You are here

Bourses cautiously higher ahead of Fed speech

08/09/2004 11:51
European equity markets were cautiously higher on Wednesday, following on from an overnight rally on Wall Street, but awaiting testimony on monetary policy by Federal Reserve chairman Alan Greenspan.

US stocks were propelled to two-month highs on Tuesday by declining oil prices, and while trade was volatile, thin volumes ensured the market ended the day off highs as some chose to take profits.

Mr Greenspan is expected to reiterate the Fed’s recent stance that interest rates should increase at a measured pace.

The FTSE Eurotop 300 was up 0.1 per cent to 992.19, while the FTSE 100 in London added 0.1 per cent to 4,567.8. In Paris, the CAC-40 was flat at 3,681.01, but Frankfurt’s Xetra Dax eased 0.1 per cent to 3,886.15.

Bid speculation and corporate profits provided the early focus to the market. Ad agencies Havas of France and the UK’s WPP are likely to be in the spotlight as potential bidders for Grey Global as the deadline for offers for the US company looms. Havas shares were 2.6 per cent lower at €3.95, while those of WPP were down 0.5 per cent at 517p.

Vinci, the French construction company, was the biggest percentage gainer on the Eurotop 300 after reporting higher-than-expected first-half net profit following the close on Tuesday. Its shares gained 3.3 per cent to €91.65.

Also in the construction sector, Lafarge, the French company which reports half-year earnings on Thursday, was up 0.4 per cent to €73.80. “Based on the comments from others who have already reported, and in particular Holcim, we consider the balance of risk is that Lafarge will be subject to earnings upgrades after the result. For now, we continue with our ‘neutral’ rating,” said Credit Suisse First Boston in a research note.

Holcim was up 0.2 per cent to SFr68.90, while Spain’s Grupo Ferrovial added 0.9 per cent to €37.95.

Core profit at Accor, Europe’s biggest hotel operator, rose 4.8 per cent in the first half, failing to meet expectations. The company, which owns the Ibis, Sofitel and Novotel chains, said it expected to see profit growth for the full year. However, disappointment that the results did not top forecasts helped drive the shares 4 per cent lower to €33.60 - making Accor the biggest percentage loser on the pan-European index.

London-listed Hilton Group fell 1.5 per cent to 268p.

Alcatel, the French mobile handset maker, added 2.8 per cent to €9.89 after JP Morgan upgraded the stock to “neutral” from “underweight” saying that at current valuation, the stock was well below its six-month tartget price of €11.

Credit Agricole, the French bank, was up 0.7 per cent to €21.01 after it reported profits for the second quarter that beat market estimates as bad loan provisions fell and sales at consumer banking units rose strongly.

Strong interim results from Bouygues were driven by a 65 per cent rise in net profit at the conglomerate’s mobile telecoms division. The group’s shares were up 1.7 per cent to €28.99 as total net profit in the first half almost doubled to €249m, from €130m in the same period a year ago.

Casino, the French supermarket operator, fell 0.2 per cent to €67.95 as it announced first-half profits that were in line with both its own guidance and market expectations, thanks to improving sales at its discount operations and its foreign outlets. Net profit was up 10.5 per cent on the year ago period.

Heineken, the Dutch brewer, managed to edge 0.2 per cent higher to €21.92 in spite of a 4.5 per cent fall in first-half profit. The result had been widely expected as the summer had been poor in many of its key markets, but the company said it was on target to meet full-year goals.

“Given the high benchmark set by last year’s excellent summer in Europe, the organic growth rate will inevitably be lower in the second half of the year compared with that of the first half of 2004,” the company said.

Interbrew, wich reports later in the week, was up 0.5 per cent to €26.85.