M&A news boosts European shares; miners up

By Joanne Frearson

LONDON (BestGrowthStock) – European shares rose on Monday from the previous session’s one-month low, boosted by merger and acquisition news and on gains in the mining sector on industry hopes a planned Australian mining tax could be scrapped.

M&A news buoyed the financial sector. Insurer Old Mutual

gained 3.2 percent after HSBC said it is in talks to buy up to 70 percent of South Africa’s Nedbank, in which Old Mutual owns a controlling stake.

HSBC was up 0.8 percent.

The pan-European FTSEurofirst 300 index of top shares closed 0.7 percent higher at 1,036.51 points after hitting a one-month closing low in the previous session on concerns about global economic growth.

“We have had a good day on the back of M&A activity, which is surprising considering the concern about the prospects of a double dip recession,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

“Corporates are taking the view that the operating environment looks satisfactory and it’s time to buy.”

Mining stocks were in demand on the possibility that Australia’s inconclusive weekend election would sink a planned mining tax. Anglo American, Antofagasta and Rio Tinto rose 0.6 to 1.6 percent.

BHP Billiton was 0.5 percent higher. Canada’s fertilizer producer Potash Corp is seeking talks with possible counter-bidders as it fights off an unwanted $39 billion takeover offer from BHP Billiton.

Top fertilizer company K+S was also buoyed by M&A news and climbed 2.1 percent as traders pointed to industry speculations on more potential acquisition offers.

PETROFAC GAINS

Petrofac gained 3.5 percent after the oil and gas services company forecast a 20 percent rise in net profit for the full year as its backlog of contracts continued to grow and it won its first contract in Iraq.

Global mergers and acquisitions have hit nearly $200 billion so far in August, $77 billion shy of the record set in 1999 for what is typically one of the quietest months of the year, Thomson Reuters data showed.

In other M&A news, beverage groups SABMiller and Asahi Breweries are looking at Foster’s Group’s beer operations, valued at more than $10 billion, but have not yet made any formal offers, sources said.

SABMiller was up 1.7 percent.

Hewlett-Packard Co offered $24 a share in cash for data storage company 3PAR Inc. The $1.6 billion offer tops a competing bid by technology rival Dell Inc.

But some analysts stayed cautious because of recent poor macro numbers, especially from the United States.

“Macroeconomic figures are still likely to come in worse than expected and could push down the market. On the other hand we have some relief from M&A activities, but that is not going to be able to offset the bad economic numbers,” said Koen de Leus, economist at KBC Securities.

The Euro STOXX 50, the euro zone’s blue-chip index, rose 0.6 percent to 2,660.84 points. The index faced strong resistance at around 2,670 — its 38.2 percent Fibonacci retracement of a fall from a high in April to a low in May — and further at around 2,698, its 50-day moving average.

Across Europe, the FTSE 100 index gained 0.8 percent, Germany’s DAX was up 0.1 percent and France’s CAC 40 was 0.8 percent higher.

(Graphics by Scott Barber, additional reporting by Harpreet Bhal; Editing by David Cowell)

M&A news boosts European shares; miners up