Europe up on M&A, Upgrades

Ivaylo
21 Mar, 2007
New York City

M&A activity spurred European markets higher in early trade as financial stocks extended their advance. Barclays and ABN Amro were at the forefront of the advance after agreeing to some initial terms for a merger that may be the biggest financial-services takeover in history. However, the mood was cautious ahead the interest rate decision of the US Federal Reserve later on Wednesday. Frankfurt Xetra Dax was fractionally lower, the CAC 40 in Paris gained 0.1%, and London FTSE 100 climbed 0.2%.

[R]7:30AM European equities were broadly higher Wednesday on financials.[/R]
European markets were broadly higher on Wednesday morning. Frankfurt Xetra Dax was fractionally lower at 6,699.01, the CAC 40 in Paris gained 0.1% to 5,505.61, and London FTSE 100 climbed 0.2% to 6,235.0. National benchmarks advanced in all of the 16 western European markets that were open except Ireland.

Advancers

Barclays, the third-biggest U.K. bank, gained 1.6% while ABN Amro, the largest Dutch bank, added 0.5%. Both companies agreed to some initial merger terms, for the takeover.

Goldman Sachs upgraded some of the banking sector including Royal Bank of Scotland, which climbed 1.5%, Santander, up 0.1%, and Bank of Piraeus, which added 0.5%. Intesa Sanpaolo, the Italian bank, gained 1.7% as two brokers started coverage of the stock. Sal Oppenheim started the stock with a buy rating, while Morgan Stanley resumed coverage with an overweight rating.

CNP Assurances SA advanced 3.7%. The biggest life insurer in France, reported a 55% rise in second- half net income to 875.9 million euros, or $1.2 billion, supported by lower taxes and investment gains. SAP AG, the world biggest business-management software maker, gained 0.8%. Valeo SA gained 1.8%. Morgan Stanley raised its recommendation on shares of third-largest maker of car parts in the Europe, to overweight from underweight.

Decliners

Bank of Ireland fell 1.6% after its forecast of a 22% rise in underlying earnings per share for the current year failed to please investors. Hochtief AG fell 2.3%. August von Finck, the biggest shareholder of the company, sold his entire 25% stake in the German builder.

Total, the French oil company, bucked the generally stronger trend in the sector after Christophe De Margerie, chief executive, was detained for questioning by police investigating alleged corruption in Iran. Total shares fell 0.2%

Gold and oil

Oil prices climbed in Asian trading Wednesday on expectations that the weekly U.S. oil inventory picture will show a decline in domestic supplies of gasoline and distillates such as heating oil. Crude oil for May delivery gained 25 cents to $59.50 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude contract for May delivery rose 23 cents to $60.43 a barrel on the ICE Futures exchange in London.

Gold in Asia traded near a two-week high as rising inflation concerns in the U.S. weakened the dollar. Gold for immediate delivery rose as much as $1.13, or 0.2%, to $659.92 an ounce and traded at $659.38. Silver for immediate delivery gained 3 cents, or 0.2 %, to $13.33 an ounce. Platinum gained $2 to $1,231 an ounce, while palladium fell $1 to $351.50 an ounce.

Currencies

The dollar was little changed against the euro before the Federal Reserve finishes a two-day meeting on interest rates policy. The dollar traded at $1.3307 against the euro in early trade. in London from $1.3318 in New York yesterday. It was at 117.73 yen from 117.29. Japanese markets were closed for a holiday. The pound climbed to 1.4747 against the euro, from 1.4728 yesterday. Against the yen, it rose to 230.98 from 230.05. The pound rose to $1.9627 from $1.9609.

[R]6:00AM Cocoa rallies, gold and silver gain, oil advances on Tuesday.[/R]
Most-active May cocoa gained $86 to settle at $1,864 a metric ton, while April gold advanced $4.70 to $659 a troy ounce, and May silver rose 13.7 cents to $13.37. April platinum gained 60 cents to $1,235.30, while June palladium added $1.20 to $355.30. The most-active May copper contract rose 1.25 cent to settle at $3.0340 per pound.

The April crude oil contract, which expired Tuesday, advanced 14 cents to end at $56.73 a barrel, while the front month April gasoline lost 1.60 cent to finish at $1.9421 a gallon. Earlier in the day prices rose to $1.985 a gallon, the highest intraday price since Sept. 8. Front month April heating oil declined 1.97 cent to $1.6687 a gallon, while April natural gas settled up 6.3 cents at $6.910 per million British thermal units.

Arabica coffee futures settled down 0.95 cent at $1.0930 a pound, with July off 1.00 cent at $1.1215. Futures on raw sugar in foreign ports for May settled up 0.01 cent at 10.23 cents a pound, with July up 0.03 cent at 10.18 cents.