European stocks ended the day higher Monday, helped by a positive tone to the banking sector despite further subprime writedowns from Swiss bank UBS as investors look ahead to a potential U.S. Federal Reserve rate cut, according to AP. The U.K.'s FTSE 100 Index gained 0.2 percent to 6,565.4, while France's CAC-40 Index rose 0.6 percent to 5,750.9. Germany's DAX Index gained 0.5 percent to 8,033.4. UBS shares gained 1.4 percent after it said it was taking a US$10 billion (¤6.83 billion) writedown, representing a third of its subprime exposure. «We would not suggest that all UBS' problems are behind it,» Bear Stearns said in a research note. «Today's action has certainly helped to move focus away from U.S. subprime and onto the bank's earnings potential.» U.K. bank Lloyds TSB has been less affected by the subprime crisis, announcing in a trading statement that it remains firmly on track to deliver a good performance and solid profit growth for 2007. The bank said it would take a 200 million pound (US$406 million; ¤277 million) charge related to the recent credit market turmoil. Lloyds shares firmed 3.4 percent, and provided some relief for the U.K. banking sector. Alliance & Leicester gained 2.7 percent and HBOS climbed 1.5 percent. France's second-largest bank Societe Generale said Monday it will bail out its only structured investment vehicle, PACE, to the tune of US$4.3 billion (¤2.9 billion), and take the vehicle's assets onto its own balance sheet. «This is obviously bad news for SocGen,» Pierre Chedeville of CM-CIC Securities said. «But, above all, it shows that the crisis is not over yet, contrary to what some people thought.» The announcement saw SocGen shares rise 1.1 percent. The Federal Reserve is widely expected to cut its benchmark rate by a quarter of a percentage point Tuesday, bringing the rate down to 4.25 percent. Shares in the world's largest cement maker Lafarge soared 13 percent on news that the French company bought Egypt's Orascom Construction Industries Cement Group for ¤8.8 billion (US$12.9 billion). Natixis raised its Lafarge rating to buy from accumulate, saying the deal was «good news» for Lafarge, citing synergies around «three times (higher) than what is standard for the sector.» Philips Electronics rose 3.6 percent after two U.S. activist shareholders, claiming to own a 1.6 percent stake in the company, said they would announce their views on the Amsterdam-based company. They didn't provide a time frame for their announcement. French carmaker Renault gained 4.7 percent after its decision to acquire a 25 percent stake in Russia's AvtoVaz. Despite all this, «it's a very quiet market at the moment, and it seems investors are winding down their positions towards the year's end,» said Roger Cursley, strategist at Investec.
