Peugeot in talks with Mitsubishi Motors; Siemens posts quarterly loss
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares moved higher for the third straight session on Thursday, with most automakers gaining ground as one brokerage suggested prospects are bright for earnings growth in the sector and banks also advancing.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 247.73, +0.96, +0.39%) rose 0.3% to 247.57.
Goldman Sachs European portfolio strategists said that they expect the index to rise to 300 by the end of 2010.
"Our economists forecast global GDP growth of 4.4% and 4.5% in 2010 and 2011 respectively," the strategists said. "This, coupled with an extended period of very low interest rates, is likely to be supportive for risky assets," they said.
The European Central Bank left its key lending rate unchanged at a record low 1% on Thursday. Read more on ECB.
The Goldman Sachs strategists said that they expect earnings "will take over the baton" from valuation expansion in 2010 as the key driver of returns and remain overweight on autos and auto parts makers, as they believe the sector can continue to deliver positive earnings surprises.
Autos were among the best performers in percentage terms on Thursday, with Daimler (DE:DAI 35.74, +0.60, +1.71%) (DAI 53.71, +0.87, +1.65%) shares up 1.1% and BMW (DE:BMW 32.35, +0.71, +2.23%) shares up 2.3%.
However, Peugeot (FR:UG 24.51, -0.09, -0.35%) underperformed, down 0.4%, after it said that it's talking with Mitsubishi Motors Corp. about a tie-up. "We think PSA shareholders face a material risk of a rights issue" said analysts at Bank of America's Merrill Lynch unit. See full story.
On a regional level, the U.K. FTSE 100 index (UK:UKX 5,338, +10.93, +0.21%) rose 0.1% to 5,333.19, the German DAX index (DX:DAX 5,818, +35.94, +0.62%) climbed 0.5% to 5,813.00 and the French CAC-40 index (FR:PX1 3,823, +27.04, +0.71%) advanced 0.6% to 3,818.95.
Asia stocks advanced and U.S. stock futures were pointing to gains on Wall Street. See Indications.
Late Wednesday, Bank of America Corp. (BAC 16.15, +0.50, +3.20%) said that it will repay $45 billion it got from the government after raising $18.8 billion selling new common securities, setting the giant lender on course to wean itself from taxpayer support. See full story.
Amid that sign of possible improvement in banking-sector health, European lenders advanced, with Barclays (UK:BARC 307.20, +9.70, +3.26%) (BCS 20.50, +0.59, +2.96%) up 3.3% and Credit Suisse (CH:CSGN 53.50, +0.88, +1.66%) (CS 53.57, +1.38, +2.64%) shares up 2.2%.
Spain's Banco Bilbao Vizcaya Argentaria (ES:BBVA 12.93, +0.15, +1.17%) rose 1.3% after it said it would increase its holding in China's Citic Bank Corp. to 15%.
Shares of CFAO (FR:CFAO 0.00, 0.00, 0.00%) , the African distribution unit for French luxury group PPR, traded at 27.20 euros.
The firm debuted in Paris Thursday at 26 euros a share, in what was the second-largest initial public offering in Western Europe in 18 months. See full story.
Still, shares of German industrial conglomerate Siemens (DE:SIE 65.33, -2.08, -3.09%) (SI 98.60, -3.07, -3.02%) fell 3.5% after it posted a fourth-quarter net loss of 1.1 billion euros and said that the market environment will remain challenging in fiscal 2010.
In the same quarter of last year, it posted a loss of 2.47 billion euros.
"Siemens reported a strong operating fourth quarter with healthcare standing out but are continuing to be very cautious on the outlook, setting low expectations," said analysts at Bank of America's Merrill Lynch unit. See full story.
Meanwhile a change of CEO at Sky Deutschland (DE:SKYD 2.28, -0.18, -7.32%) sparked a 6.6% drop for the firm's share price. CEO Mark Williams will be replaced by Brian Sullivan
"Sentiment has already taken a hit on speculation about this departure and could take a further hit now it has been confirmed, given Mark Williams was the most important person at the company with experience of the turn-around at Sky Italia and he has invested 2.6 million euros in 1.25 million Sky Deutschland shares," said analysts at Nomura.
News Corp. (NWS 14.00, +0.05, +0.36%) owns just under 40% of Sky Deutschland is also the parent company of MarketWatch, the publisher of this report.
