M&A Boosts European Stocks

Ivaylo
18 May, 2007
New York City

European markets reached six-and-a-half-year highs on Friday as merger talk drove advances in the oil sector, while aerospace group EADS was boosted by rumours of the sale of a stake. Oil stocks were higher, both by crude prices surging back towards $70 a barrel, and by merger talk between Royal Dutch Shell and BP. By late morning, Frankfurt Xetra Dax added 0.8%, the CAC 40 in Paris added 0.8% and London FTSE 100 climbed 0.8%.

[R]6:30AM European markets advance Friday on merger talk.[/R]

European markets were higher on Friday. By late morning, Frankfurt Xetra Dax added 0.8% to 7,560.14, the CAC 40 in Paris added 0.8% to 6,074.75 and London FTSE 100 climbed 0.8% to 6,630.5. National benchmarks rose in all 17 western Europe markets that were open.

Advancers

The rumour, which lifted Shell 3.7% on Thursday, was largely rejected, but speculation continued that the sector could be ready for consolidation. Shell rose 1.4% in Amsterdam.

Other oil companies also advanced. Statoil ASA, Norway biggest oil company, gained 2.6%. Spanish Repsol, which has been the object of stakebuilding by Sacyr-Vallehermoso, the Spanish construction group, rose 1.4 %. Total of France gained 1.8%.

EADS, the European aerospace company and maker of Airbus jetliners, climbed 3.2% after Dubai International Capital, the private equity group, said it was in talks to buy a stake in the business for a fund it manages.

Bayer AG, which makes coatings and high-performance plastic at its material science unit, rallied 3.9% and steelmaker Arcelor-Mittal added 3.7% after announcing an interim dividend of 0.325 euro a share, prompting a target price upgrade by UBS.

Decliners

There were few decliners. British Airways declined 3.6% after the third-largest airline in Europe reported fourth-quarter net loss of 128 million pounds, or $253 million, after a labor dispute disrupted flights and trans-Atlantic traffic declined.

Commodities

Gold gained in London for the first time in three days on higher demand from jewelers. Gold for immediate delivery climbed $3.50, or 0.5%, to $661.15 an ounce, while silver gained 7.5 cents, or 0.6%, to $12.915 an ounce.

Crude oil retreated after reaching a three-week high in New York on speculation breakdowns and production halts mean refiners will have trouble replenishing U.S. gasoline stockpiles. Crude oil for June delivery fell 4 cents to $64.82 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for July settlement was down 46 cents at $69.81 a barrel in electronic trading on the ICE Futures exchange.

Currencies

The dollar was mostly higher against other major currencies in European trading Friday morning. The euro traded at $1.3485, down from $1.3492 late Thursday in New York. The British pound traded at $1.9725, down from $1.9743. The dollar stood 121.35 Japanese yen, up from 121.27.

[R]5:00AM Copper declines Thursday, gold and silver follow suit.[/R]

The most-active July copper contract plunged 11.60 cents to end at $3.3065 per pound on the New York Mercantile Exchange. June gold lost $4.30 to settle at $657.20 a troy ounce, while July silver finished down 4.7 cents at $12.883 an ounce. July platinum closed also down $7.90 at $1,317.90 an ounce. June palladium bucked thr downtrend and settled up $2.90 at $360.40 an ounce.

The front-month June crude oil contract advanced $2.41 at $64.86 a barrel, while June gasoline ended up 9.96 cents at $2.4366 a gallon. June heating oil finished up 6.97 cents at $1.9367 a gallon and June natural gas added 18.5 cents to close at $8.075 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures May settled up 3.10 cents at $1.1035 a pound, with July up 3.4 cents at $1.1310. Most-active July cocoa shed $6 to settle at $1,894 a metric ton. Futures on raw sugar in foreign ports for July ended unchanged at 8.68 cents a pound, with October off 0.02 cent at 9.01 cents.

On the Chicago Board of Trade, July corn futures closed 3 cents lower at $3.73 per bushel, and December finished 7 cents lower at $3.7050. July soybeans settled unchanged at $7.9275 per bushel. July wheat settled down 11.25 cents at $4.8550 per bushel.