LONDON (Thomson Financial) - Europe's leading exchanges gained ground as the oil sector rallied on rising crude-oil prices and corporate takeover talk, but British Airways fell amid some disappointment over its full-year results.
At 9.21 am, the STOXX 50 was up 30.78 points at 3,906.17 while the STOXX 600 added 2.77 points to 393.16.
'The oil sector is buoyant after the rumours of a BP-Royal Dutch merger yesterday,' with the rise in crude oil lending further support to oil stocks, said Adrian Darley, head of trading at Resolution Asset Management.
Among the leading gainers in the sector, BP was up 2.2 pct, Total gained 2.2 pct while ENI rose 1.3 pct.
Darley said the broad strength in European markets is due to the solid outlook for European growth, with 'lean and mean' European companies continuing to deliver.
Private equity deals also continue to be a supporting factor, said Darley.
Reflecting that support, Cadbury Schweppes was trading at historic highs after UK newspaper The Daily Telegraph said two rival private-equity consortia are preparing 8 bln stg bids for its US beverage arm. The stock was last up 4.5 pct.
In the banking sector, trading in shares in Italy's Unicredito Italiano and Capitalia were suspended for the day, including after-hour trading, pending the release of a statement.
The two banks are expected to hold board meetings on Sunday to clear a merger, according to media reports.
The swap ratio of the operation is expected to be 1.1 Unicredito share for every Capitalia share, and will lead to the creation of a bank with a market capitalisation of about 100 bln eur, according to Italy's Finanza & Mercati.
On the earnings front, shares in British Airways fell 2.5 pct after the airline's full-year results came in below consensus, with full-year operating profit falling to 602 mln stg from 694 mln in 2006.
Analysts, however, remained positive on the stock.
UBS reiterated its 'buy' stance and maintained its target price at 650 pence, stating that, on a positive note, the company's decision to reiterate its guidance for the year should calm investors.
Broker Collins Stewart also said it remained a buyer of the stock, citing valuation and its attractiveness as a takeover target.
Staying in the airline sector, shares in Air France fell 0.8 pct on a Spanish news report the French airline may be mulling a bid for Spain's Iberia in which BA has a 10 pct stake.
BA said this morning it is continuing to look at all options for its stake, including the disposal of its shareholding.
Arcelor Mittal shares rose 2.5 pct after broker Exane said the steel maker's strong cash flow generation warrants 40 pct additional upside to the current level of the stock.
Shares in Renault SA rallied 2.3 pct after Merrill Lynch raised its price target on the car maker to 130 eur from 100 eur and reiterated its 'buy' rating.
The broker said it has greater confidence in the recovery of the company's auto operations, prompting it to lift its 2008 and 2009 earnings estimates.
Other car makers were also higher in morning trading, with Peugeot up 1.1 pct, DaimlerChrysler gaining 0.5 pct while shares in BMW rose 1.1 pct. Volkswagen, meanwhile, edged up 0.1 pct. Mark.cotton@thomson.com mc1/slj COPYRIGHT Copyright AFX News Limited 2007. 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.
At 9.21 am, the STOXX 50 was up 30.78 points at 3,906.17 while the STOXX 600 added 2.77 points to 393.16.
'The oil sector is buoyant after the rumours of a BP-Royal Dutch merger yesterday,' with the rise in crude oil lending further support to oil stocks, said Adrian Darley, head of trading at Resolution Asset Management.
Among the leading gainers in the sector, BP was up 2.2 pct, Total gained 2.2 pct while ENI rose 1.3 pct.
Darley said the broad strength in European markets is due to the solid outlook for European growth, with 'lean and mean' European companies continuing to deliver.
Private equity deals also continue to be a supporting factor, said Darley.
Reflecting that support, Cadbury Schweppes was trading at historic highs after UK newspaper The Daily Telegraph said two rival private-equity consortia are preparing 8 bln stg bids for its US beverage arm. The stock was last up 4.5 pct.
In the banking sector, trading in shares in Italy's Unicredito Italiano and Capitalia were suspended for the day, including after-hour trading, pending the release of a statement.
The two banks are expected to hold board meetings on Sunday to clear a merger, according to media reports.
The swap ratio of the operation is expected to be 1.1 Unicredito share for every Capitalia share, and will lead to the creation of a bank with a market capitalisation of about 100 bln eur, according to Italy's Finanza & Mercati.
On the earnings front, shares in British Airways fell 2.5 pct after the airline's full-year results came in below consensus, with full-year operating profit falling to 602 mln stg from 694 mln in 2006.
Analysts, however, remained positive on the stock.
UBS reiterated its 'buy' stance and maintained its target price at 650 pence, stating that, on a positive note, the company's decision to reiterate its guidance for the year should calm investors.
Broker Collins Stewart also said it remained a buyer of the stock, citing valuation and its attractiveness as a takeover target.
Staying in the airline sector, shares in Air France fell 0.8 pct on a Spanish news report the French airline may be mulling a bid for Spain's Iberia in which BA has a 10 pct stake.
BA said this morning it is continuing to look at all options for its stake, including the disposal of its shareholding.
Arcelor Mittal shares rose 2.5 pct after broker Exane said the steel maker's strong cash flow generation warrants 40 pct additional upside to the current level of the stock.
Shares in Renault SA rallied 2.3 pct after Merrill Lynch raised its price target on the car maker to 130 eur from 100 eur and reiterated its 'buy' rating.
The broker said it has greater confidence in the recovery of the company's auto operations, prompting it to lift its 2008 and 2009 earnings estimates.
Other car makers were also higher in morning trading, with Peugeot up 1.1 pct, DaimlerChrysler gaining 0.5 pct while shares in BMW rose 1.1 pct. Volkswagen, meanwhile, edged up 0.1 pct. Mark.cotton@thomson.com mc1/slj COPYRIGHT Copyright AFX News Limited 2007. 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.
© 2007 AFX News
