LONDON (AFX) - European exchanges remained higher midday, with Wall Street expected to add to yesterday's gains but Arcelor lower after shock news it plans to try to fend off Mittal's hostile offer through an equity swap with Russia's Severstal, dealers said.
At 12.09 pm, the STOXX 50 was 27.25 points higher at 3,374.09 and the STOXX 600 was up 3.31 points at 320.22.
Spread bettors IG Index said the Dow looks set to move 12 points higher after rising nearly 100 points yesterday, as stock markets continue to rally from heavy losses last week.
Arcelor fell back 3.49 pct as it said it will take an 89.6 pct stake in Russia's largest steel group Severstal in exchange for a 32 pct stake in Arcelor, putting paid to hopes of a raised takeover offer from Mittal.
The transaction values Arcelor at 44 eur per share, excluding a 1.85 eur dividend, representing a premium of 100 pct over Arcelor's closing price on Jan 26, 2006, the day before Mittal Steel announced its hostile offer, and 36.6 pct over Arcelor's closing price ex-dividend yesterday.
'The proposed acquisition of Russian Severstal would make a lot of operational sense,' said CA Cheuvreux. It repeated its 'outperform' stance on the French steel group.
It said there is still some chance that Mittal could take over Arcelor but this move has reduced the likelihood it will.
Exane BNP Paribas also maintained its 'outperform' stance, saying Arcelor's management is building a strong case either for a sustainable re-rated fair value if Mittal's bid is defeated or a higher offer by Mittal. WestLB agreed the move makes strategic sense, giving the new combined group a strong geographical footprint.
Shares in ThyssenKrupp added 3.88 pct and Salzgitter rose 5.09 pct following upbeat comments from Credit Suisse and on the read-across from the Arcelor move.
Corus climbed 2.95 pct and Acerinox was up 1.01 pct.
Telefonica rose 2.87 pct as it said it expects EPS and dividends to double in 2009 from 2005, and said it plans to invest no more than a net 1.5 bln eur in acquisitions up to 2007.
'It's good to see Telefonica is concentrating more on distributing dividends than unnecessary acquisitions. Certainly positive for traders,' a trader said.
EDP added 1.75 pct after its in-line results, as dealers said the shares are attractive again at current levels.
Oil shares made good ground as crude continued to move higher after solid gains in the US last night. BP was up 0.39 pct and ENI was 1.47 pct higher.
Total -- up 0.89 pct -- was in focus. The company is in discussions with Banco Santander Central Hispano -- up 0.53 pct -- over ending a shareholder pact, giving the Spanish group total control of Cepsa.
Shares in Unilever -- up 2.12 pct -- have been upgraded to 'buy' from 'hold' by Deutsche Bank.
And shares in Deutsche Boerse AG and Euronext NV rose 3.32 pct and 2.66 pct respectively in early trade after Credit Suisse upgraded its stance on the two exchange operators' stock to 'outperform' from 'underperform'.
LSE, up 2.13 pct, rebounded from heavy losses yesterday and shrugged off a downgrade to 'underperform' from 'neutral' by the Swiss broker after a report LSE chief executive Clara Furse will meet Nasdaq Stock Market chief executive Robert Greifeld next week in London.
Shares in ASML Holding NV, up 2.08 pct, have been upgraded to 'buy' from 'hold' by Citigroup. Cap Gemini moved up 3.1 pct.
Nokia and Ericsson were tracking peers higher, as shares in the pair were unable to take part in yesterday's stock market gains because their markets were closed for Ascension Day. Nokia added 2.17 pct. Ericsson was 3.07 pct higher.
But Enel fell 0.1 pct, as Eni SpA CEO Paolo Scaroni said the group is in 'no hurry' to reduce its 50 pct stake in Snam Rete Gas SpA, and dismissed the possibility of merging with Enel SpA. deborah.hyde@afxnews.com dlh//cmr 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
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