Markets & Finance

European Indexes Gain


Earnings and M&A buoyed indexes Friday

From Standard & Poor's European MarketScope

European indexes closed higher Friday. Oil traded below US$60 a barrel amid signs of falling exports from OPEC and a production halt at a US oil field after a fire. Wall Street was trading higher on strong oil and bullish analyst comments on General Motors (GM).

UK: The FTSE 100 index closed the day in positive territory helped by broker action. Buoyant crude and commodity prices also helped keep the index in the black.

In broker action: Engine maker Rolls-Royce (+3.18%) shares were fired up by broker upgrades following fiscal year earnings. Glaxo (GSK) (+2.25%) too got a boost from target price lifts. In company news, Private equity bid target Sainsbury (-1.02%) sold its 5% of its stake in Sainsbury's Bank for £21 million to HBOS (+0.80%).

Kelda (-0.16%) postponed the sale of Aquarion to a Macquarie consortium. The Essar Group reportedly said it had tied up funds to raise its stake in India's No. 4 mobile firm Hutchison Essar, for which Vodafone (VOD) (-0.83%) is one of the bidders. FirstGroup (+6.24%) said it was buying US company Laidlaw in a US$3.6 billion deal. Carlyle offloaded its 10.3% stake in Qinetiq (-1.19%).

Germany: The Xetra-Dax index (+0.60%) finished comfortably in the black. Carmakers also enjoyed a good day. DaimlerChrysler (DCX)(+3.23%) ended firmly at the top of the index, after having offloaded EADS stock to a consortium of investors, reducing its shares in the aerospace and defense group to 15% from 22.5%, as planned. The auto giant will see cash inflow to the tune of €1.5 billion this year, while retaining its current voting rights in EADS. The transaction will be executed in the first quarter of 2007.

Elsewhere, Infineon (IFX) (-1.32%) crowed round the bottom of the index. It was up for most of the day after it announced that it will supply Mastercard (MA) with payment chips but eventually ran out of steam. Siemens (SI) (+0.85%) invited investment banks to compete to run the planned initial public offering of its automotive engineering unit, VDO.

Karstadt (-0.34%) sunk further after it bought Lufthansa's (-0.54%) stake in Thomas Cook, as expected. Meanwhile, Lufthansa's January passenger traffic rose 7.4% year-over-year, with the load factor increasing by 1.7 percentage points to 73.6%. Tip sheet Aktien Boerse reckoned that TUI (-0.29%) could be subject to a break-up bid from Swiss logistics group Kuehne & Nagel. Q-Cells (+1.41%) rose following a statement that it has exercised €492.5 million in the total issue of its convertible bond after over-allotment.

France: The CAC 40 index (+0.48%) pared gains mirroring a similar trading in Wall Street after St. Louis Federal Reserve bank's president warned on inflation. Alcatel-Lucent (ALU) (-0.10%) succumbed to profit taking. It posted fiscal 2006 sales of €18.254 billion, down 2%; net income of €522 million, down 68%. Earlier in the day investors welcomed plan to cut 12,500 jobs instead of 9,000 as previously announced.

LVMH (+1.35%) saw Citigroup raising its target to €95 from €88. STM (STM) (+1.03%) gained on news that JP Morgan raised its recommendation on semi stocks to 'bullish' from 'cautious'. Thomson (+2.91%) was the top percentage performer after breaking through a €15 technical barrier on positive broker sentiment. PSA (+2.06%) climbed on a target increase from JP Morgan.

Lagardere's (-0.33%) underperformed as it tabled an in-line fiscal 2006 sales of €13.998 billion, +7.6%. CNP Assurances (+0.97%) reported consensus-beating fiscal 2006 sales of €31.99 billion, up 20.6%. Eiffage (+0.58%) posted forecast-topping fiscal 2006 sales of €10.745 billion, up 27.4%.

On the downside, Sanofi-Aventis (SNY) (-0.44%) announced that it lost the Lovenox lawsuit against Amphastar and Teva (TEVA). DaimlerChrysler sold a third of its stake in EADS (-0.94%) for €1.5 billion.

Elsewhere: The Nordic markets ended higher on Friday, with Copenhagen and Oslo the top two performers in Europe. Copenhagen finished today's winner as Moeller Maersk (+5.22%) jumped following an upgrade to buy at UBS, while Vestas Wind (+10.23%) flew sky high as the group raised its fiscal 2006 revenue forecasts.

Spanish shares edged off peaks in late session to finish 0.33% higher.

Rocio Opazo-Aniotz, Claudia Perotti, Michael Sanderson, Emma Stevenson, Mariella Mongio, Pawan Girglani, Guarav Panchal, Julien Manrique, Isabell Witt, Sara Oscarsson, Ben Marino, John West

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