European stocks near 11-month high
EUROPEAN shares closed higher yesterday, led by UKchocolate giant Cadbury which soared 38 per cent following a £10.2bn bid approach from US company Kraft Foods.
The pan-European FTSEurofirst 300 index of top shares rose 1.4 per cent to 975.90 points, just 0.3 per cent away from an 11-month closing high. The European benchmark index has risen more than 51 per cent since it hit a lifetime low of 9 March as investor confidence about prospects of economic recovery have grown.
All major sectors rose yesterday, with food companies among the most notable gainers.
“Positive sentiment from Friday’s close on Wall Street and bid speculation on Cadbury are igniting things a little bit,” said Philippe Gijsels, senior equity strategist at Fortis Banks.
Other analysts said the market lacked direction with Wall Street closed for the Labor Day holiday.
Volumes were 70.6 per cent of the 90-day average.
“Everybody is cautious, and positioned for a downturn, but you need a trigger. The trend for the moment is sideways,” said Giuseppe-Guido Amato, strategist at Lang & Schwarz. “Last week, we had good indicators, but the market couldn’t go up.”
Swiss Re rose 3.4 per cent after saying reinsurance prices were rising overall and it was well positioned for the January 2010 renewals season, with a considerably strengthened capital base. Other insurers to rise included Aegon, Aviva, AXA, and Legal & General, up between 2.3 and 3.5 per cent.
Banks to gain included Barclays, Credit Suisse, HSBC and UniCredit, up between 1 and 2.4 per cent.
Spain’s Telefonica rose 2.1 per cent after the telecoms company said on Sunday it had reached a deal with China Unicom whereby each would buy $1bn(£612m) of the other’s shares as part of a strategic alliance.
Across Europe, the FTSE 100 index rose 1.7 per cent to its highest close in more than 11 months. Germany’s DAX and France’s CAC 40 both rose 1.5 per cent.
The market got support after the G20 said it would not remove economic stimulus until the global recovery was well established.