Posted by
alfredlester on Friday, June 26, 2009 7:36:45 AM
LONDON (MarketWatch) -- Bank shares advanced in Europe on Friday as news that money-losing UBS would be raising fresh capital didn't scare traders into dumping its peers, although weakness in the pharmaceutical sector kept gains for the broader equities market in check.
The pan-European Dow Jones Stoxx 600 index climbed 0.2% to 205.04, led by banks.
On a regional level, the German DAX index rose 0.3% to 4,813.22 and the U.K.'s FTSE 100 index advanced 0.1% to 4,254.66, while the French CAC-40 index dipped 0.1% to 3,160.05.
Consumer and industrial stocks led a broad Thursday rally in the U.S., as investors welcomed favorable earnings and merger news for consumer companies while industrials bounced back from heavy selling earlier in the week. Stock futures were mildly lower Friday on Wall Street. See Indications.
Asia shares also had a positive session to close out the trading week. See Asia Markets.
Among European banks, shares of Credit Suisse advanced 3.8%, outpacing gains in Deutsche Bank , up 2.4%, and Societe Generale , up 1.2%.
"There's a feeling out there in the market that that the worst is behind us and the problems that have hit the banks specifically are beginning to fade," said Peter Dixon, strategist at Commerzbank.
"As markets generally recover, banks are able to generate more business," he said. "The hope is that we will start to see banks posting better results."
Still, some banks will take longer than others to recover, analysts believe.
Shares of UBS traded down 3.4% after the company said that it expects a loss in the second quarter as well as outflows. The bank will raise 3.8 billion Swiss francs of fresh capital.
"The [loss] preannouncement and, in particular, the continuing net money outflows prove, in our view, that it will take a longer time to bring UBS back on track," said analysts at UniCredit.
They prefer Credit Suisse and Deutsche Bank among European investment bankers.
Also Friday, oil producers were on the move, as light sweet crude oil futures traded up 85 cents at $71.08 a barrel.
Shares of Eni advanced 1.1% in Milan and Total rose 0.9% in Paris.
On the downside in Paris, pharmaceutical giant Sanofi-Aventis saw its shares fall 6.4%.
"Commentary is circulating in the market that a safety issue may soon emerge for Lantus (long-acting insulin for diabetes), a major driver of revenue growth and profits at Sanofi-Aventis," said analysts at Credit Suisse.
"However, given the lack of any details, Credit Suisse Research prefers not to make any change yet to forecasts or valuation and retains an outperform rating," they added.
A spokesman for Sanofi-Aventis said: "Data from clinical studies involving over 70,000 patients as well as data from post-marketing surveillance covering 24 million patient years of experience confirms the safely profile of Lantus."
Also lower, shares of Danish drugmaker H. Lundbeck fell 3.2%. In the U.S., the Food and Drug Administration requested more data on Serdolect, Lundbech's schizophrenia drug.
In the auto sector, shares of Peugeot fell 2.9%.
Standard & Poor's placed Peugeot's credit ratings under review for possible downgrade. The move "reflects the risk we perceive that PSA's financial profile relative to our current rating could deteriorate further in 2009 and that it might not recover in 2010," said S&P analyst Barbara Castellano.
However, the rest of the sector was broadly higher. In Frankfurt, shares of Volkswagen added 3.8% and Daimler traded up 2.3%.
Europe Markets: Banks offset drugmakers in mildly higher Europe
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UBS shares edge lower after loss forecast