Europe Rallies on Autos, M&A

Ivaylo
20 Dec, 2006
New York City

Apart from autos, European shares recovered on Wednesday, on the heels of a rebound in commodity-dependent stocks, deal news from Ericsson and Arcelor-Mittal and another record in the U.S. markets overnight. Also, Ericsson of Sweden announced that it has agreed to acquire Redback Networks. By mid morning, the FTSE 100 in London climbed 0.4%, Frankfurt Xetra Dax added 0.7%, while the CAC 40 in Paris advanced 0.6%.

[R]6:30AM European shares advanced Wednesday on autos and merger deals.[/R]
European markets were higher on Wednesday. By mid morning, the FTSE 100 in London climbed 0.4% to 6,232.3, Frankfurt’s Xetra Dax gained 0.7% to 6,597.89, while the CAC 40 in Paris advanced 0.6% to 5,518.66.

Advancers

DaimlerChrysler led European autos higher, up 2%, before a supervisory board meeting. Volkswagen, whose board is locked in a management leadership struggle with chief shareholder Porsche, advanced 1%. Porsche added 1.8%.

Price increases buoyed Continental. The company said it might return some of its 4 billion euros to shareholders if it did not find suitable acquisitions. Shares gained 0.8%, while Michelin climbed 1.8%.

Ericsson led the tech sector after investors welcomed its acquisition of Redback Networks. Ericsson gained 1.5%. Swiss engineer ABB advanced 2.1% after Moody’s raised its rating on the debt of the company, in view of its the stronger-than-expected improvement of its operating performance.

Arcelor-Mittal the world largest steelmaker, advanced 1.5% following its statement that it is buying Sicartsa of Mexico from Grupo Villacero.

Decliners

HMV Group traded down 1.8% after the U.K. book and music retailer said that it anticipates its annual profit to be at the low end of market expectations.

Oil and gold

Crude oil for February delivery declined 15 cents at $63.31 a barrel in on the New York Mercantile Exchange. At London ICE Futures exchange, oil prices also moved slightly lower, with Brent crude for February delivery 17 cents lower to $62.64 a barrel.

Gold traded in London at $623.40 per troy ounce, higher than $620.20 late Tuesday. In Zurich, gold traded at $621.70, up from $619.95.

Currencies

The U.S. dollar dipped against the euro on Wednesday morning. The euro traded at $1.3229, up from $1.3192 late Tuesday. The British pound was quoted at $1.9707, up from $1.9682. The dollar bought 117.98 Japanese yen, down from 118.08.

[R]5:00AM Precious metals gained on Tuesday on dollar weakness and oil climb.[/R]
On the New York Mercantile Exchange, February gold finished $7.50 higher at $625.40 a troy ounce while March silver ended 18.5 cents up at $12.710 an ounce. January platinum advanced $16.40 to close at $1,118.50 an ouncea and March palladium added $4.30 to finish at $329.25 an ounce. The most-active March copper contract was off 1.20 cent at $3.0175 per pound.

The front-month January crude oil contract gained 94 cents to finish at $63.15 a barrel. January heating oil ended down 0.2 cent at $1.7187 a gallon. January unleaded gasoline rose 3.83 cents to close at $1.7005 a gallon. January natural gas edged 0.8 cents higher to stop at $7.083 a million British thermal units.

On the New York Board of Trade, March Arabica coffee futures closed 1.45 cents lower at $1.23 a pound, with May off 1.45 cents at $1.26. Futures on raw sugar in foreign ports for March gained 0.01 cent to close at 12.04 cents a pound, with May 0.05 cent higher at 11.85 cents.