European Stocks Bounce Back as Bid Hopes and Broker Upgrades Take Hold

Strategic Insights -

European stocks emerged from the summer doldrums, with the FTSE Eurofirst 300 rising 0.2% to 1,091.94, driven by mining sub-index gains and bid talk surrounding Glencore and Eurasian Natural Resources Corporation. Meanwhile, French carmakers Peugeot and Renault had contrasting fortunes, with Citigroup and Credit Suisse producing research favouring Peugeot. French designer apparel maker Hermes International also saw gains, while Italy's Edison secured bank loans to cover its financial needs.

Key Takeaways:

  • The FTSE Eurofirst 300 rose 0.2% to 1,091.94, driven by mining sub-index gains and bid talk surrounding Glencore and Eurasian Natural Resources Corporation.
  • Peugeot was upgraded to "buy" from "hold" by Citigroup, with its target price raised to €36 from €33, while Renault was cut to "hold" from "buy" by Credit Suisse.
  • Hermes International rose 2.7% to €187.55 on continuing talk of an imminent offer.
  • Edison , the Italian utility, secured bank loans of €700m to cover its financial and operative needs, up 3.6% to €0.84.
  • Glencore was considering a bid for Kazakh copper producer Eurasian Natural Resources Corporation, lifting the mining sub-index.
  • BMW was the top pick of Credit Suisse due to its exposure to premium customers in emerging markets, with shares climbing 0.3% to €62.51.
  • German medical devices maker Fresenius added 1% to €71.71, while French drugmaker Sanofi-Aventis climbed 1.3% to €52.08.
  • Defensive sectors mostly contributed to gains, while rivals Daimler and Volkswagen gained 0.1% and 0.8%, respectively.

Statistics:

  • The Eurofirst 300 climbed 0.2% to 1,091.94.
  • Mining sub-index gains contributed to the rise.
  • Glencore was considering a bid for Kazakh copper producer Eurasian Natural Resources Corporation.
  • Peugeot gained 1.9% to €27.97, while Renault fell 1.6% to €35.82.
  • Hermes International rose 2.7% to €187.55, while Edison secured bank loans of €700m.
  • BMW shares climbed 0.3% to €62.51, with Credit Suisse naming it their top pick.
  • Defensive sectors mostly contributed to gains.
  • Earnings and bid announcements lifted the market, offsetting weaker sentiment due to market turbulence.

Sources:

  • "Neil Dennis EUROPE Stocks made headway in Europe as bid hopes and broker upgrades helped lift the summer doldrums."
  • "Glencore, Page 16"