LONDON (AFX) - Leading European exchanges moved higher midday as Wall St futures are positive as the price of oil continues to fall, the UK government has downgraded it terrorism alert and as M&A speculation lifted selected stocks including Ahold, dealers said.
At 9.50 am, the STOXX 50 was up 21.96 points higher at 3,449.35 and the STOXX 600 was 1.93 points higher at 326.38.
Spread bettors, IG Index, said the Dow is set to rise 35 points after losses Friday.
Ahold led the gainers -- up 3.23 pct -- after reports stated that a group of investors headed by Centaurus is preparing to make an 11 bln eur bid for the Dutch food retailer, analysts said, adding that Permira Advisors LLP and Apax Partners Worldwide may also be included in the group.
Centaurus and Paulson later issued a joint press statement indicating they owned an aggregate stake worth 6.4 pct in Ahold.
Merrill Lynch said the move is intended to pressure Ahold into making some radical decisions. Rabo Securities analysts said the investor action could put pressure on them to divest underperforming and non-core assets such as CE Europe, Tops, Jeronimo Martins and US Foodservice.
Shares in British Airways were 0.88 pct higher in early deals after the UK government downgraded the security threat level to 'severe' from 'critical' overnight, while Deutsche Bank reiterated its preference for flag-carriers.
Deutsche Bank reiterated its 'buy' stance and 418 pence target price, noting the market seems to be discounting the group's prospects in the coming year.
Lufthansa added 1.4 pct and Air France-KLM shares moved up 1.66 pct, also boosted by a weakening oil price.
Crude prices fell more than a dollar on Nymex on hopes than a UN-brokered truce and the eventual deployment of an international peacekeeping force in Lebanon will end the conflict there.
And RWE shares were 0.94 pct higher as the Sunday telegraph said two rival groups are preparing to bid for the German utility group's Thames Water unit.
Guy Hands' private equity firm Terra Firma has lined up a 5 bln stg debt package to help finance a bid for RWE's UK unit Thames Water, the paper said.
A rival consortium led by the Qatar Investment Office have also put financing in place for a bid, the paper said.
Rodamco moved 1.09 pct higher after the property company came out with strong first half results.
ABN Amro analyst Rogier Quirijns kept his rating at 'buy' after the company reported a direct income higher than his expectations.
And Hochtief added 3.21 pct after the German construction group reported better-than-expected Q2 numbers supported by annual results from its Australian subsidiary Leighton Holdings which posted annual results dealers said.
Shares in ThyssenKrupp AG rose 1.76 pct, recovering from Friday's 7 pct slump, after Deutsche Bank this morning upgraded its stance on the stock to 'buy' from 'hold' on the back of the steel conglomerate's third quarter results.
In a note to clients, Deutsche Bank said that it expects steel demand to remain strong and believes ThyssenKrupp will have another profitable year in 2007, despite a perceived slowdown in restructuring initiatives.
European insurers moved higher as Citigroup lifted its rating to 'positive'.
It said it is likely that 23 bln eur of these earnings will be reinvested, with a further 38 bln eur being given back to shareholders and the other 33 bln of 'free capital' being deployed.
The broker did not speculate as to how the companies in the sector would spend the free capital, despite market assumptions that any leftovers would be spent on value-destructive M&A.
Axa, Zurich Financial Services Group and Allianz AG were the broker's stock picks. The trio moved up 0.96 pct, up 1.71 pct and 1.35 pct respectively.
But shares in Interserve dropped 25 pct after news the group has suspended six senior staff after discovering accounting irregularities.
Earlier today, the support services group announced it had suspended six members of senior staff after unveiling accounting fraud in the Industrials division that will result in a 25 mln stg cut in net assets in interim results.
Evolution Securities downgraded its rating to 'add' from 'buy' following the news, with a reduced target price of 390 pence from 450 pence, but maintained its estimates until it speaks to management.
Shares in Michael Page dropped 5.37 pct after its slightly disappointing first half results. deborah.hyde@afxnews.com dlh/joy COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited