Europe Rallies on M&A

Ivaylo
25 Apr, 2007
New York City

European shares rose on Wednesday morning, supported by gains from ABN Amro after a bidding consortium said that they may pay around $100 billion for the Dutch bank and some well-received earnings from Siemens, Michelin and LVMH. Results from Siemens, Michelin and LVMH rekindled confidence that companies earnings growth remains on track. The U.K. FTSE 100 index rose 0.2%, the German DAX Xetra 30 index increased 0.6% and the French CAC-40 index advanced 0.5%.

[R]6:30AM European markets advanced Wednesday on merger deals.[/R]
European markets advanced on Wednesday. The U.K. FTSE 100 index rose 0.2% at 6,444.70, the German DAX Xetra 30 index increased 0.6% at 7,313.88 and the French CAC-40 index advanced 0.5% at 5,915.47. National benchmarks rose in 14 of the 17 western European markets that were open.

Advancers

Barclays advanced 2% after the consortium announcement and after ABN Amro also detailed how its agreed pact to sell its Chicago-based LaSalle operations to Bank of America for $21 billion can be broken.

German engineering company Siemens advanced 1.5% after it reported a 36% increase in quarterly net profit to 1.26 billion euros. Reportedly, the company is set to decide on the future of one of its top executives, Klaus Kleinfeld, on Wednesday.

LVMH Moet Hennessy gained 1.8% after posting first-quarter revenue rising 7% to 3.8 billion euros or rose 13% on a comparable basis.

Michelin shares rose 3.5% after the tire maker reported a 5.5% rise in first-quarter sales to 4.2 billion euros, after higher volumes and prices, and held to its fiscal year guidance.

Retailers were doing well as British supermarket chain J. Sainsbury was up 6.5% after a 250 million-share block trade spurred renewed takeover talk and as department store chain Marks & Spencer shares rose 2.3% after a management reshuffle.

Decliners

Shares for companies in the bidding consortium were down, with Royal Bank of Scotland dipping 1.1%, and Fortis down 2%. Spanish property companies kept losing ground, with Ibex-35 constituent Grupo Inmocaral down another 3.9% in Madrid as investors continued to worry about Spain property market bubble bursting.

Oil and precious metals

Crude oil rose after some U.S. refineries cut production while gasoline demand rose. Crude oil for June delivery rose 45 cents, or 0.7%, to $65.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for June gained 74 cents, or 1.1%, to $67.90 a barrel on London ICE Futures exchange.

Gold broke two days of declines on speculation that a weakening dollar will increase investor demand for the precious metal. Gold for immediate delivery gained $2.20, or 0.3%, to 685.85 an ounce. Platinum rose $2.50 to $1,306.50, silver fell 0.5 cent to $13.78 an ounce and palladium gained $1.50 to $378.

Currencies

The dollar was lower against other major currencies in late European trading Wednesday morning. The euro traded at $1.3645, up from $1.3626 late Tuesday in New York. The British pound traded at $2.0045, up from $2.0000. The dollar fetched 118.65 Japanese yen, down from 118.68.

[R]5:00AM Corn surged Tuesday, while gold and silver declined.[/R]
On the Chicago Board of Trade, May corn ended up 8.25 cents at $3.6050 per bushel, July gained 7.25 cents to $3.7125, and December gained 4 cents to $3.7250.

June gold shed $6.50 to $687.70 a troy ounce on the New York Mercantile Exchange, while July silver slipped 26.8 cents to $13.916 an ounce. July platinum finished down $20.20 at $1,311.50 an ounce, while June palladium lost $8.40 to close at $379 an ounce. The most-active July copper contract fell 8.15 cents to settle at $3.5640 per pound.

The July crude oil contract declined 1.22 cents to end at $65.89 a barrel. May gasoline settled down 1.82 cents at $2.2089 a gallon and the May heating oil contract ended down 4.83 cents at $1.8460 a gallon. May natural gas bucked the trend and settled up 3.6 cents at $7.598 per million British thermal units.

On the New York Board of Trade, the May Arabica coffee contract finished down 1.95 cents at $1.0440 a pound, with July off 1.75 cents at $1.0765.