Europe Higher on M&A

Ivaylo
15 Dec, 2006
New York City

The market reaction to Eurozone inflation data was not worthy of notice as the upward revision of headline CPI was 1.9%, slightly lower than the targeted 2% of ECB. German companies have been upping prices in advance of the rise in VAT in January. Investors expected takeovers and earnings growth to continue to buoy markets. The FTSE 100 opened 0.3% higher, while the German Xetra Dax added 0.4% and the French CAC 40 rose 0.5%.

[R]6:30AM European stocks advanced on Friday in quiet trading with M&A bids.[/R]
European markets gained on Friday. The FTSE 100 started the day 0.3% higher at 6,246, while the German Xetra Dax added 0.4% at 6,577.18 and the French CAC 40 advanced 0.5% to 5,534.64.

Corporate news

Japan Tobacco, the third-largest cigarette maker in the world, agreed to buy Gallaher in the biggest overseas takeover of the nation.

Advancers

Altadis SA led advancers as tobacco companies after Japan Tobacco Inc. agreed to buy Gallaher Group Plc for 7.5 billion pounds ($14.7 billion). Altadis, the largest tobacco company in Spain, added 1.1%. Citigroup Inc. upped a recommendation on the shares to `buy'' from hold, announcing the company is a possible target as takeovers in the industry continue.

Swedish Match AB, the second-largest producer of smokeless tobacco products in the world, advanced 0.8%.

France Telecom rose 1.9% after it reiterated its financial targets for 2006. Altana firmed 0.9% after Deutsche Bank upgraded the chemicals company to buy from hold and lifted its price target.

Carmakers were in great demand. Fiat rallied 2.6% after its European market share jumped to 7.6% from 6.5%. Renault SA gained 1.2 %. Porsche AG surged 1.2%. Separately, WestLB AG raised its recommendation to hold from reduce and lifted its price estimate for the shares by 27%.

Decliners

Ahold fell 1.1%, erasing some gains on Thursday, which were prompted by talk of a bid talk for the Dutch retailer from KKR, the private equity group. Sources close to KKR have played down the prospects of it making an offer.

Oil and gold

Crude oil for January delivery advanced 36 cents, or 0.6%, to $62.87 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $62.72 a barrel in early trading in London.

Gold for immediate delivery was at $625.45 an ounce today. It is little changed this week, after dropping 3.2% last week.

Currencies

The euro bought $1.3166 early Friday, up from $1.3152 in New York the previous day. The British pound also gained on the dollar at $1.9627, up from $1.9611 in New York overnight. The dollar remained strong against the Japanese yen, buying 117.97, up from 117.86 on Thursday.

[R]5:00AM Gold futures dropped on Thursday due to the rising US currency.[/R]
Gold for February delivery ended down $1.50 at $630.90 an ounce on the New York Mercantile Exchange. March silver futures advanced 3.5 cents to finish at $13.95 an ounce, while January platinum added $4.90 to close at $1,112.70 an ounce and March palladium added $1.35 to $331.05 an ounce. March copper futures moved 2.45 cents higher to close at $3.0575 a pound after closing Wednesday at its lowest level since late June.

The front-month January oil contract for U.S. light crude gained $1.14, or 1.86%, to $62.51 a barrel. In London, the expiring Brent crude contract for January delivery advanced 79 cents to $62.12 a barrel. At the retail level, the average price for a gallon of regular unleaded advanced to $2.291 Thursday, from $2.289 on Wednesday.

Wheat for March delivery rose 3 cents to $4.91 1/2 a bushel. March corn gained 3 1/2 cents to $3.71 3/4 a bushel while March oats moved 3/4 cent to $2.64 a bushel. January soybeans advanced 1 3/4 cent to $6.62 3/4 a bushel.