Europe Buoyed by M&A

Ivaylo
10 Apr, 2007
New York City

European markets were higher on Tuesday, as merger activity and weaker oil prices pulled the markets out of their post-Easter subdued state. Deal news helped lift the shares of DaimlerChrylser and Puma while oil companies weighed on the wider market. By mid morning, Frankfurt Xetra Dax added 0.5%. In Paris, the CAC 40 was 0.1% higher and London FTSE 100 was 0.2% higher.

[R]6:30AM European equities were higher on Tuesday on merger activities.[/R]
European markets were higher in early trading on Tuesday. By mid morning, Frankfurt Xetra Dax added 0.5 % to 7,132.27. In Paris, the CAC 40 was 0.1 % higher at 5,748.12 and London FTSE 100 was 0.2 % higher at 6,410.5. National benchmarks rose in 16 of 18 markets in western Europe.

Advancers

PPR, the French fashion retailer, announced it would make a public tender offer for German sportswear maker Puma after agreeing to buy a 27% stake in the company from Mayfair, the largest shareholder of Puma. Puma welcomed the bid, which is valued at 330 euro a share adding it would recommend the deal to shareholders. Puma surged 9.6%, while PPR shares added 2.9%. Shares in the main rival of Puma, Adidas gained 2.5% on speculation it could also become involved in fashion sector consolidation

ABN Amro also advanced on the Dutch market, gaining 1.5% after press reports over the weekend, including that the Dutch regulator would mull a break up of the group and talk of other bidders still waiting if exclusive talks with Barclays should not succeed.

German carmaker DaimlerChrysler rose 3% after US billionaire Kirk Kerkorian offered $4.5 billion for the company Chrysler division. Mr Kerkorian, once the largest shareholder of Chrysler, asked the German company for 60 days exclusive rights to carry out due diligence.

Decliners

A report that a consortium led by CVC Capital has offered a 582 pence-a-share bid for J. Sainsbury proved not enough to boost shares in the supermarket operator after an earlier report that the controlling family will not consider a bid below 600 pence a share. Shares in Sainsbury slipped 1.3% in London.

Oil stocks were hurt by weaker oil prices. Shares in BP lost 0.7% and France Total also lost 0.7%. Tobacco company also Altadis lost 0.5% after it rejected Imperial Tobacco 12 billion euro offer. Imperial Tobacco shares dipped 0.8%.

Oil and gold

Crude oil advanced from a 12-day low in New York after Iran announced it has started to enrich uranium on an industrial scale, heightening tensions in the region. Crude oil for May delivery rose 48 cents, or 0.8%, to $61.99 a barrel in after-hours electronic trading on the New York Mercantile Exchange and was at $61.78 in early trade in London. Brent crude for May settlement increased 54 cents, or 0.8%, to $67.13 a barrel in electronic trading on the ICE Futures exchange.

Gold gained on speculation declines in the dollar will boost investor demand for the metal as an alternative to stocks and bonds. Silver also gained. Gold for immediate delivery gained $5.75, or 0.9%, to $676.50 an ounce in early trade in London. Silver advanced 8.99 cents, or 0.7%, to $13.835 an ounce. Palladium rose $3.50, or 1%, to $358.50 an ounce, after earlier advancing to $359.50, the highest since June 5. Platinum fell $2 to $1,249.50, erasing an earlier gain to $1,260, the highest since Nov. 21.

Currencies

The dollar declined against other major currencies in European trading Tuesday as markets reopened following the long Easter weekend. The euro traded at $1.3415, up from 1.3360. The British pound traded at $1.9712, up from $1.9610. The dollar bought 119.09 Japanese yen, down from 119.30.

[R]5:00AM Gold declined on profit-taking and dollar strength, silver gained.[/R]
June gold shed $2.50 to end at $676.90 a troy ounce on the New York Mercantile Exchange. May silver advanced 7 cents to settle at $13.81 an ounce. July platinum lost $1.60 to close at $1,264.30 an ounce, while June palladium added $1.60 to settle at $358 an ounce. In base metals trading, the most-active May copper contract rose on short covering and settled 12.90 cents higher at $3.5060 per pound.

The front-month May crude oil contract declined $2.77, or 4.3%, to $61.51 a barrel, the lowest settlement price for a front-month contract since March 21. May gasoline dropped 3.42 cents to close at $2.0946 a gallon after climbing as high as $2.1555 a gallon. May heating oil slipped 4.52 cents to settle at $1.8157 a gallon. Natural gas for May delivery ended 6.1 cents lower at $7.546 a million British thermal units.

Arabica coffee futures slid to three-day lows as funds and locals sold, before industry buying curbed the decline. May coffee closed down 1.20 cents weaker at $1.0965 a pound. May corn settled 2.5 cents lower at $3.6350 a bushel, and December corn finished a quarter-cent lower at $3.8650 a bushel.