Europe Rises on Vodafone, M&A

Ivaylo
29 May, 2007
New York City

European markets were broadly higher for the first time in three days after a sales forecast from Vodafone lifted phone companies and as investors watched carefully ongoing deal moves in the banking sector after a Royal Bank of Scotland-led consortium formally offered to buy ABN Amro. The U.K. FTSE 100 index advanced 0.2% while the German DAX Xetra 30 index increased 0.1% as British and German investors returned from a long holiday weekend. The French CAC-40 index inched down 0.1%.

[R]6:30AM European stocks inch higher Tuesday on Vodafone and deal offers.[/R]

European markets were mostly higher Tuesday. The U.K. FTSE 100 index advanced 0.2% at 6,581.20 while the German DAX Xetra 30 index increased 0.1% at 7,745.68 as British and German investors returned from a long holiday weekend. The French CAC-40 indexinched down 0.1% at 6,063.66. National benchmarks rose in 10 of the 17 western European markets that were open.

Advancers

Mobile phone company Vodafone Group posted strong share gains in early trading as investors welcomed the company announcement that its fiscal-year loss narrowed to 5.3 billion pounds, from 21.8 billion pounds a year ago, in part on much lower impairment losses. Vodafone climbed 4%.

France Telecom gained 0.2%, adding to recent strong gains made amid growing speculation that it is on the verge of selling its Orange Netherlands division, most likely to Deutsche Telekom, which shares rose 0.8%.

Philips gained 1.2% as it was added to Lehman Brothers European Recommended Portfolio.

Decliners

Bid target ABN Amro declined 0.6% after a consortium led by Royal Bank of Scotland officially launched its offer for the bank, bidding 71.1 billion euros, or $95.5 billion for the firm.

Shares in Royal Bank of Scotland fell 1.2% while its consortium partners put in a mixed performance, with Fortis shares down 1%.

Commodities

Crude oil for March delivery was at $64.35 a barrel in after- hours electronic trading on the New York Mercantile Exchange, down 85 cents from the closing price on May 25. Brent crude oil traded little changed in London on expectations of higher gasoline demand in the U.S.

Gold advanced in London as a decline in the dollar against the euro revived demand for the metal as an alternative investment. Gold for immediate delivery rose $2.25, or 0.3%, to $657.80 an ounce, after falling 45 cents yesterday. Silver gained 7 cents to $13.01 an ounce.

Currencies

The U.S. dollar was mostly down against most major currencies in European trading Tuesday. The euro traded at $1.3483, up from $1.3451 late Monday in New York. The British pound traded at $1.9874, up from $1.9834. The dollar bought 121.41 Japanese yen, down from 121.68.