London: European stocks surged at midday on Friday in choppy trade as a hostile takeover bid from Roche pushed pharma firms up, while commodity stocks fell as woes about the global economy deepened.
By 1129 GMT, the FTSEurofirst 300 index of top European shares was up 0.2% at 797.79 points, having traded in a range of 804.32 points and 791.90 points earlier in the session.
“The last trading day of the month will give us a fresh perspective - one can’t help but feel that as much as we try to pull ourselves out of this mess, one can’t walk away from the harsh realities of the excesses of the the past decade,” said Chris Hossain, senior sales manager at ODL Securities.
In macroeconomic news, euro zone inflation fell this month to its lowest in almost 10 years, boosting pressure on the European Central Bank (ECB) to cut interest rates. and euro zone unemployment rose to 8.0% in December from an upwardly revised 7.9% in November.
“What we are seeing today is a nervous trading session and the market is braced for a set of pretty horrendous numbers from the United States later today,” said Henk Potts, strategist at Barclays Stockbrokers.
US GDP figures are due at 1330 GMT and US PMI numbers at 1445 GMT.
The pharmaceutical indices added the most points to the index. Roche gained 1.4% after it launched a hostile bid for Genentech, dashing investor hopes of a sweetened offer for the 44% of the US biotech group it does not already own.
Novartis, Sanofi-Aventis and GlaxoSmithKline were up 1.2-1.6%.
French bank BNP Paribas was the top gainer, up 4.4%, after the company, the Belgian government and embattled financial group Fortis agreed to revisions to the latter’s carve-up.
German banks were also higher with traders and analysts pointing to talk about the possible creation of so-called “bad banks”, both in Germany and the US, to house toxic assets off balance sheets.
Deutsche Postbank, Commerzbank and Deutsche Bank were 1.1-5.7% up.
However, the banking sector overall was lower. Banco Santander, Credit Suisse, and Credit Agricole were down 2.2-4.6%.
Across the Europe, the FTSE 100 index was up 0.08%, Germany’s DAX was down 0.4% and France’s CAC 40 was 0.3% lower.
The mining sector contributed to heavy losses on the index as metal prices slipped, with copper down 1.6%. Miner BHP Billiton fell 4.6% on market talk that it is guiding its forecasts lower, traders said.
The company was unavailable for comment.
Anglo American, Antofagasta and Xstrata were 3.3-4.5% lower.
However, Rio Tinto gained 3.8% after the group said it will sell potash assets and its Corumba iron ore mine in Brazil for $1.6 billion to rival Vale as part of a plan to cut debt by $10 billion in 2009.
Energy stocks fell as crude hovered around $41 a barrel on economic concerns. BP, Royal Dutch Shell and Total were down 0.2-1.7%.