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European stocks hit new six-year closing high
Published in Saudi Press Agency on 06 - 02 - 2007


European shares rose on Tuesday
led by health care stocks, utilities and merger and acquisition
talks but ended below a six-year intra-day high as leading U.S.
stock market indexes turned lower, according to Reuters.
"It's a small consolidation triggered partly by the
Americans," said a trader, referring to the retreat in the
European afternoon.
"Some investors are locking in profits," the trader said.
The pan-European FTSEurofirst 300 index's close at 1,543.08
points, up 0.31 percent on the day, was its highest since Jan.
31, 2001, but below a peak of 1,548.90 points set earlier in the
session.
The index has risen 4 percent this year, having advanced
more than 16 percent in 2006. But equity strategist Teun
Draaisma at Morgan Stanley said the joyride could not go on
forever, adding that markets were already quite expensive.
"I think the day to aggressively position yourself for that
kind of scenario was seven or eight months ago, and we've got to
think: what's next? And what's next is, I think, there is upward
rate pressure.
"We think it's quite a dangerous period in the next six
months," Draaisma added.
Stock market performance across Europe varied, with London's
FTSE 100 benchmark closing 0.45 percent higher while Frankfurt's
DAX managed a gain of just 0.02 percent and the French CAC 40
fell 0.08 percent.
J. Sainsbury Plc rose 1.3 percent with sources saying
private equity firm Cinven has held talks with Texas Pacific
Group to contemplate a bid for the British supermarket group.
Cable & Wireless rose 3 percent with traders citing talk
that Deutsche Telekom might be interested in a bid for the
British telecoms group. Both companies declined to comment.
M&A speculation also drove utilities, which rose 0.7 percent
on the DJ EuroStoxx sector index, with Iberdrola up 2.8 percent,
Gas Natural up 2.4 percent and E.ON, which is expected to
succeed in its takeover bid for Endesa, up 1.6 percent.
"Investors are already betting on other energy stocks that
could become takeover targets and are taking positions," one
trader said.
In health care, Actelion put on 3.5 percent fuelled by
upgrades from Deutsche Bank and Goldman Sachs.
Fresenius Medical Care climbed almost 6.5 percent on hopes
that U.S. budget health care reform proposals will boost its
sales.
Data showing British retail sales had the strongest January
for three years, up 3.1 percent, helped Morrison rise 2.6
percent, Home Retail Group 1.3 percent and Tesco 1 percent.
After a largely strong start to the European earnings
season, reports from some companies disappointed, with BP
falling 1.2 percent after the company lowered its production
growth targets.
"BP is indicating 3 percent per annum growth to 2009 from 4
percent previously based on what appears to be a much more
conservative approach to production guidance," Dresdner
Kleinwort said in a note.
"The strategy update is very, very poor," said a trader.
Telecoms firm KPN followed its sector peers in reporting
weaker-than-expected results but its shares ended 0.1 percent
higher.
Investors were waiting for a speech later in the day by
Federal Reserve Chairman Ben Bernanke for clues on the U.S.
interest rate outlook.
Recent U.S. data has led some to bet that the U.S. central
bank will keep interest rates on hold for a while. The European
Central Bank is widely expected to raise its rates in March.
In the United States, the Dow Jones industrial average was
down 0.1 percent, the S&P 500 was 0.2 percent lower and the
Nasdaq was off 0.5 percent.


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