LONDON, May 14: European shares gave up meagre gains to trade a touch lower on Monday as a slide by miners helped outweigh a rally in auto stocks, amid a flurry of merger activity.
Among major movers, DaimlerChrysler jumped after Cerberus bought the majority of its Chrysler unit for $7.4 billion euros, while security company Securitas fell after its earnings failed to meet expectations. “Sentiment is slightly complacent, everyone's been looking at five years of good growth but we're at the top and starting to slow down,” said Justin Urquhart Stewart, director at 7 Investment Management in London.
Don't expect what we've seen over the past four years to repeat themselves over the next four years. It's how low, how slow will we go. The FTSEurofirst 300 index of top European shares dipped 0.2 per cent to 1,580.2 points by 1030 GMT, after earlier trading at 1,588.4 points. Around Europe, shares on Germany's DAX gained 0.2 per cent, while Britain's FTSE 100 slipped 0.3 per cent while France's CAC 40 lost 0.2 per cent. Mergers and acquisitions helped power a 16 per cent rise in European shares last year, and have contributed strongly to lifting the European index over 6 per cent so far in 2007.
Mining stocks languished, with Rio Tinto falling 2.5 percent after a report in the Sunday Telegraph it had hired Morgan Stanley to help defend against a potential hostile takeover, and after an HSBC downgrade. Speculation swirled last week that bigger rival BHP Billiton was considering an $100 billion plus bid for the miner. The company has denied it has been approached.
A dip in the price of copper also weighed on other miners, with Antofagasta down 1.9 per cent and Anglo American down 1 per cent. Auto stocks ranked among major gainers, with DaimlerChrysler up 5 per cent rise after saying private equity firm Cerberus would pay $7.4 billion for 80.1 per cent of its struggling Chrysler Group and its related financial services units.
Elsewhere in the sector, Nokian Renkaat added 3.1 per cent, while Renault gained 2.4 per cent and BMW added 1 per cent. Volvo gained 3.3 per cent, extending Friday's gains as JP Morgan raised its price target.
M&A activity and corporate results are prevailing over macroeconomic weakness, said Commerzbank strategist Ralf Groenemeyer in Frankfurt.
Volatility in markets might be higher following the weak performance of last week, but it might still not be time to sell in May and go away. Security services group Securitas fell 3.7 per cent after its first quarter earnings came in below market expectations, while France's Alstom fell 1 per cent despite raising its profit targets. In merger developments, Italian bank Capitalia added 2 per cent on persistent speculation UniCredit could make a bid, while Atos Origin sank 12.5 per cent after saying it said it ended talks with potential buyers.
Merck KGaA rose 1.3 percent after it announced the sale of its generics unit to Mylan Laboratories for 4.9 billion euros, and promised a special dividend. — Reuters
