Posted by
alfredlester on Tuesday, August 17, 2010 1:12:08 PM
LONDON (MarketWatch) -- European shares rose Tuesday amid strong gains for most miners, while BHP Billiton's unsolicited bid for Potash Corp. of Saskatchewan gave fertilizer firms a lift.
Oil product traders dance the contango tango
Growing volumes of middle distillate oil products are being stored off the UK coast, as oil product traders take advantage of the ICE gasoil contango - where near-term futures are cheaper than deferred prices - to store jet fuel and heating oil.
After a flat finish in the previous session, the Stoxx Europe 600 index rose 0.6% to 257.06.
Miners were among the best performers, with shares of Chilean copper miner Antofagasta moving up 3.3% and coal and copper miner Xstrata adding 3.5%.
The gains for the sector came along with higher metal futures, as the dollar weakened a bit against the euro , with the common currency up 0.5% at $1.2883.
Ireland auctioned 1.5 billion euros ($1.9 billion) in government bonds, the maximum amount on offer. The Irish Iseq 20 index rose 1.3% to 464.04.
Still, sterling declined, trading down 0.1% at $1.5626, and Anglo-Australian mining giant BHP Billiton failed to join in the mining-sector gains, trading down 2.8% after fertilizer firm Potash Corp. rejected a $38.6 billion, or $130 a share, takeover bid from BHP.
"We believe that this would move into a dilutive transaction at a price above $150/share and so see some scope for BHP Billiton to increase its offer," said analysts at Evolution Securities.
More broadly, Stephen Taylor, strategist at Dolmen Securities, said he expects deals to become a key theme over the coming 12 months, as "companies are forced to acquire revenue and create synergies in the lower-growth environment."
European rivals of Potash Corp. were climbing as well, with Yara International trading up 5.7% in Oslo and K+S gaining 6.2% in Germany.
Of the major regional benchmarks, the French CAC-40 index advanced 1% to 3,634.78, the German DAX index gained 0.9% to 6,168.39 and the U.K.'s FTSE 100 index rose 0.7% at 5,311.33.
Asian shares ended mixed, with Japanese stocks lagging the rest of the region, while U.S. stocks opened with gains, stopping Wall Street's recent bearish slide electronic check payday advance.
Also on the economic front, there was mixed sentiment data out from Germany with the ZEW dropping to 14 in August, from 21.2 in July.
Economists had forecast that the index would hold steady. However, the current conditions index rose sharply to 44.3 in August from 29.7 in July. Read more on ZEW.
Other notable gainers in Europe included Dutch insurance group Aegon , up 5.9%.
The firm is planning to repay the remaining 2 billion euros ($2.56 billion) of state aid it owes by the end of June next year. Read more on Aegon.
Global Dow
• MarketWatch Topics: Greece • Asia Markets | Europe Markets | Lat. Am. • Canadian Markets | Israel Stocks | London • U.S.: Market Snapshot | After Hours • Latin American/Canadian indexes • European indexes | Asian indexes • Bond Report | Oil News | Earnings Watch • Currencies | U.S. Economic Calendar
Danish brewing group Carlsberg jumped 1.6%.
First-half net profit rose to 3.1 billion Danish kroner ($535 million), from DKK1.7 billion in the year-ago period, and the brewer lifted its fiscal-year forecast for profit growth to take into account a more positive ruble exchange rate and better-than-expected conditions in Russia. Read more on Carlsberg.
Autos and construction stocks were also higher, with Austrian-listed brick maker Wienerberger up 9.4% after it narrowed its first-half loss to €39.4 million after taxes from €204 million in red ink during the year-ago period.
Still, Gas Natural shares fell 3.2% in Madrid. The firm was downgraded to sell from neutral at UBS, with the broker citing a decision made in a Paris arbitration court over a supply dispute.
"According to local press, this could imply a 20% increase in gas prices from the Maghreb pipeline. According to press sources, the ruling appears to apply retrospectively since Jan-2007. On our preliminary estimates, this could imply a one-off payment of €1 billion, or 9% of market cap," the broker said.
Europe Markets: Miners, fertilizer suppliers help Europe to gains