Eurobloc posts biggest rise in six months

What were widely seen as tame US inflation indicators put some spark back into European equities yesterday.

By the close the FTSE Eurobloc 100 index was up 2.5 per cent at 1,094.76, its strongest advance in a single session since early March. The FTSE Eurotop 100 index gained 2.5 per cent to 3,011.57 and the broader FTSE Eurotop 300 index added a similar percentage at 1,317.44.

Frankfurt rose strongly in afternoon trading, tracking bond markets and Wall Street higher to close with the Xetra DAX index up 2.8 per cent or 143.63 at 5,336.22.

A fresh twist in the merger saga involving leading utilities Viag and Veba left the former well ahead but made for mixed trading at Veba. The latest speculation took up the theme that the deal was to be executed via a takeover bid from Veba. Viag rose €1.05 at €22.10. Veba, in negative territory for most of the day, ended 30 cents higher at €59.40.

Takeover rumours, which ran rampant earlier in the week, returned to send Commerzbank 5.1 per cent ahead, lifting the shares €1.73 at €35.90. Hypovereinsbank rose €1.65 to €56.95.

News of strong gains in US sales through August sent BMW up €1.31 at €29.72 and lifted Porsche €65 at €2,340. Elsewhere in the sector, Volkswagen gained €1.18 at €56.68.

Paris surged almost 3 per cent in a rally led by the computer services sector. The CAC-40 ended 121.77 higher at 4,672.37.

Computer services groups prospered on merger speculation and the release of strong interim results on Thursday by Sema Group of the UK.

Atos climbed €8.40 or 7.4 per cent to €121.90 and Cap Gemini finished €14 or 8.4 per cent up at €180.

STMicroelectronics continued to recover the losses it suffered on news that it planned a 28.6 million share offer. The stock, which dropped 8 per cent in two days earlier this week, closed €5 or 7.9 per cent higher at €68 to mark a two-day gain of 12 per cent.

Renault fell victim to profit-taking after revealing better-than-expected first half results. The stock, which had run up 8 per cent in the previous four sessions, ended 50 cents or 1 per cent down at €52.

Renault's results raised hopes of good figures from PSA Peugeot Citroen, which ended €10.20 or 5.7 per cent up at €190.10.

Amsterdam pushed ahead strongly with financials, recently showing weakness on interest rate concerns, supplying most of the motive power. The AEX index ended 13.63 up at 578.63.

Aegon added €2.90 at €81.95, with interest in the stock aided by speculation that the group could be a potential counter-bidder for UK insurer Legal & General. EING rose €1.65 to €53.25.

Brewer Heineken shot ahead, rising €1.90 to €50 following an upgrade at Morgan Stanley which moved to "strong buy" and set a target price of €56 for the stock.