European shares closed higher Wednesday, supported by gains from ABN Amro after a consortium said it may pay nearly US$100 billion for the Dutch bank, and some well-received earnings from Michelin, Merck KGaA and Shire, according to AP. The U.K. FTSE 100 index ended 0.5 percent higher at 6,461.90 and the German DAX Xetra 30 index rose 1 percent to 7,343.08. The French CAC-40 index closed up 1 percent at 5,947.33 after touching a session high of 5,962.39, a level not seen since February 2001. ABN Amro shares rose 3.5 percent in Amsterdam, while shares for two of the three companies in the bidding group were weaker. Royal Bank of Scotland lost 0.8 percent and Fortis closed down 1.7 percent. The consortium also includes Banco Santander, which gained 0.9 percent. The consortium valued its offer at around 13 percent more than the deal ABN Amro agreed to with Barclays. Barclays shares closed up 1.6 percent after the consortium announcement and as ABN Amro detailed how its pact to sell its Chicago-based LaSalle operations to Bank of America for US$21 billion can be broken. Mergers and acquisitions are «rampant in the market and we believe the best way to play this is to buy large-capitalization stocks as deals are moving up the capitalization scale,» said Teun Draaisma, a European equity strategist at Morgan Stanley. U.S. markets gave a boost to sentiment, after the Dow Jones Industrial Average hit the 13,000 mark for the first time on better-than-expected durable-goods orders. Shire shares surged 5.2 percent after it reported that first-quarter net nearly doubled and that it's expecting 2007 revenue to grow in the low 20 percent range, compared with a previous estimate of around 20 percent. Shares of German pharmaceutical producer Merck KGaA increased 4.5 percent after the company posted a 37 percent rise in first-quarter sales, lifted by the inclusion of Serono. Merck swung to a first-quarter loss after charges. Michelin rose 4.4 percent, boosting the auto sector, after the tiremaker posted a 5.5 percent increase in first-quarter sales, after higher volumes and prices. The company affirmed its fiscal-year estimate. Luxury-goods leader LVMH Moet Hennessy rose 1.9 percent after it said first-quarter revenue rose 7 percent, or rose 13 percent on a comparable basis. HBOS shares gained 3.5 percent in London after the bank said that it's expecting to deliver earnings per share ahead of the market consensus estimate for 2007. Airline Deutsche Lufthansa closed 1.4 percent higher after it said that it swung to a net profit in the first quarter compared to a loss a year earlier. And Reuters Group ended down 0.6 percent after the business news and information provider said first-quarter revenue dropped 1.1 percent. The figure was hurt by the British pound climbing 12 percent on the U.S. dollar, 2 percent on the euro and 13 percent on the yen. British supermarket chain J Sainsbury closed up 7.2 percent after a 250-million-share block trade spurred renewed takeover talk. Department store chain Marks & Spencer shares rose 2.3 percent after a management shuffle. Alstom shares rose 6.4 percent in Paris after Morgan Stanley upgraded the company to overweight from equal weight.
