Europe Rallies on ABN Amro Deal

Ivaylo
23 Apr, 2007
New York City

Barclays agreed to buy ABN Amro in the largest-ever banking deal sending European markets to a six-and-a-half-year high Monday, supported also by favorable updates from Swiss company Novartis and Nestle. Novartis led drugmakers higher after posting first-quarter profit that topped expectaions. The German DAX Xetra 30 index rose 0.1%, the U.K. FTSE 100 index rose 0.1% and the French CAC-40 index increased 0.2% a morning after the first round of the French presidential election.

[R]6:30AM European shares advance Monday on ABN Amro M&A[/R]
European markets advanced on Monday. The German DAX Xetra 30 index rose 0.1% at 7,347.57, the U.K. FTSE 100 index rose 0.1% at 6,492.70 and the French CAC-40 index increased 0.2% at 5,949.47, a morning after the first round of the French presidential election.

Advancers

ABN Amro, a Dutch bank, gained 1.7% after it agreed to the largest-ever banking takeover from the Barclays worth around 67 billion euros, or $91.2 billion. Scottish & Newcastle shares rose 2.4% after reports that SABMiller and Diageo held detailed talks about a joint bid for the U.K. brewer. Novartis added to pharmaceutical sector earnings news. Its shares rose 1.8% after it announced that its first-quarter net income rose 11% to $2.17 billion, with sales up 18% to $9.82 billion.

Food company Nestle also held to its fiscal year earnings guidance on Monday. Shares rose 1.7% after Nestle said that it is still expecting organic growth of between 5% and 6% this year, with improved constant currency earnings before interest and tax margins for the fiscal year.

In the auto sector, BMW shares rose 2.5% after J.P. Morgan upgraded the company to overweight from neutral on Monday. Peugeot also rose 0.8% after reports that the French automaker could be planning to restructure in France after the presidential election, a move that could affect around 10,000 jobs.

Decliners

Barclays dropped 1.7 % after the bank bid for the Dutch bank. AstraZeneca lost 1.4 %. The maker of the Nexium ulcer medicine agreed to buy MedImmune to gain flu vaccines and an antiviral medication for babies. Societe Generale SA declined 2 % after second-biggest bank by market value in France denied it was in merger talks on April 20.

Oil and precious metals

Crude oil advanced on concern supplies from Nigeria will be disrupted just as demand for gasoline is surging. Crude oil for June delivery rose 42 cents, or 0.7 %, to $64.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June gained 86 cents, or 1.3 %, to $67.35 a barrel in electronic trading on the ICE Futures exchange.

Gold fell from an 11-month high after the dollar advanced against the euro, denting investor demand for the precious metal as an alternative investment. Silver also declined. Gold for immediate delivery dropped $1.60, or 0.2 %, to $690.35 an ounce. Silver declined 4.5 cents to $13.895 an ounce. Palladium for immediate delivery fell 50 cents to $384.50 and platinum dropped $4 to $1,324 an ounce.

Currencies

The U.S. dollar was mostly higher against other major currencies in European trading Monday morning. The euro traded at $1.3562, down from $1.3601 late Friday in New York. The British pound traded at $1.9986, down from $2.0036. The dollar fetched 118.44 Japanese yen, down from 118.74.

[R]5:30AM Gold and other precious metals rally Friday on new buying interest.[/R]
June gold advanced $7.50 to finish at $695.80 a troy ounce on the New York Mercantile Exchange. July platinum surged $31.40 to $1,341.20 an ounce, May silver rose 22 cents to $13.955 an ounce, and June palladium added $8.25 to $388.25 an ounce. In trading of base metals, May copper contract rose 2.4 cents to settle at $3.6105 per pound.

The May crude oil contract gained $1.55 to end at $63.38 a barrel before expiring. May gasoline futures jumped 4.86 cents to $2.1374 a gallon, and May heating oil added 2.67 cents to $1.8325 a gallon. Natural gas for May delivery ended 11.1 cents lower at $7.381 per million British thermal units

On the New York Board of Trade, Arabica coffee futures plunged, ending 0.80 cents lower at $1.0770 a pound. Futures on raw sugar in foreign ports closed weaker on trade-house selling and speculator sales.. May sugar ended 0.03 cents lower at 9.52 cents a pound, and July sugar finished 0.04 cents weaker at 9.49 cents a pound.