LONDON: European shares hovered near six-year highs on 7 February, inspired by continued bid speculation among utilities which boosted Germany’s E.ON and Spain’s Iberdrola.
E.ON gained 2 % as investors cheered the favourable response from takeover target Endesa and welcomed price restraint at the German utility for keeping its bid below 40 euros per share.A 4 % rally in BHP Billiton’s shares also underpinned the broader market after the world’s biggest miner set an extra $10 billion in share buy backs.
By 1200 GMT, the FTSEuro first 300 index of leading European shares was up 0.1 % at 1,543.89, near a 6-year high of 1,548.90 hit in the previous session.Philipp Musil, equity fund manager at Constantia Privatbank in Vienna said he remained upbeat on markets, which have been supported by mostly strong results and rising M&A activity.
“For me, there is nothing new to change my mind that we are still positive on the market, that we think we will have a positive return in 2007 and all the volatility in the last days is just liquidity-driven, nothing else,” he said.
The pan-European FTSEurofirst 300 index has gained 4 % so far this year, adding to last year’s 16 % rally.Investors will keep a close eye on monetary policy with interest rate decisions due from the European Central Bank and the Bank of England on 8 February.
The ECB is widely expected to keep rates on hold at 3.5 % and to signal that rates might rise in March. The Bank of England is seen keeping rates steady at 5.25 % after a surprise increase in rates last month.
Across European exchanges, Britain’s FTSE 100 index was little changed, France’s CAC 40 rose 0.2 % and Germany’s DAX added 0.3 %. US stock index futures indicated a firm start on Wall Street.Among gainers in Europe, Iberdrola rallied 5%, adding to Tuesday’s 3% gain on persistent bid speculation in the sector. The latest bid talk focused on possible interest for the company from French power giant EDF, traders said.
Pharmaceuticals underperformed, with Swiss drugmaker Roche falling 2.6% after a cautious outlook.The company reported results broadly in line with market forecasts but disappointed some investors who had been expecting stronger results after the stock jumped 9 % so far this year in the run up to the results.
“It’s just Roche results. Basically I think it was a crowded long going into numbers, expectations were very high and I think there’s a little bit of concern on the guidance of 2007,” said one dealer.Astra Zeneca lost 2 % after going ex-dividend, while GlaxoSmithKline Plc fell 1 %, a day before it reports results.