European Indexes Gain
From Standard & Poor's European MarketScope
European indexes closed strongly higher after the U.S. Fed Wednesday talked about 'future policy adjustments' rather than 'firming', as it kept rates unchanged at 5.25%. Meanwhile Wall Street was mixed. WTI traded up at about US$61.35.
UK: The FTSE 100 index closed strongly in positive territory. Stronger-than-expected UK retail sales increased expectations of rate hikes. The EU okayed the 'Open Skies' agreement, which will come into force from March 31 2008 - British Airways (BAB) (+1.06%) closed off intra-day highs.
Banks were strong as consolidation talk gained momentum. Dutch bank ING (ING) said it was looking at several strategic options and would participate in consolidation. This came as Barclays (BCS) (+3.58%) and ABN (ABN) are trying to hammer out a merger.
In earnings: Next (+6.73%) unveiled a forecast-beating 6.5% rise in fiscal pretax profit. However, the retailer said mainline like-for-like sales at its 320 stores unaffected by new openings fell 0.3% in the first 7 weeks of the new financial year. Insurer Standard Life (-0.98%) booked an ahead-of-estimates 55% rise in fiscal EEV operating profit before tax, saying it saw more cost savings by 2009.
In other news, three of Altadis's largest shareholders instructed the board to accept a revised offer from Imperial Tobacco (ITY) (-1.51%) if a rival bidder does not emerge soon, The Times reported.
France: The CAC 40 index (+1.75%) closed the session firmly higher while Wall Street traded mixed. At home, AXA (AXA) (+4.15%) and Total (TOT) (+2.25%) boosted the index, adding almost 27 index points. AXA gained on news that ING is seeking a partner in the Benelux: Dexia (+4.29%) was mentioned.
Eiffage (+14.35%) surged on yesterday's rumor that Sacyr is preparing to sell its Repsol (REP) shares to fund a bid. Arcelor Mittal (+0.33%) fell having been ordered by the Brazilian securities regulator to pay US$5.05 billion for a minority stake in its Brazilian unit, 49% more than it initially offered, Bloomberg said. Areva (+3.16%) learned that Suzlon has topped its bid for German's Repower. EADS (+1.88%) gained on news that the European Commission is expected to file a case against rival Boeing (BA) at the WTO for its receipt of massive US subsidy, the FT said.
Air France-KLM (AKH) (+2.17%) said it will be in position to expand its network. Valeo (+3.94%) is being examined as a possible takeover target by U.S. investment fund Apollo, reported Les Echos. Hermes (-0.28%) posted fiscal 2006 net income of €268 million, +8.5%, vs. the consensus of €276.5 million. Goldman Sachs downgraded Alcatel Lucent (ALU) (-1.36%) to neutral. Lehman initiated GDF (+1.09%) with an equal weight rating and €34.7 target.
Germany: The Dax index closed over 2% higher and ahead of other European bourses, as every stock ended the session in the black. In German corporate news, E.On (EON) (+1.69%) said it could waive the 50.01% minimum tender condition on its bid for Endesa, after getting approval from the SEC. Deutsche Post (+0.91%) came off highs after S&P put ratings on CreditWatch negative.
Chrysler's (DCX) Chief Executive Tom LaSorda said the issue of whether or not the DCX (+2.4%) unit would sell or not would be resolved quickly, according to the WSJ. Cerberus Capital Management and an equity group led by Blackstone Group and Centerbridge Partners had reportedly signed confidentiality agreements to begin studying Chrysler. Lufthansa (+1.53%) and a US fund have asked for information regarding Iberia, with a view to potentially entering its shareholding structure, reported El Pais.
Hochtief (+3.87%) rose significantly following results. Wacker Chemie (+0.11%) proposed a dividend for 2006 of €2 per share after announcing its final results. Patrizia Immobilien (-5.23%) was a sore spot after JP Morgan downgraded the company to underweight from overweight. Suzlon Energy planned to raise its bid for RePower (-0.09%) to top an offer from Areva, Diario Economico reported.
Elsewhere: Both major Italian indexes closed with considerable gains, as did the benchmark index in Madrid.