Tuesday May 3, 2005

European stocks advance

LONDON (AP) - European markets advanced on Monday, helped by airline stocks that benefited from oil prices below $50 a barrel and a star performance from Adidas-Salomon AG.

Germany's DAX 30 index rose 0.9 percent to 4.224, while France's CAC 40 Index gained 0.7 percent to 3,938.

Markets in London were closed for a national holiday, which kept a lid on volumes across Europe.

Volumes for Deutsche Bank, for example, were less than half of its average.

The euro edged 0.09 percent lower vs. the dollar at US$1.2865, while the pound fell a more significant 0.72 percent to US$1.8951, albeit in a thinly traded market.

In economics, Eurozone April manufacturing PMI fell to 49.2 in April from 50.3 in March, with German April manufacturing PMI missing forecasts, French manufacturing PMI slowing to a 19-month low and also below expectations, and Italian manufacturing PMI falling to 48.0 in April from 49.1 in March.

A reading below 50 indicates contraction.

Investors were still positioning themselves against sluggish economic growth.

Oil-sensitive stocks such as tire maker Michelin SA and airline Lufthansa led the way, though front-month crude oil contracts edged higher in early New York trade.

Extra support came for Michelin and other French auto stocks came as the French CCFA trade association said auto sales rose 11.4 percent in April to 233,939 vehicles.

Adidas-Salomon was a standout, up more than eight percent in Frankfurt after a strong first-quarter and after agreeing to sell Salomon.

The German sneaker and apparel maker said 2005 net income should be at the high end of its 10-15 percent growth view and it upped its operating margin target to 10 percent.

The group posted higher-than-expected first-quarter net income, up 46 percent to euro105 million.

Operating margin rose 1.4 percentage points to 10.1 percent, and sales rose 10 percent to euro1.78 billion.

Adidas also held to its 2005 sales outlook of mid- to high-single-digit growth, saying it has an increasingly positive outlook for North and Latin America.

Shares of rival Puma AG rose 2.4 percent, and Nike, Inc. advanced in U.S. trading.

In the telecom sector, Versatel Telecom International N.V. climbed 24 percent in Dutch trade, as the group confirmed it was in talks with Belgacom, and the De Tijd newspaper said Dutch telecom operator Scarlet also is looking at buying the company.

De Tijd on Friday broke the news that Belgacom was interested in Versatel.

Belgacom eased 0.9 percent in Brussels.

Analysts for Fortis said a note to clients that they don't rule out other companies wanting to acquire Versatel.

In the construction sector, shares of Holcim were flat after the Swiss cement and materials company said first-quarter net income soared 67.3 percent to 169 million Swiss francs (US$141.3 million, euro109.85 million ) while sales slipped 1.1 percent on currency fluctuations.

Holcim also reiterated its guidance for 2005, saying weather-related and seasonal losses sustained in the first quarter should be offset over the remainder of the year.

Analysts for Morgan Stanley said the sales and EBIT results came in below expectations, "due to poor weather in Europe, a weaker dollar and strong increases in energy and transport costs.'' - AP

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