European stock markets finished at 19-month highs Monday, with some help from strength on Wall Street due to stronger-than-anticipated manufacturing data.
In Britain, record profits from British bank HSBC fueled optimism for improving corporate earnings. Oil companies, telecoms and mining concerns led gains. BHP Billiton led miners higher, jumping 4.1% after signing a $9 billion deal to double its iron ore sales to China. Hotel stocks were stronger despite CSFB downgrading its stance on the sector to marketweight. London's Financial Times-Stock Exchange 100 index finished up 44.8 points, or 1%, to 4,537.
Germany's DAX index ended higher by 36.27 points, or 0.9%, to 4,054.43. Deutsche Bank rose, benefiting from merger speculation though banking sources think it is unlikely to seek a tie-up with HSBC as reported by the Sunday Express. VW gained, helped by a Spiegel article which says VW aims to cut 2 billion euros in costs over the next two years. BASF was strong after its CEO told a German regional newspaper he thought his group had left the trough behind. The FT reports that Siemens has begun reviewing the possibility of big acquisitions as it seeks to expand in the recovering economic climate.
In Paris, the CAC 40 gained 23.43 points, or 0.63%, to 3,748.87. The market speculated Total (+1.56%) could bid GBP3.75/share cash for BG Group. Both groups declined to comment. Chip stocks on both sides of the Atlantic were under pressure as JP Morgan downgraded its sector view to neutral from attractive.
In Japan, markets finished at 20-month highs. Investors said they were mostly busy with new additions on the mainboard exchange, says Asia MarketScope. Nihon Trim, Jalux, and FCC surged after the Tokyo Stock Exchange added their shares to its first section today, as some money managers tracking the Topix index bought them to match the additions. The companies were among 20 that the Tokyo exchange, the world's second-largest, last month selected from its second section for its mainboard. Seventeen of the 20 additions advanced today. Jalux, a Japan Airlines System Corp unit that sells aircraft parts, gained 17%. The Nikkei 225 index gained 229.2 points, or 2.08%, to 11,271.2.
Meanwhile, a senior Finance Ministry official said the Japanese yen is still in a downward adjustment phase, indicating there is still room for the U.S. dollar to rise against its Japanese counterpart
In Hong Kong, the Hang Seng index added 11.62 points, or 0.08%, to 13,918.65.