29/06/2005 14:39
European shares advanced on Wednesday as oil prices eased from record high levels and Europe’s second biggest telecoms operator announced a forecast-beating dividend rise for 2005.
The FTSE Eurofirst 300 rose 0.2 per cent to 1,142.35 by midday, London’s FTSE 100 gained 0.1 per cent to 5,096.3, Germany’s Xetra Dax put on 0.2 per cent to 4,564.62 and France’s CAC-40 moved 0.6 per cent higher to 4,217.10.
On Wall Street overnight, stocks finished higher for the first session in seven as a fall in crude prices and a rise in US consumer confidence gave investors a boost. The Dow Jones Industrial Average rose 1.1 per cent to 10,405.63, while the Nasdaq Composite Index gained 1.2 per cent to 2,069.89.
Oil prices fell nearly 4 per cent on Tuesday, as investors booked profits after front-month Nymex WTI hit a record nominal high of $60.95 a barrel in the previous session. Prices held above $58 a barrel on Wednesday as the oil market awaited crucial US crude inventory data due out at 1430 GMT.
In Europe, France Telecom, the continent’s second largest fixed and mobile telecoms operator, surprised the market by proposing to more than double its dividend to €1 in 2005 from €0.48 in 2004. At the company’s investor day in Paris, executives also pledged to lift sales between 3 and 5 per cent from 2006 and 2008 and vowed to continue to cut costs and debt.
“Overall, we would expect the market to be pleased with the dividend,” said analysts at Deutsche Bank who reiterated their “buy” recommendation on the stock. Shares rose 4.3 per cent to €23.57.
The upbeat tone spread across the European telecoms sector, with Telecom Italia rising 1.9 per cent to €2.5375, Deutsche Telekom gaining 1.8 per cent to €15.12, the Netherland’s KPN up 1.4 per cent to €6.77 and Portugal Telecom putting on 0.8 per cent to €7.70.
Shares in French motorway operator Autoroutes du Sud de la France jumped 4.9 per cent to €47.10 after the French government announced its plan to sell its remaining stake in the company in an effort to reduce debt.
Far from depressing prices, the move was greeted enthusiastically by investors, as ASF is now seen as a potential takeover target for rival Vinci, which already owns a 23 per cent stake in the company. Vinci shares rose 4.6 per cent to €68.55.
“We believe that there is the potential for a deal in the coming months and would be long both companies ahead of this,” said analysts at Goldman Sachs.
German chipmaker Infineon drove gains in the technology sector after analysts at CSFB upgraded the stock to “neutral” from “underperform”.
“With low valuation, slightly more supportive prices in DRAM, investor excitement around press reports of a possible break-up, and new management that appears firmly committed to a turnaround, we feel investors should not be short the stock at this point,” they said. Shares rose 1.2 per cent to €7.73.
Elsewhere in the sector, France’s Alcatel rose 1.5 per cent to €9.07, Europe’s second largest chipmaker STMicroelectronics gained 2.1 per cent to €13.30and Sweden’s Ericsson put on 0.8 per cent to €25.40.
Swiss-Swedish engineering group ABB rose 0.9 per cent to SFr8.86 after JP Morgan reiterated its “overweight” recommendation on the stock and upped their price target by 8 per cent to SFr9.1. “ABB remains one of the most interesting stories in the increasingly fully-valued capital goods sector,” said Andreas Willi of JPM. “The group’s favourable end-market outlook gives us confidence in medium-term top-line growth.”
Spanish contractor Grupo Ferrovial rose 1.5 per cent to €53.10 after Deutsche Bank upped its price target on the stock to €59 from €49 and reiterated its “buy” recommendation. Analysts said Ferrovial was their top pick in the Spanish construction sector which has outperformed the Ibex-35 this year on a combination of low interest rates and continuing construction backlogs. “The reasons that could explain the good performance of these companies till now are not scheduled to change in the short term, and subsequently, could still be valid for some months,” they said.
The FTSE Eurofirst 300 rose 0.2 per cent to 1,142.35 by midday, London’s FTSE 100 gained 0.1 per cent to 5,096.3, Germany’s Xetra Dax put on 0.2 per cent to 4,564.62 and France’s CAC-40 moved 0.6 per cent higher to 4,217.10.
On Wall Street overnight, stocks finished higher for the first session in seven as a fall in crude prices and a rise in US consumer confidence gave investors a boost. The Dow Jones Industrial Average rose 1.1 per cent to 10,405.63, while the Nasdaq Composite Index gained 1.2 per cent to 2,069.89.
Oil prices fell nearly 4 per cent on Tuesday, as investors booked profits after front-month Nymex WTI hit a record nominal high of $60.95 a barrel in the previous session. Prices held above $58 a barrel on Wednesday as the oil market awaited crucial US crude inventory data due out at 1430 GMT.
In Europe, France Telecom, the continent’s second largest fixed and mobile telecoms operator, surprised the market by proposing to more than double its dividend to €1 in 2005 from €0.48 in 2004. At the company’s investor day in Paris, executives also pledged to lift sales between 3 and 5 per cent from 2006 and 2008 and vowed to continue to cut costs and debt.
“Overall, we would expect the market to be pleased with the dividend,” said analysts at Deutsche Bank who reiterated their “buy” recommendation on the stock. Shares rose 4.3 per cent to €23.57.
The upbeat tone spread across the European telecoms sector, with Telecom Italia rising 1.9 per cent to €2.5375, Deutsche Telekom gaining 1.8 per cent to €15.12, the Netherland’s KPN up 1.4 per cent to €6.77 and Portugal Telecom putting on 0.8 per cent to €7.70.
Shares in French motorway operator Autoroutes du Sud de la France jumped 4.9 per cent to €47.10 after the French government announced its plan to sell its remaining stake in the company in an effort to reduce debt.
Far from depressing prices, the move was greeted enthusiastically by investors, as ASF is now seen as a potential takeover target for rival Vinci, which already owns a 23 per cent stake in the company. Vinci shares rose 4.6 per cent to €68.55.
“We believe that there is the potential for a deal in the coming months and would be long both companies ahead of this,” said analysts at Goldman Sachs.
German chipmaker Infineon drove gains in the technology sector after analysts at CSFB upgraded the stock to “neutral” from “underperform”.
“With low valuation, slightly more supportive prices in DRAM, investor excitement around press reports of a possible break-up, and new management that appears firmly committed to a turnaround, we feel investors should not be short the stock at this point,” they said. Shares rose 1.2 per cent to €7.73.
Elsewhere in the sector, France’s Alcatel rose 1.5 per cent to €9.07, Europe’s second largest chipmaker STMicroelectronics gained 2.1 per cent to €13.30and Sweden’s Ericsson put on 0.8 per cent to €25.40.
Swiss-Swedish engineering group ABB rose 0.9 per cent to SFr8.86 after JP Morgan reiterated its “overweight” recommendation on the stock and upped their price target by 8 per cent to SFr9.1. “ABB remains one of the most interesting stories in the increasingly fully-valued capital goods sector,” said Andreas Willi of JPM. “The group’s favourable end-market outlook gives us confidence in medium-term top-line growth.”
Spanish contractor Grupo Ferrovial rose 1.5 per cent to €53.10 after Deutsche Bank upped its price target on the stock to €59 from €49 and reiterated its “buy” recommendation. Analysts said Ferrovial was their top pick in the Spanish construction sector which has outperformed the Ibex-35 this year on a combination of low interest rates and continuing construction backlogs. “The reasons that could explain the good performance of these companies till now are not scheduled to change in the short term, and subsequently, could still be valid for some months,” they said.
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