Fiat splits; Porsche rallies on lawsuit dismissal from last week
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — European stocks markets kicked off the first trading day of 2011 on a stronger footing, as optimism over global growth lifted auto stocks such as Volkswagen and Peugeot.
In Italy, Fiat began trading as two separate companies Monday.
The Stoxx Europe 600 index (ST:STOXX600 278.07, +2.26, +0.82%) rose 1% to 278.34. London markets are closed for a bank holiday.
Growing optimism over global growth helped drive Europe broadly higher. Asia rose overnight, with stocks in South Korea surging to an all-time high. See more on the rally in Asia.
U.S. stock futures also pushed higher ahead of data due later such as ISM manufacturing for December and construction spending for November. See more in Indications.
Economic data released on Saturday in China showed the purchasing managers’ index for December softened to 53.9, a drop of 1.3 percentage points from November’s level.
Some analysts said this confirms the view the Chinese economy peaked in the third quarter of last year, which would come as relief to markets worried about growth overheating in the economic powerhouse. But it may also worsen worries about the consequences of slower China growth. See related story
“Overall, equity markets should do well going forward,” said Christoph Riniker, head of strategy research at Bank Julius Baer & Co.
“There might be some positioning of investors going on, but be aware that investor sentiment is very positive at the moment and therefore might lead to some profit-taking again near term,” he said.
Porsche powers ahead
While gains were widespread across all sectors, auto stocks — the best-performing sector in Europe for 2010 — showed no signs of pulling back as 2011 got underway.
The German DAX 30 index (DX:DAX 6,992, +77.56, +1.12%) rose 1.2% to 6,999.29, with shares of Volkswagen AG (DE:VOW3 126.36, +4.55, +3.74%) trading up 3.8%. And outside of the main bourse, shares of Porsche Automobil Holding SE (DE:PAH3 67.44, +7.86, +13.19%) jumped 14%.
Monday was the first opportunity for Porsche shares to trade after the dismissal in a U.S. court last week of a lawsuit filed by hedge funds, which alleged the high-end car maker manipulated the market while building its stake in Volkswagen.
Porsche’s planned merger with Volkswagen, due sometime in 2011, could theoretically go ahead, though appeals could be filed in the case.
Analysts at Deutsche Bank called the suit’s dismissal a “clear positive” for Porsche shares, but the independent approval of Volkswagen preferred shareholders remains a final hurdle to the merger once all legal claims end. They said in a note to investors that this will be “challenging” for the group.
