European Markets Higher As M&A Warm Up

Ivaylo
27 Sep, 2006
New York City

A return to gains in the mining sector and the bid for Spanish utility Endesa by E.On buoyed European stock markets to advance in early trading Wednesday. The mining companies strong cash generation raises the prospect of higher dividends or further buybacks and M&A, which is believed to support a recovery in the shares. The U.K. FTSE 100 index rose 0.6%, the German DAX Xetra 30 index rose 0.5% and the French CAC-40 index climbed 0.5%.

[R]6:30AM European stocks rise on Wednesday helped by M&A and mining shares.[/R]
Europe was higher by mid morning on Wednesday. The U.K. FTSE 100 index rose 0.6% at 5,907, the German DAX Xetra 30 index rose 0.5% at 5,991 and the French CAC-40 index climbed 0.5% at 5,242.

M&A

Eon, the German utility at the centre of the battle for Spanish company Endesa, raised its offer for the Spanish company by 38%. This would make it the largest ever utilities takeover should the deal go through.

Advancers

Gas Natural, which still showed an interest in acquiring Endesa and failed in a hostile bid earlier this year, gained 5.5%. Also receiving a boost from the moves in Spain was EDP, power generator in Portugal. Its shares gained 4.4%.

Hennes & Mauritz, the Swedish fashion retailer, gained 4.5% after it reported a forecast-beating rise in third-quarter pre-tax profit, boosted by a 5% rise in like-for-like sales.

Decliners

E.On wasn''t performing so well, down 1.7% after raising its offer for Endesa. French insurer CNP Assurances fell 5.6% after its 16.6% rise in first-half net profit failed to impress.

Corporate news

Aer Lingus, the Irish airline, debuted on the Dublin bourse on Wednesday after its initial public offering was nearly four times oversubscribed. The stock was priced at 2.20 euros, the lower end of the pricing range, but in early trade it stood at 2.39 euros.

Oil and gold

Oil prices rose Wednesday amid lingering uncertainty about OPEC production plans. By mid-afternoon Wednesday, light, sweet crude for November delivery had rebounded 35 cents to $61.36 in on the NYME. November Brent crude on London ICE futures exchange rose 14 cents Wednesday to $60.26 a barrel. Gold traded in London at $595.10, up from $591.10 late Tuesday.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Wednesday morning. The euro bought $1.2692, up from $1.2691 late Tuesday in New York. The British pound traded at $1.8889, down from $1.8949. The dollar bought 117.29 Japanese yen, up from 117.10.

[R]6:00AM Gold and silver futures nudge higher on Tuesday.[/R]
December gold gained $1.20 at $597.10 a troy ounce on the NYME, while December silver added 17 cents to $11.495 an ounce. October platinum sank $1.60 to end at $1,131.60 an ounce while December palladium settled up $1.45 at $318.65 an ounce. Most-active December copper advanced 1.85 cents at $3.4660 per pound.

November crude oil declined 44 cents at $61.01 a barrel, after earlier trading as high as $62. October heating oil rose 0.14 cent to $1.6578 a gallon and October gasoline sagged 0.83 cent at $1.4918 a gallon. October natural gas settled down 5.1 cents at $4.526 a million British thermal units. On the New York Board of Trade, December Arabica coffee futures finished up 0.25 cent at $1.0690 a pound. Futures on raw sugar in foreign ports for October advanced 0.44 cent at 10.19 cents a pound.