European stocks advance on takeovers, US index futures gain
Monday, 25 August 2008
LONDON, Aug. 24 (Bloomberg): European stocks and US index futures advanced as investors speculated takeovers may increase and a drop in oil boosted airlines and carmakers. Asian shares retreated.
Lehman Brothers Holdings Inc. climbed 12 per cent in New York after Reuters reported that Korea Development Bank was considering acquiring the fourth-largest US securities firm. Hochtief AG increased 9.8 per cent after Manager Magazin said Germany's biggest builder may be broken up. Benfield Group Ltd. jumped 30 per cent after Aon Corp., the world's biggest insurance broker, offered $1.6 billion for the U.K. company. PSA Peugeot Citroen, Deutsche Lufthansa AG and UAL Corp. rallied more than 2 per cent in European trading as oil retreated.
Europe's Dow Jones Stoxx 600 Index added 1.3 per cent to 281.94 at 12:48 p.m. in London, trimming this week's decline to 1.9 per cent. Futures on the Standard & Poor's 500 Index added 0.8 per cent, while the MSCI Asia Pacific Index fell 1.1 per cent.
`You've got to believe it is a positive sign for the market if companies think it is calm enough to resume activity,'' said Henk Potts, a London-based fund manager at Barclays Stockbrokers, which has $45 billion. ``Merger-and-acquisition activity should be a supportive factor for stocks.''
Aon's bid for Benfield follows Xstrata Plc's unsolicited $10 billion takeover offer for Lonmin Plc and General Dynamics Corp.'s purchase of Jet Aviation Management AG this month.
European takeovers have drawn a ``line in the sand'' for asset valuations and represent a turning point for the market, Goldman Sachs Group Inc. said in report.
``Either the market is pricing in a 1970s period of low growth and high inflation, or it has become relatively more attractive,'' Goldman Managing Director Anthony Ling and a team of analysts wrote in the report dated yesterday.
Lehman rose 12 per cent to $15.30 in New York. A spokesman for state-run Korea Development Bank said that Lehman was one of its options for an acquisition, Reuters said. Officials at Lehman were not immediately available for comment, according to Reuters.
SSL International Plc climbed 5.7 per cent after Goldman Sachs Group Inc. recommended buying shares in the maker of Durex condoms and Scholl shoes on speculation it may be a takeover target. TNT NV surged 7.7 per cent after the U.K.'s Times newspaper said United Parcel Service Inc. may bid for the Dutch company as soon as this weekend.
Europe's Dow Jones Stoxx 600 Index trades at 11.71 times its members' current earnings, according to weekly Bloomberg data. That's near the lowest valuation since at least 2002.
National benchmark indexes rose in all 17 western European markets that were open except Norway. Germany's DAX added 0.6 per cent as did France's CAC 40. The U.K.'s FTSE 100 gained 0.9 per cent.
Hochtief climbed 9.8 per cent to 55.03 euros. Germany's biggest builder may be broken up by its main investors, Manager Magazin reported, without saying where it got the information. Spanish builder Actividades de Construccion & Servicios SA, which holds more than 25 per cent of Hochtief, may buy out other shareholders, the magazine said.
ACS doesn't seek a breakup of Hochtief, spokesman Lorenzo Cooklin said in a telephone interview today.
Benfield surged 30 per cent to 353 pence. Aon agreed to buy London-based Benfield for 844 million pounds ($1.6 billion), including new shares.
SSL International gained 5.7 per cent to 463 pence after Goldman Sachs added the stock to its ``conviction buy'' list.
``The group could prove an attractive bolt-on deal for a larger group seeking to increase exposure to branded consumer health products,'' London-based analyst Robert Waldschmidt wrote in a note dated yesterday. In addition, a trading update scheduled for Oct. 16 ``could lead to upward revisions to consensus estimates.''
TNT gained 7.7 per cent to 26.65 euros. UPS and Europe's second-biggest express-delivery service may meet to work out a deal over the weekend, with the U.S. company offering 34 euros to 38 euros a share, the Times reported today, without citing anyone.
TNT spokesman Cyrille Gibot didn't immediately return a phone call seeking comment.
Peugeot, Europe's second-biggest carmaker, increased 2.5 per cent to 33.20 euros. Nokian Renkaat Oyj, the Nordic region's biggest tiremaker, added 2.6 per cent to 25.65 euros.
Lufthansa, Europe's second-largest airline, climbed 2.4 per cent to 14.35 euros. UAL, the parent company of United Airlines, 3.4 per cent to $11.72 in German trading.
Crude oil for October delivery declined 61 cents, or 0.5 per cent, to $120.57 a barrel today.
European stocks are headed for their worst week in more than a month as concern spread that banks will post more losses and reports signaled faster-than-forecast inflation in the U.S. and Germany, Europe's biggest economy. More than $13 trillion has been erased from equity markets worldwide in 2008 as accelerating inflation, record oil and $505 billion in writedowns and credit-related losses threaten economic growth.
Arriva Plc added 4.2 per cent to 743 pence. The operator of the U.K.'s longest train route said first-half profit jumped 32 per cent as the company added buses, won a rail-route franchise and attracted travelers switching to public transit as gasoline prices rose.
Dragon Oil Plc jumped 13 per cent to 351.75 pence after the Dubai-based petroleum producer with operations in Turkmenistan said first-half profit gained 34 per cent as crude prices rose to a record.
Rentokil Initial Plc tumbled 5.4 per cent to 69.75 pence. The world's biggest pest-control provider reported a 68 per cent plunge in second-quarter profit and said it will take up to five years to turn around sliding earnings.
Lehman Brothers Holdings Inc. climbed 12 per cent in New York after Reuters reported that Korea Development Bank was considering acquiring the fourth-largest US securities firm. Hochtief AG increased 9.8 per cent after Manager Magazin said Germany's biggest builder may be broken up. Benfield Group Ltd. jumped 30 per cent after Aon Corp., the world's biggest insurance broker, offered $1.6 billion for the U.K. company. PSA Peugeot Citroen, Deutsche Lufthansa AG and UAL Corp. rallied more than 2 per cent in European trading as oil retreated.
Europe's Dow Jones Stoxx 600 Index added 1.3 per cent to 281.94 at 12:48 p.m. in London, trimming this week's decline to 1.9 per cent. Futures on the Standard & Poor's 500 Index added 0.8 per cent, while the MSCI Asia Pacific Index fell 1.1 per cent.
`You've got to believe it is a positive sign for the market if companies think it is calm enough to resume activity,'' said Henk Potts, a London-based fund manager at Barclays Stockbrokers, which has $45 billion. ``Merger-and-acquisition activity should be a supportive factor for stocks.''
Aon's bid for Benfield follows Xstrata Plc's unsolicited $10 billion takeover offer for Lonmin Plc and General Dynamics Corp.'s purchase of Jet Aviation Management AG this month.
European takeovers have drawn a ``line in the sand'' for asset valuations and represent a turning point for the market, Goldman Sachs Group Inc. said in report.
``Either the market is pricing in a 1970s period of low growth and high inflation, or it has become relatively more attractive,'' Goldman Managing Director Anthony Ling and a team of analysts wrote in the report dated yesterday.
Lehman rose 12 per cent to $15.30 in New York. A spokesman for state-run Korea Development Bank said that Lehman was one of its options for an acquisition, Reuters said. Officials at Lehman were not immediately available for comment, according to Reuters.
SSL International Plc climbed 5.7 per cent after Goldman Sachs Group Inc. recommended buying shares in the maker of Durex condoms and Scholl shoes on speculation it may be a takeover target. TNT NV surged 7.7 per cent after the U.K.'s Times newspaper said United Parcel Service Inc. may bid for the Dutch company as soon as this weekend.
Europe's Dow Jones Stoxx 600 Index trades at 11.71 times its members' current earnings, according to weekly Bloomberg data. That's near the lowest valuation since at least 2002.
National benchmark indexes rose in all 17 western European markets that were open except Norway. Germany's DAX added 0.6 per cent as did France's CAC 40. The U.K.'s FTSE 100 gained 0.9 per cent.
Hochtief climbed 9.8 per cent to 55.03 euros. Germany's biggest builder may be broken up by its main investors, Manager Magazin reported, without saying where it got the information. Spanish builder Actividades de Construccion & Servicios SA, which holds more than 25 per cent of Hochtief, may buy out other shareholders, the magazine said.
ACS doesn't seek a breakup of Hochtief, spokesman Lorenzo Cooklin said in a telephone interview today.
Benfield surged 30 per cent to 353 pence. Aon agreed to buy London-based Benfield for 844 million pounds ($1.6 billion), including new shares.
SSL International gained 5.7 per cent to 463 pence after Goldman Sachs added the stock to its ``conviction buy'' list.
``The group could prove an attractive bolt-on deal for a larger group seeking to increase exposure to branded consumer health products,'' London-based analyst Robert Waldschmidt wrote in a note dated yesterday. In addition, a trading update scheduled for Oct. 16 ``could lead to upward revisions to consensus estimates.''
TNT gained 7.7 per cent to 26.65 euros. UPS and Europe's second-biggest express-delivery service may meet to work out a deal over the weekend, with the U.S. company offering 34 euros to 38 euros a share, the Times reported today, without citing anyone.
TNT spokesman Cyrille Gibot didn't immediately return a phone call seeking comment.
Peugeot, Europe's second-biggest carmaker, increased 2.5 per cent to 33.20 euros. Nokian Renkaat Oyj, the Nordic region's biggest tiremaker, added 2.6 per cent to 25.65 euros.
Lufthansa, Europe's second-largest airline, climbed 2.4 per cent to 14.35 euros. UAL, the parent company of United Airlines, 3.4 per cent to $11.72 in German trading.
Crude oil for October delivery declined 61 cents, or 0.5 per cent, to $120.57 a barrel today.
European stocks are headed for their worst week in more than a month as concern spread that banks will post more losses and reports signaled faster-than-forecast inflation in the U.S. and Germany, Europe's biggest economy. More than $13 trillion has been erased from equity markets worldwide in 2008 as accelerating inflation, record oil and $505 billion in writedowns and credit-related losses threaten economic growth.
Arriva Plc added 4.2 per cent to 743 pence. The operator of the U.K.'s longest train route said first-half profit jumped 32 per cent as the company added buses, won a rail-route franchise and attracted travelers switching to public transit as gasoline prices rose.
Dragon Oil Plc jumped 13 per cent to 351.75 pence after the Dubai-based petroleum producer with operations in Turkmenistan said first-half profit gained 34 per cent as crude prices rose to a record.
Rentokil Initial Plc tumbled 5.4 per cent to 69.75 pence. The world's biggest pest-control provider reported a 68 per cent plunge in second-quarter profit and said it will take up to five years to turn around sliding earnings.