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Thursday June 03, 03:26
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Bourses end higher after oil prices drop
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European equities ended with gains on Thursday after spending most of the day watching developments in the oil markets. A muted early performance from Wall Street did little to liven up the session.
The FTSE Eurotop 300 index finally settled 0.4 per cent higher at 986.83, while Frankfurt’s Xetra Dax ended 0.7 per cent higher at 3,917.08. In Paris, the CAC-40 added 0.2 per cent to 3,654.37 and London’s FTSE 100 closed 0.3 per cent higher at 4,435.4.
There was little in the way of corporate or economic news to drive the market. The European Central Bank left interest rates unchanged at its regular policy meeting, as had been widely expected.
The chemicals and drugs sector remained in the news after Belgium’s Solvay told shareholders its 2004 results would compare "positively" with those of last year.
Investors were particularly pleased at a higher forecast for sales of a schizophrenia drug the company is currently developing.
Alois Michielsen, chief executive, said that group results for the first few months of this year had shown a gradual improvement in many areas of its busines. Profits in 2003 were down 20 per cent, largely due to problems at its chemicals unit.
Shares rose 2.9 per cent to €68.10.
Insurance stocks were in the spotlight after Munich Re unveiled a turnaround at its primary insurance arm in the first quarter of the year.
Net profit at the operation came in at €43m, against a €545m loss in the same period of last year. Profits at its reinsurance business improved to €498m from a previous loss of €545m.
Dresdner Kleinwort Wasserstein said the figures contained no material surprises and confirmed the company’s previously released summary numbers.
"As previously noted, these figures do not significantly increase the visibility of the group achieving its €2bn net income objective or reattaiment of an AA rating this year," said analyst Richard Hewitt, in a research note.
"As a consequence of this and the challenging financial markets we have retained our "hold" recommendation despite the stock appearing somewhat cheap against our price target of €91."
Munich Re shares ended 1.4 per cent higher at €84.68.
Meanwhile, French rival Scor came under pressure from concerns about its exposure to the recent incident at Paris airport when a roof collapsed.
Scor said that based on current information, the accident "will not have a significant impact on the group’s net result." The shares recovered from a low of €1.15 to close 1.7 per cent weaker at €1.17.
Dutch insurer Aegon rose 1.1 per cent to €9.88. Deutsche Bank noted that the stock had severely underperformed the sector so far this year.
"We recognise that the de-rating may have been overdone, and while there might be some nervousness ahead of the 2003 embedded value disclosure on Monday, post the disclosure there could be a relief rally," said analyst Chantal Waight.
Airline stocks were also in focus after Swiss International Airlines abandoned plans to join the One World airline alliance due to differences with British Airways over how to integrate their frequent flyer programmes.
The news prompted speculation that the Swiss flag carrier might team up with Germany’s Lufthansa instead.
Although Swiss said it was not in talks with Lufthansa and insisted it could remain independent for now, the government - which is the single biggest shareholder in the airline - urged it to begin co-operation or even merger negotiations with its German rival.
Swiss shares climbed 6.1 per cent to SFr12.20 while Lufthansa edged up 0.7 per cent to €11.38.
Meanwhile, Ryanair leapt 6.1 per cent to €4.68 in the wake of Tuesday’s forecast-beating results from the Irish budget airline.
Interbrew, the Belgian brewing group, added 3.9 per cent to €25.61 after UBS upgraded the stock from "neutral" to "buy" and raised its price target from €24.50 to €30.
But Fiat ran into profit-taking after moving sharply ahead over the last two session following a management reshuffle following the death last week of Umberto Agnelli. The shares fell 3.4 per cent to €6.163, with sentiment also hit by vague rumours of an imminent takeover at the group.
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