European stocks hit ten-week high led by Alstom after Siemens deal
Reuters
Published Sep 27, 2017 08:39
European stocks hit ten-week high led by Alstom after Siemens deal
LONDON (Reuters) - Europe's main benchmarks climbed to a new ten-week high on Wednesday as deals remained front and centre, while a weaker euro also supported indexes which had dipped this summer as the strong currency dented earnings expectations.
The pan-European STOXX 600 (STOXX) gained 0.2 percent to hit its highest level since July 20, while euro zone stocks (STOXXE) also rose 0.3 percent. UK's FTSE (FTSE) gained 0.4 percent.
Cyclical sectors led gains with basic resources stocks (SXPP) and banks (SX7P) driving higher. The euro
Merger and acquisition news stole the spotlight with Alstom (PA:ALSO) shares rising to their highest level in more than six years after the French industrial group struck a deal to merge rail operations with Germany's Siemens (DE:SIEGn).
Alstom jumped 8.2 percent to the top of the STOXX, while Siemens led gains on the DAX, up 1.4 percent.
Spain's Banco Sabadell (MC:SABE) and Caixabank (MC:CABK), which had suffered in the past week as tensions over the Catalan referendum simmered, recovered, up 2 and 4 percent respectively, after the government said police would take control of voting booths in Catalonia to thwart the vote.
Broker downgrades drove the worst performers. Swedish retailer ICA (ST:ICAA) sank 4.4 percent after SEB cut it to "sell", while travel retailer SSP Group (L:SSPG) fell 3 percent after HSBC downgraded it, saying positive news was priced in.
Overall, second-quarter earnings for the STOXX 600 were expected to grow 16.4 percent compared to the same period last year, the latest Thomson Reuters data showed.
The strengthening euro had led analysts to cut earnings expectations for Europe, but Goldman Sachs' head of European equities Sharon Bell still expected earnings to grow 15 percent in 2017, making it the best year since 2010.
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Written By: Reuters
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