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European Stocks Rise to Highest Since 2001; ICI, BA Advance
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By Alexis Xydias
Nov. 22 (Bloomberg) -- European stocks rose on speculation that a record year for takeovers and better-than-expected earnings will help extend a rally that has sent the Dow Jones Stoxx 600 Index to its highest in almost six years.
Imperial Chemical Industries Plc jumped after it sold a fragrance unit to Givaudan SA for 1.2 billion pounds ($2.28 billion). British Airways Plc led gains by airlines after Australia's Qantas Airways Ltd. became an acquisition target. Vestas Wind Systems A/S surged as it forecast higher sales.
``We are seeing a lot of mergers and positive earnings'' from companies, said Albert Duran, who helps manage $1.9 billion at Caixa Manresa in Manresa, Spain. ``People should not worry, stocks will keep delivering.''
The Stoxx 600 Index added 0.5 percent to 361.79 as of 12:08 p.m. in London, set for its highest since Jan. 31, 2001. The Stoxx 50 and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, both rose 0.4 percent.
ASML Holding NV and STMicroelectronics NV climbed after profit at Dell Inc., the world's No. 2 personal computer maker, topped analysts' predictions. Credit Agricole SA slid after revenue at the French lender fell short of estimates.
Mergers and acquisitions worldwide have surged to an all- time high of $3.1 trillion this year, with Europe accounting for 47 percent of the deals. Analysts have increased their forecast for 2006 profit growth throughout 2006 as earnings beat estimates.
Consumer Spending
French consumer spending on manufactured goods rose in October after unemployment fell to a five-year low, the government said. Investors will also look at a report on U.S. consumer confidence to gauge the strength of the global economy.
Analysts have raised earnings estimates for companies in the Stoxx 600 throughout the year, to match better-than-expected releases. They now forecast earnings will grow on average 14 percent this year, from the 9 percent predicted in January, according to estimates compiled by FactSet Research Systems Inc.
National benchmarks rose in all 18 western European markets, except Iceland. The U.K.'s FTSE 100 Index added 0.2 percent while France's CAC 40 Index climbed 0.6 percent. Germany's DAX increased 0.5 percent.
ICI, the U.K.'s largest specialty chemical maker, surged 9 percent to 422 pence. Givaudan, the world's biggest flavors and fragrances maker, agreed to buy ICI's Quest International fragrance unit for 1.2 billion pounds to become the largest supplier of scents used in perfumes.
Givaudan rose 6.2 percent to 1,092 Swiss francs.
Techem AG, the German company that reads utility meters, jumped 10 percent to 55.25 euros. BC Partners Ltd. agreed to buy Techem for 1.28 billion euros ($1.7 billion), topping a bid by Macquarie Bank Ltd. by 18 percent.
Steelmakers Gain
Rautaruukki Oyj, Finland's biggest maker of carbon steel, rose 3 percent to 27.65 euros. Acerinox SA, the world's fourth- largest stainless-steel maker, added 3.1 percent to 20.08 euros.
U.S. Steel Corp. yesterday jumped 2 percent. The biggest U.S.-based steelmaker has risen 11 percent in the past three days on speculation that it may be a takeover target, according to analysts including David Lipschitz at Merrill Lynch & Co.
``This M&A trend will continue,'' said Daniel Broby, who helps manage $14 billion as chief investment officer at Copenhagen-based Bankinvest. ``The reason that I have confidence is the size of private-equity bids. No company is sacrosanct.''
British Airways, Europe's third-biggest airline, added 2.5 percent to 493 pence and Deutsche Lufthansa AG, the second largest, rose 2.4 percent to 19.36 euros.
Qantas Bid
Qantas, Australia's biggest airline, said it's received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group, sparking an 18 percent gain in its shares.
Vestas Wind, the world's largest maker of wind turbines, surged 17 percent to 205 kroner, the biggest gain on the Stoxx 600. Revenue will rise to about 4.5 billion euros ($5.8 billion) in 2007 from an estimated 3.7 billion euros this year, the Randers, Denmark-based company said. Vestas had 3.58 billion euros in sales last year.
ASML, Europe's largest maker of semiconductor equipment, added 1 percent to 20.04 euros. STMicroelectronics, Europe's largest semiconductor maker, gained 1.4 percent to 14.39 euros.
Dell reported third-quarter net income of 30 cents a share, topping the 24-cent average estimate of analysts in a Thomson Financial survey. Gross margin, the percentage of sales left after production costs, also beat predictions.
`Positive Surprise'
``Dell's margins were a tremendous positive surprise and tell us that global demand is good,'' said Sanjay Jhaveri, a technology analyst who helps manage the equivalent of $25.7 million at Vontobel Asset Management in Zurich. It could be ``very good'' from companies such as ASML.
Credit Agricole, France's second-biggest bank by assets, lost 3.8 percent to 32.98 euros. Revenue advanced 15 percent to 3.81 billion euros ($4.9 billion), missing the 3.91 billion-euro median estimate of 11 analysts surveyed by Bloomberg. Before today, the shares gained 29 percent in 2006.
Nokia Oyj, the world's largest mobile-phone maker, rose 3 percent to 16.25 euros as it widened its lead over competitors in the third quarter on demand in Asia. Nokia's market share increased to 35.1 percent from 32.5 percent in the year-earlier quarter, researcher Gartner Inc. said.
European Aeronautic Defence & Space Co., the parent of planemaker Airbus SAS, advanced 4.7 percent to 23.9 euros. Goldman Sachs Inc. added EADS to its ``conviction buy list'' of favorite stocks in the region, with a 12-month stock price estimate of 27 euros.
``We believe the perceived major negatives for EADS are largely priced in,'' wrote Goldman analysts in a report to investors. ``We now believe both management and stakeholders accept the need for radical restructuring at Airbus.''
Real Estate Slump
DSG International Plc fell 4.8 percent to 208 pence, the worst decline on the Stoxx 600. The U.K.'s largest consumer electronics retailer said first-half profit was little changed because of a slump in revenue at its Italian unit and a decline in net finance income.
Confidence among U.S. consumers probably held close to a 15- month high in November as lower gasoline prices and more jobs helped Americans cope with the slump in real estate, economists said before a report due at 3 p.m. London time today