Euroshares higher mid-morning, Bank of America investment lifts confidence

Euroshares higher mid-morning, Bank of America investment lifts confidence

	Published : Thu, 23 Aug 2007 10:11 By : Agencies Print this Story

LONDON (Thomson Financial) - Europe's leading exchanges were higher in morning deals after the Bank of America made a 2 bln usd investment in America's largest mortgage lender Countrywide Financial, which traders and analysts deemed to be a huge sign of confidence.

At 9.45 am, the Dow Jones STOXX 50 added 28.56 points or 0.77 pct to 3,734.08 as the STOXX 600 rose 2.90 points or 0.79 pct to 371.52.

'This is a surprisingly strong recovery, if one remembers that we were looking at some all-time lows just a week ago,' said Andreas Huerkamp, strategist at Commerzbank said.

'This time it was the news in the US that Bank of America has agreed to invest in Countrywide Financial. A huge signal of trust,' he added and noted that last week's sell-off may well be the low point of this correction.

He further said that Commerzbank believes that new highs will be reached in Germany and the European markets in the fourth quarter, while the recovery of the financial markets continues.

Investors are also heartened that M&A is continuing despite credit jitters. An affiliate of Dubai's government said it was investing 5.1 bln usd in casino operator MGM Mirage; Nymex Holdings chairman said the commodities exchange has been meeting with suitors; and Rio Tinto said it was able to close the loan syndication to fund its 38.1 bln usd Alcan purchase.

TUI was one of the leading gainers this morning --up 2.54 pct -- as speculation continues that Geveran Trading Co, one of shipping billionaire John Fredriksen's investment vehicles, may be interested in raising the 3.07 stake it currently holds in TUI and possibly aim for a break up of the tourism and shipping giant.

Alitalia gained 1.53 pct and Air France-KLM added 1.60 pct following a report in Finanza e Mercati which said the Franco-Dutch airline was ready to cooperate with Italian investors.

Meanwhile, Unipol climbed 1.92 pct after reports that Banca Popolare Milano is eyeing both for a potential link.

Norway's OMX added 0.86 pct as Sweden's FSA said that said Borse Dubai's press release about its bookbuilding process in OMX amounted to a public takeover offer and that the Middle Eastern exchange breached the law. But the FSA said it will take no action because Borse Dubai has since complied with the law.

'The FSA's decision was more or less as expected. It is a detail in the big picture, but leaves the road clear (for a bid battle),' a dealer at a European investment bank said.

In earnings results, Holcim charged 2.38 pct ahead after beating expectations with its first half results and positive outlook.

Holcim reported a rise in first-half net profit of 162.7 pct to 2.9 bln sfr, driven by a one-off capital gain of 1.11 bln sfr from the divestment of Holcim South Africa and improved demand in all segments.

Flughafen Wien was 1.17 pct higher as it released a first half net profit up 9.6 pct on the year thanks to a solid increase in passengers over the period and it has revised its passenger growth forecast for the year to 8 pct from 5 pct as a result.

'Even stripping out any special provisions, the half year results are much better than our estimates with strong operative turnover in all segments,' said Bernd Maurer an analyst at Raiffeisen Centrobank.

In Belgium, Umicore jumped 3.80 pct as analysts praised its half year report.

Rabo Securities analysts said the results were 'fantastic'. The broker intends to raise its price target on the stock to around 175.0 eur from 150.0 and increase its full-year earnings per share estimate by at least 30 pct.

But Kuoni Reisen Holding shed 3.70 pct as it reported a first half net profit of 3.5 mln sfr, down from 8.1 mln sfr a year earlier and below forecasts as EBIT losses widened at the group's Swiss unit.

A trader at ZKB said Kuoni results are not bad, but net was below expectations. 'Growth is ok and bookings were good. These results are neutral for the stock,' he said.

In the automotive sector, Fiat was trading 1.32 pct higher after Moddy's yesterday upgraded the group's corporate family rating and other long-term senior unsecured ratings to 'Ba1' from 'Ba2' with a positive outlook.

Peugeot traded in line with its index, after it said yesterday after market close that it is recalling 240,000 of its 307 cars in Northern Europe, including 80,000 in Germany, as a precautionary measure.

Staying with autos, MAN AG added 2.61 pct as traders noted that press reports of a possible joint venture in China were giving some support.

We don't have that much information on the deal, but right now we would tend to believe that this is positive news,' Robert Heberger, analyst at Merck Finck said.

In broker action, Ahold was one of today's favourites, gaining 1.39 pct as both Citigroup and Fortis issued bullish notes ahead of what they expect to be very strong numbers to be released next week.

Fortis said the group will report record-high quarterly results on August 30 with strong profitability at its Giant-Carlisle and Albert Heijn brands.

Citigroup was yet more bullish, saying the shares are worth a look ahead of the results statement.

The broker said Ahold is one of the few stocks with upside in an expensive-looking sector.

Peer Sainsbury added 1.13 pct as Numis Securities reiterated its 'buy' stance and said it continues to favour the food retail sub sector, given its more defensive nature and strong property backing.

Elsewhere, hotel group Accor rose 2.09 pct, benefiting from an upgrade to 'buy' from 'hold' at Kepler Equities, as well as a continued bargain-hunting by investors after the severe correction of recent weeks.

In a note this morning, Kelper analysts argued that the recent drop in the stock was 'excessive' and offers a buying opportunity.

patrizia.kokot@thomson.com

pk/rfw

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