Euroshares slightly higher midday, gains capped ahead of US rate decision

Euroshares slightly higher midday, gains capped ahead of US rate decision

	Published : Wed, 21 Mar 2007 13:45 By : Agencies Print this Story

LONDON (AFX) - Leading European exchanges remained muted in midday deals with US markets expected to post only modest gains ahead of today's US rate decision although M&A hopes lifted selected stocks, dealers said.

At 12.15 am, the STOXX 50 was up 11.54 points at 3,662.29 and the STOXX 600 was up 1.29 at 368.52.

Spread bettors, IG Index, said the Dow looks set to add around 3 points in opening deals.

Intesa SanPaolo added 2.43 pct after Morgan Stanley yesterday initiated coverage with an 'overweight' rating and a 6.32 eur price target.

Generali added 1.14 pct after in-line full-year results last night as it announced plans to offer shareholders one free share for every ten shares owned.

Analysts said today's conference will be key as the group's outlook statement seems unambitious.

CNP added 7.2 pct after it reported a larger than forecast surge in 2006 net profit last night.

SAP added 0.85 pct, rebounding from fears yesterday US rival Oracle could issue a profit-warning. Instead, Oracle surprised by beating the most bullish expectations and allayed concerns about macro software spending. But shares came off highs amid concerns that the German group may have lost market share to its German rival.

'SAP's shares are relatively strong right now, but there is a chance it will retreat after Oracle said it won market share from SAP,' said one Frankfurt dealer.

Alcatel-Lucent, though, led the STOXX 50 fallers after CA Cheuvreux cut its stance to 'underperform' from 'outperform' and slashed its price target and earnings forecasts.

The broker said 'things could get a lot worse before they get better' for the recently-merged telecoms group.

Nutreco gained 4.88 pct on vague talk the group could be bid for by Provimi -- which was recently bought by equity fund Permira. The news came ahead of Provimi's earnings update later and amid reports FMR (Fidelity Management & Research) has increased its stake in Nutreco.

Takeover hopes continued to boost Iberia -- up 1.68 pct -- ahead of today's meeting on the US/EU open skies agreement-- which will open transatlantic flights to increased competition.

It is widely believed the group will become a bid target as soon as a deal is struck with British Airways -- up 2.78 pct -- often cited as the most likely bidder. But today dealers noted talk that Lufthansa is preparing a 3.90 eur per share bid. Today's meeting also sparked talk Emirates is preparing a bid for the UK flag carrier, even though -- under the UK carrier's ownership rules -- at least 51 pct of the group's equity must be owned by UK shareholders.

But shares in Baloise slipped 1.47 pct in morning trade hit by profit taking, after the release of the group's full-year numbers which were strong but showed a slightly mixed underlying performance, dealers said.

Shares in Metro were 1.92 pct lower as the retail giant's outlook statement disappointed and as some analysts said the first quarter will be difficult.

Analysts at Sal Oppenheim said they see no reason to buy the stock, given that the group's EBIT will likely be under pressure in the first quarter and as it expects consensus forecasts to fall.

Inditex fell 1.78 pct after the release of the clothing retail group's forecast-busting full-year numbers as analysts said there are signs that cost control success cannot continue at current levels and as some expressed disappointment there was no mention of a special dividend.

deborah.hyde@afxnews.com

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