Banks Lead European Markets Higher, SEB to Buy WMF

Lucy Stoeva
24 May, 2016
New York City

European stocks changed direction and moved higher as bank stocks advanced, while exporters received a boost from the weakening euro. French appliance maker SEB SA agreed to buy WMF for

[R]4:00 PM Frankfurt, Germany – European stocks changed direction and moved higher as bank stocks advanced, while exporters received a boost from the weakening euro. French appliance maker SEB SA agreed to buy WMF for €1.6 billion. Galenica dropped 6.1% after the drug maker postponed the breakup of the group.[/R]

European stocks changed direction and moved higher on Tuesday as bank stocks advanced, while exporters received a boost from the falling euro.

The euro fell 0.5% against the dollar to $1.1165 on the expectations that the Federal Reserve is more likely to raise rates at its June meeting.

The pullback of the euro mostly affected German exporters as their products become more competitive on international markets.

BMW gained 1.9%, Volkswagen jumped 4%, and Heidelberg Cement climbed 2.6%, ThyssenKrupp surged 2.3% and Siemens added 1.7%

Also in Germany, the ZEW Institute said its indicator of economic sentiment unexpectedly fell to 6.4 in May from 11.2 in April.

The main reason for the deterioration of economic sentiment was the uncertainty regarding the June 23 “Brexit” referendum in the U.K, ZEW said.

In Italy, UniCredit rose 5.22% before its board meeting, which should approve the search for a new chief executive.

Among other bank shares, UBS rose 1.3%, Commerzbank surged 2.6%, Deutsche bank gained 2.7%, Banco Santander added 2.8%, and Banca Monte de Paschi di Siena soared 10.1%.

In Greece, the Athens Composite Index tumbled 2.2% ahead of a key decision for the country’s bailout funds.

The finance ministers of the euro zone are meeting in Brussels today to review the Greek austerity reforms and decide whether to unlock the third bailout program agreed last year for €11 billion.

In London, the FTSE 100 index climbed 62.58, or 1.02%, to 6,199.01, while in Frankfurt, the DAX index added 144.12, or 1.46%, to 9,986.41.

In Paris, the CAC 40 index rose 75.34, or 1.74%, to 4,400.44.

SEB SA surged 9.7% to €106.10 after the French appliance company agreed to buy WMF, a maker of coffee machines and silverware, from private equity group KKR & Co.

The total value of the deal is €1.6 billion. SEB will pay €1.02 billion for WMF and will assume €565 million in debt and €125 million in retirement liabilities.

Galenica dropped 6.1% to 1,257 Swiss francs after the drug maker decided to postpone the breakup of the group.

The Board of Directors started a recruitment process for a new CEO for Vifor Pharma, and said Galenica will be divided after the new CEO has been appointed and settled into its role.

The company expects the division to be completed by the end of 2017.