV rights after 2006.
Elsewhere: In Milan, Piazza Affari ended on a high note Wednesday as insurance, energy and utilities stocks helped the SPMIB over the 35,800 mark, and to new year-highs. Breadth was 30-10 positive. Autostrade (+1.14%) is ready to launch a €1 billion bond to repay all its debts for ANAS concessions, and fund new investments, wrote Finanza & Mercati. AEM Milano (+1.22%) reportedly aims for a deal to boost its stake in Swiss peer Atel by the end of February or will sell its existing stake in the utility.
The SMI (+0.41%) also ended Wednesday's session comfortably higher. Swisscom (SCM )(+0.92%) will be allowed to take stakes in foreign companies as long as the target is not a provider of basic telephone services in a particular country, the government's new four-year plan stipulates, which is a lifting of a previous total ban. Novartis (NVS )(-0.59%) stands by its offer to pay US$45/share (US$5.1 billion) for the remaining 56% Chiron (CHIR )that it does not already own. The disclosure follows news that ValueAct Capital has notified the US SEC of its intention to vote against the sale. ValueAct holds 5% of Chiron's shares.
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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