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European stocks rise as earnings impress

25/10/2007 11:56
European equity markets were higher on Thursday, buoyed by strong results from France Telecom and Swiss engineering group ABB.

In early trade the FTSE Eurofirst 300 was up 0.6 per cent to 1,559.42, Frankfurt’s Xetra Dax added 0.6 per cent to 7,878.02, the CAC 40 in Paris climbed 0.7 per cent 5,712.8 and London’s FTSE 100 gained 0.7 per cent to 6,528.3.

France Telecom reported that its cost control programme and better-than-expected growth in Spain and the UK helped it deliver forecast-beating third-quarter profits.

The company added that it intended to distribute 40-45 per cent of its organic cash flow to shareholders in a dividend payout that should come between €1.15 and €1.30 a share.

France Telecom rose 3.7 per cent to €24.57, and helped boost the wider telecoms sector. Deutsche Telekom climbed 1.5 per cent to €13.59 and Dutch operator KPN gained 1.5 per cent to €12.99.

ABB, the Swiss engineering group, rose 3.1 per cent to SFr33.20 after reporting a forecast-beating 86 per cent rise in third-quarter net profit on strong growth in demand for power infrastructure. The company said the impact of the US housing slowdown on profits in the coming quarters was not expected to be significant.

French rival Alstom climbed 3.3 per cent to €157 after Lehman Brothers raised its price target from €140 to €170 and kept its ”overweight” rating.

Italian insurer Generali climbed 3.5 per cent to €32.26 after Algebris, the British fund and shareholder, called for sweeping changes in corporate governance which it said was depressing the insurer’s value.

Following weak third-quarter results, Finnish paper maker Stora Enso revealed plans to cut production capacity by closing mills in Finland and Sweden to ease costs. The plans will lead to the loss of 1,700 jobs the company said, but added the annual savings would come in between €140-160m. Stora’s shares climbed 3.5 per cent to €12.16.