European Indexes Rally

A rundown of Monday's action on major European stock exchanges


The FTSE 100 closed firmly higher as Wall Street traded in positive territory. At home, the gains were powered by strength in resource shares. Hopes that US president-elect Barack Obama's stimulus package, the biggest in 50 years, would limit the global slowdown saw a return of risk appetite. GBP = US$1.483. The weak US$ also fired up WTI: at US$43.56/bbl. Further supporting crude was news OPEC would likely decide a 'severe' cut to output and Saudi Arabia would trim January oil supplies more than expected for Asian refiners. BP (+6.01%), SHELL (+7.99%), BHP BILLITON (+16.25%), RIO TINTO (+14.68%), KAZAKHMYS (+6.63%), ANTOFAGASTA (+15.06%) gained.

BRITISH AIRWAYS (+11.53%) is trying to woo Caja Madrid, a key Iberia shareholder, in an effort to convince the Spanish airline to join a 3-way merger with Qantas, The Sunday Times wrote. VODAFONE (+7.11%) is to announce an alliance with Western Union to allow cross-border money transfers via mobile phones, the WSJ reported. REED ELSEVIER (+0.87%) is said to be close to selling RBI to US buyout group Bain Capital for GBP680m. WHITBREAD (+7.87%) said LFL sales for 39 weeks to 27 November rose 6.7%, adding it will cut capex next year to c.GBP200m vs c.GBP300m in 2008/09. FIRST GROUP (+4.64%) named Dean Finch COO of UK Bus and North America businesses. FILTRONIC (+11.69%) said 1H sales were slightly lower y/y and expects weaker trading in 2H.


The CAC 40 (+8.62%) finished the first trading day of the week sharply higher as Wall Street was also clocking up gains after President-elect Obama pledged the largest infrastructure-spending package since the 1950s to stimulate economic growth. ARCELORMITTAL (+17.79%) rallied on the news. Meanwhile, lawmakers were working to reach an agreement on automaker aid. Staying in the sector, the economic crisis will lead to the consolidation of the auto industry, Fiat CEO Sergio Marchionne told Il Sole 24 Ore in an interview. Marchionne added that only six mass producers are likely to survive: RENAULT (+9.13%) and PSA (+1.98%). Oil rallied to US$43.56/bbl as OPEC said it would likely decide a 'severe' cut to output at its meeting on 17 December - TOTAL (+11.29%) added 42 index points.

Elsewhere, AIR FRANCE-KLM (+5.54%) announced November traffic fell 0.8% y/y, though this incorporated the period 14-17 November, when there was a strike. The airline estimated traffic rose 1.8% excluding the strike impact. In the wider market, RHODIA (-1.96%) revised down its 2008 outlook, now seeing recurring EBITDA some 10% lower than that achieved in 2007, impacting its EPS objective. PUBLICIS (+4.69%) CEO Maurice Levy said he expects 'a market showing zero growth at best' in 2009, La Tribune reported. Among broker changes, ING cut its target on PERNOD RICARD (+3.13%), but kept its buy recommendation.


Xetra-Dax (+7.63%) closed the Monday session with significant gains. Meanwhile, Wall Street was rallying further as President-elect Obama's plans to bolster the US economy boost sentiment and European leaders are meeting in London to discuss the EU's EUR 200bn economic stimulus plan. Key for the likes of METRO (+7.55%), ARCANDOR (+10.60%) and DOUGLAS (+4.38%), according to a survey conducted by trade group HDE, Germany's retail sector is satisfied with the second week of Christmas sales and expects seasonal sales to rise in the next two weeks.

In M&A news, merger talks between DEUTSCHE BOERSE (+10.98%) and NYSE Euronext ended without success, the German stock exchange said on Sunday after a report in Der Spiegel claimed they were under way. Funding talk weighed on POSTBANK (-3.13%), although the savings bank said it does not need state aid to cope with the financial crisis. SCHMACK BIOGAS (-4.22%) took a knock on news of a capital increase. PREMIERE (-2.47%) was lower on reports that News Corp may ask to be exempted from making a compulsory offer for the group.

Finally, AIR BERLIN's (+6.32%) November passenger count was down 5.5%, while the load factor rose 0.6 percentage points to 72.6%. Fare yields were 20.2% higher y/y last month.


Nordic bourses closed firmly higher, with Norway's benchmark index closing up over 10% as crude rallied. Elsewhere, President-elect Obama announced on Sunday the biggest public works programme in about 50 years. SKANSKA (+16.88%) and NCC (+5.72%) gained on the news.

In the auto sector, the Swedish government will support Volvo PV and Saab Automotive by granting them loans until GM and Ford find buyers for the two Swedish car makers, Dagens Industri reported. At the same time, Swedish authorities are in discussions with VOLVO (+9.14%), Volvo PV, Saab Automotive and SCANIA (+12.5%) regarding R&D solutions. In the steel sector, SSAB (+10.16%) will launch a cost savings program that is estimated to reduce operating costs By at least SEK1bn and will cut 1,300 jobs.

In the pharma sector, as the American Society of Hematology (ASH) holds its 50th annual meeting 6-9 December, traders noted some comments referring to Ofatumumab's response rate as 'truly impressive' and 'quite stunning'. Phase III data will be announced at ASH at 19.45 GMT. In financials, and with significance for SWEDBANK (+8.88%), IMF will support Latvia with loans of up to EUR 3bn and will not require that the country devalues or changes currency to euro, Dagens Industri reported.


The AEX (+8.14%) started the week with a resounding performance, finishing the trading day with spectacular gains. Wall Street was also in rebound mode, as lawmakers reportedly agreed on the auto bailout and Barack Obama pledged massive infrastructure investments. WTI crude was on the up, trading at US$43.56.

In local news, Het Financieele Dagblad reported that the sale of FORTIS's (+14.83%) Belgian insurance arm to BNP-Paribas was uncertain as there are still disagreements over the price of EUR 5.5bn. REED ELSEVIER (+2.80%) is close to selling RBI to US buyout group Bain Capital for US$1bn (GBP680m), after its main rival pulled out, The independent on Sunday reported. ROYAL DUTCH SHELL (+8.14%) along with Dong Energy and ScottishPower, cancelled the GBP800m Cirrus Array wind energy project off the northwest coast. AIR FRANCE-KLM's (+5.47%) November traffic fell 0.8% y/y, though this incorporated the period 14-17 November, when there was a staff strike.

CRUCELL (+6.42%) announced that the Chinese authorities released Hepavax-Gene for registration and quality control in China. TEN CATE (+5.81%) said it expected new orders in its military fabrics division worth US$35m.

Finally, DRAKA (-4.40%) will make a mixed cash and equity offer to each bond holder for all outstanding EUR 100m 4% Convertible Subordinated Bonds due 2010.

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