Stocks Rise on Hopes That Crisis Has Passed EUROPE MARKETPLACE By Bloomberg
Posted on: Tuesday, 2 October 2007, 12:00 CDT
By Sarah Jones
European stocks advanced Monday, paced by mining companies and banks, on speculation that the worst of the credit crisis could be over and that the U.S. Federal Reserve would cut interest rates to fuel economic growth.
BHP Billiton and Anglo American, the two largest mining companies, gained as copper prices rose. UBS led banks higher. Air France-KLM Group climbed after Goldman Sachs advised buying the airline's shares.
The Dow Jones Stoxx 600 index added 3 points to 380.86 in London. The Stoxx 50 advanced 25.62 points to 3,845.95. The Euro Stoxx 50, a measure for the euro region, rose 27.94 points to 4,409.65.
Stocks followed U.S. gains after Citigroup advised clients to buy shares of home builders and the former Federal Reserve chairman, Alan Greenspan, said the credit slump may be ending.
"The good news is that we're finally getting figures on the impact of the credit crisis and the uncertainty is over," said Stefano Mussati, an investment adviser at Credit Suisse Group in Milan. "It's becoming apparent that the contagion will be contained and the impact will only be on one or two quarters."
Indexes extended their rally after a report showed the Institute for Supply Management's prices-paid index trailed economists' forecasts, giving the Fed more cause to cut rates.
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National indexes rise again
"The ISM data suggests that inflation is not an issue and the Federal Reserve can cut rates again," said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London.
National benchmarks increased in all 18 markets in Western Europe. The CAC 40 in Paris rose 57.57 points to 5,773.26. The DAX in Frankfurt added 60.91 points to 7,922.42. The FTSE 100 in London gained 39.40 points to 6,506.20.
BHP, the biggest mining company, climbed 65 pence to l18.15. Anglo American, the second-largest mining company, added 71 pence to l33.60.
Copper increased on concern that a strike planned for Tuesday at Southern Copper, one of the world's largest producers, will curb output.
Credit Suisse gained 1.40 Swiss francs to 78.70 francs. Profit from continuing operations will be between 1.04 billion Swiss francs and 1.56 billion francs, lower than the 1.47 billion franc profit in the same period a year earlier. The bank said it still expected to announce record nine month-earnings on Nov. 1.
Air France-KLM, the biggest airline in Europe, rallied 1.67 to 27.44 after Goldman Sachs added the shares to its "conviction buy" list on speculation that a drop in the last two months did not reflect the earnings outlook. The stock has tumbled 18 percent in the last two months.
The French carrier plans to challenge British Airways by offering a daily flight from Heathrow airport to Los Angeles, according to a report.
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German carrier also gains
Lufthansa, the second-biggest airline in Europe, increased 40 cents to 20.64 as Goldman Sachs initiated coverage of the shares with a "neutral" recommendation and a share price estimate of 21.
Deutsche Postbank gained 2.30 to 53.81 after UBS raised its recommendation on shares of the biggest lender in Germany to "buy" from "neutral."
"We think Postbank could be an attractive takeover target" over the next 6 to 15 months, with a potential price of at least 78 a share, UBS analysts including Philipp Zieschang wrote.
ThyssenKrupp, the largest steel maker in Germany, climbed 43 cents to 45.08 after the company's chief executive, Ekkehard Schulz, said the company wanted to double annual sales in China to 2 billion over the next five years. Theolia, a wind-power generator partially owned by General Electric, rose the most in seven months in Paris on speculation of a takeover by the U.S. company.
An acquisition "is always possible and it would be logical that it would come from General Electric," Didier Laurens, an analyst at Societe Generale in Paris, said.
Theolia shares rose as much as 2.99, or 16 percent, to 21.69, closing up 1.10 at 19.80 in Paris.
General Electric, the largest maker of power-plant equipment, agreed to acquire 15 percent of Theolia in February in exchange for turbines in Germany and 20 million in cash.
Originally published by Bloomberg News.
(c) 2007 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.
Source: International Herald Tribune
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