Friday September 7, 2007
European stocks end higher with miners in the lead
LONDON (AP) - European shares ended higher Thursday, as the European Central Bank and the Bank of England kept interest rates pat and as a combination of merger speculation and rallying metal prices boosted mining firms.
The U.K. FTSE 100 index, heavy with metals companies, rose 0.7 percent to 6,313.30, the German DAX 30 index rose 0.4 percent to 7,621.72 and the French CAC-40 index increased 0.5 percent to 5,576.62.
Shares in mining giant Rio Tinto rose 5.4 percent after market rumors from Australia that BHP Billiton and Brazilian miner Companhia Vale do Rio Doce, or CVRD, may team up to launch a takeover bid for their mining rival.
All of the companies named in the report said that they don't usually comment on market rumors. BHP Billiton shares jumped 4 percent.
Other miners, such as Antofagasta and Xstrata also gained as gold futures rallied to hit $700 an ounce.
Prices for the precious metal were boosted by dollar weakness, strength in oil prices, very strong physical demand and safe-haven buying.
Oil explorers including Shell, which rose 2 percent, also were strong.
Some U.S. data acted to soothe investor fears of a greater-than-expected slowdown in the U.S. economy.
The number of U.S. workers applying for jobless benefits saw its biggest drop since April last week, according to Labor Department data released Thursday.
Other data showed that the U.S. economy is more productive than suspected, but upward pressure remained on wages.
However, credit market worries haven't completely faded away and banking shares were still a bit weaker in Europe.
Northern Rock dropped 3 percent and Standard Chartered, where a leading executive resigned, declined 2.1 percent.
"Credit market worries are continuing as dysfunction is still occurring in the money markets. The focus is on how the central banks are reacting to that,'' said Gerhard Schwarz, head of global equity strategy at UniCredit Markets.
Both the European Central Bank and the Bank of England left interest rates on hold on Thursday, with both noting the impact of market volatility for their decisions not to move rates.
A gain of 5 percent from chipmaker Infineon Technologies boosted the technology sector.
It scored a double upgrade from sell to buy at Dresdner Kleinwort, with the broker saying "we see it becoming a wireless semiconductor market leader.''
Analysts at Sanford Bernstein, who upgraded the stock last week, said Infineon also stands to gains from growing auto and industrial uses of microchips.
Fiat shares rose 1.2 percent in Italy after Citigroup upgraded the company to buy from hold, saying the small car, low carbon emission bias of the company will be a key strength.
Italian utility Enel rose 1.2 percent after the company said that its first-half net profit was unchanged on the year, topping expectations, as contribution from expanding foreign assets more than offset lower domestic generation and higher financial charges.
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