Euroshares close up ahead of FOMC meeting tonight, oil and gas lend support

Euroshares close up ahead of FOMC meeting tonight, oil and gas lend support

	Published : Thu, 28 Jun 2007 17:34 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading European exchanges closed higher today with the oil and gas sector lending support on the back of higher oil prices and ahead of tonight's FOMC rate-setting meeting.

The Dow Jones STOXX 50 closed 35.49 points or 0.9 pct higher at 3,922.48 and the DJ STOXX 600 was up 3.91 points, or 1 pct to 391.60. The DJ Euro STOXX 50, which tracks the performance of blue-chip companies in 12 countries using the euro, gained 45.87 points, or 1 pct to 4,457.99.

'You can see that the market is quite stable. The heavyweight stocks are really where the music is at momentarily,' one trader said.

'Bond yields declined somewhat yesterday and the day before and that is also adding support,' he added, but also noted that the situation can turn overnight, given the general uncertainty on the markets with respect to hedge fonds and the US subprime mortgage market.

Stocks in the oil and gas industry were the most impressive with the Dow Jones Oil & Gas STOXX 600 adding 2.2 pct at last check.

Royal Dutch Shell closed 2.4 pct higher after Morgan Stanley raised its rating for the oil giant to 'equal weight' from 'underweight' and its target to 2,300 pence from 2,025, according to traders.

Morgan Stanley said it has become progressively more positive on the 'supermajors', although historically it has been negative.

SBM Offshore was in high demand -- up 4.7 pct -- after underperforming its sector in the last few days, according to an Amsterdam-based trader.

The company also confirmed after the markets closed that it had submitted a proposal with BP PLC for a large contract in Angola, but could not give an indication when a decision on the tendering process will be made.

Elsewhere, M&A chatter emerged during the day and Cap Gemini added 4.6 pct after rumours emerged India's Infosys is mulling a bid for the consultancy.

'Infosys is big enough and none of the large Indian players has made a large acquisition in Europe. Culture is often named as the reason for it,' a London-based analyst said.

He added Cap Gemini is 'the most Indian services company in Europe' and is seeking to employ more people in India than in France.

Shares in Deutsche Postbank AG were 2.4 pct higher after comments made by Commerzbank AG management board member Wolfgang Hartmann, saying that Germany's largest retail bank would make an 'excellent addition' to his bank, re-ignited rumours of a possible takeover.

Commerzbank added 0.5 pct and a Frankfurt-based trader pointed to a news wire interview with Hartmann.

'Hartmann said that Postbank would be an 'excellent addition' to Commerzbank and this has once again raised speculation that Commerzbank might redouble its efforts to buy the retail bank,' the trader said.

Meanwhile, shares in LogicaCMG PLC were 2.4 pct higher amid reports Morgan Stanley is placing 18 mln shares and after an upgrade at Theodoor Gilissen.

A London-based trader said Morgan Stanley had begun placing 18 mln LogicaCMG shares at 150-151 pence per share, while Theodoor Gilissen this morning upgraded the stock to 'buy' from 'sell', with a price target of 2.60 eur.

On automotive, shares in Volkswagen added some 2.7 pct as rumours reemerged that Porsche is increasing its stake by buying on the market.

Also, traders said the announcement that the European Commission has withdrawn its inquiry into Porsche AG's proposed takeover of Volkswagen AG was supporting the stock today.

Porsche shares were 2 pct higher.

Italian peer Fiat SpA clocked up 1.7 pct ahead of next week's launch of the 500 model and today's announcement of two joint ventures in Russia, brokers said.

'A report says that they might have to launch a new production line for the 500 because the current one will only produce 12,000 units of the model per month,' one broker said.'It is all positive, a good news flow.'

Reports today citing Fiat officials said orders in Italy for the 500 model have already hit 25,000, above a 23,000 figure last week, and against the 55,000 target for this year.

Automotive suppliers were also in focus with Michelin closing 2.3 pct up while Continental AG climbed 2.7 pct after rival Bridgestone Corp upgraded its earnings forecast for the current year to December, as a result of a weaker-than-expected yen and strong sales in the US.

However, in the semi-conductor sector ASML Holding NV -- down 1.5 pct -- and ASM International NV -- down 1.2 pct -- dropped after peer Novellus Systems Inc gave off a warning about its second quarter earnings, an Amsterdam-based trader said.

Novellus, which produces tools with which to manufacture computer chips, said that it expects second quarter earnings to come in at the lower end of forecasts, and also expects a weakening of computer chip equipment demand going forward.

Shares in Diageo PLC dipped 2.5 pct after the drinks group reiterated its guidance for 8 pct full-year organic operating profit growth.

Analysts gave a mixed response to the Johnnie Walker Scotch whisky and Smirnoff brand owner's full-year trading update.

While the group said it expects total organic net sales growth to be higher than in the first half, it held its full-year organic operating profit growth target at 8 pct.

In a note to investors Morgan Stanley said the strong and accelerating top line performance with no corresponding increase in guidance 'leaves us feeling flat'.

patrizia.kokot@thomson.com

pk/dca

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