European Indexes Rally
London: The FTSE 100 (+1.38%) closed well into positive territory Thursday with mining and oil sectors leading the gainers. Wall Street was trading in positive territory with stronger-than-expected May headline PPI. The pound slipped to US$1.9692 despite stronger UK retail sales data. Oil jumped to US$67.20/bbl on lower than expected natgas injections. Bargain hunters helped gold shine, while copper gained on strike concerns.
In company updates, Home Retail (+0.33%) reported a rise in first quarter like-for-like sales across Argos and Homebase. However, the household goods retailer said it remains cautious given the uncertain consumer outlook. Tour operator First Choice (+3.90%) said its first half pre-tax loss widened to £82.5 million due to acquisitions. Recruitment firm Hays (+6.75%) said trading is in line and expects UK headline net fees to rise 13% in second half.
In broker action, Bradford & Bingley (+5.82%) gained on a Credit Suisse upgrade to neutral, while Centrica (+4.46%) powered up as Citi raised its recommendation on the stock to buy. In other news, Glaxo (+0.38%) faces mounting pressure to sell its consumer healthcare unit, which could raise over £10 billion, The Times reported. Ladbrokes (+4.15%) was in demand on continued private equity rumours and saw almost 25 million shares traded.
Paris: The CAC 40 (+1.90%) closed Thursday's session firmly higher, breaking through above the 6,000 points line while Wall Street trades in the black amid in-line PPI numbers.
At home, Sanofi (-6.33%) tumbled on news that US regulators are set to reject proposed weight-loss pill Zimulti (Acomplia) because of concerns that the treatment may increase suicidal thinking and depression, in line with a US advisory panel's unanimous conclusion. This led to a flurry of broker downgrades and price target cuts.
Conversely, Air Liquide (+4.46%) soared. Citigroup lifted its target, confident that Air Liquide will achieve double digit adjusted EPS growth in 2007. Danone (+3.52%) also jumped; an upbeat article in La Tribune reported that the market was over-reacting to Danone's problem in China with Wahaha. Total (+3.63%) added 26 index points on higher oil prices.
Financials also gave strong support. According to a Challenges magazine article, Morgan Stanley's France chief Patrick Ponsolle, called BNP CEO Baudouin Prot on 8 June to deny that his investment bank had been hired to study a merger between BNP Paribas (+2.44%) and SocGen (+2.06%).
Alstom (+3.48%) has landed a €175 million contract in India. US Airways reportedly said it may reach a decision this month on whether to proceed with an order for 20 of EADS' (+2.94%) Airbus wide-body planes or switch to Boeing aircraft.
Frankfurt: Xetra-Dax (+2.19%) closed firmly higher on Thursday with Wall Street adding to yesterday's gains amid in-line core PPI data and Goldman Sachs' stellar figures. Of interest to the likes of Deutsche Post (+3.51%), the European parliament's three biggest parties are understood to have agreed to completely open the member states' postal services by end-2010.
In other news: Fraport's (+5.13%) passenger numbers rose 0.6% year-over-year in May. Cargo volumes increased by 0.3%. Lufthansa (+1.6%) is in talks with SAS about buying the Scandinavian airlines's 20% stake in UK carrier BMI, wrote Handelsblatt. First Choice's first half loss widened to £82.5 million due to acquisitions. The UK group, which TUI (+1.6%) has received EU approval to buy, said the last six weeks of trading were in line with expectations.
VW's (+0.62%) Audi unit plans to sell some 3,000 vehicles in India in the next three years, the Economic Times wrote. Conergy (-2.75%) may miss its expansion goal into windmill manufacturing because a scarcity of components is strangling production, Bloomberg reported the CFO as saying. Wacker Chemie's (+3.37%) investment plans provided lift to investor sentiment surrounding its stock. The group has earmarked €400 million to expand annual polysilicon production capacity.
Key on the broker front, WestLB upgraded MAN (+2.57%) to buy, UBS added Bayer (+2.03%) to its European top 20 list, while Oppenheim raised its estimates on Kontron (+2.15%).