Bank stocks turned in an action-packed performance in Paris as merger speculation returned to drive the market forward on news that a big stake in CCF had changed hands. The CAC-40 rose healthily in the morning and was given a further boost by a vigorous start on Wall Street, ending 83.83, or 2.1 per cent, higher at 4,087.99, with many stocks posting gains of 4 per cent and more.
CCF first shot up 8.7 per cent after Mutuelles du Mans said it had sold its 7.8 per cent stake to KBC for €112.50 a share, making the Belgian banking and insurance group one of CCF's main shareholders. CCF shares jumped as high as €89.25 on the news. BNP, a potential merger target in French banking consolidation, also surged as much as 8.1 per cent to €82. CCF shares drifted lower during the day, however, after KBC said it did not plan to bid for CCF or sell its stake, but closed up 2.77 per cent at €83.40, outperforming the CAC-40 index.
Oil stocks had a field day, with Elf-Aquitaine €5.20 higher at €79.90 and Total up €4.80 to €101.30, as oil prices picked up at the end of the European day.
LVMH posted its first sharp rise in two weeks, adding €8 to €200 after the company said it would suspend its hostile bid for Gucci despite an ongoing legal battle between the two companies.
Frankfurt swung higher in late trade, reversing early heavy losses to close with the Xetra DAX - which had threatened to break down through the 4,600 level - 54.17 higher at 4,722.69.
Siemens turned in the day's best performance among leaders, jumping €3.29 to €56.65 on a wave of speculation about a big US investment. Among financials, Deutsche Bank gained €1.18 to €46.83 and Munich Re rose €4.80 to €181.90.
Amsterdam brushed aside a sharp bounce for market heavyweight Royal Dutch to send the AEX index down 3.24 to 515.92 in moderate trading volume. Royal Dutch kept in step with the European-wide rally for oils stocks, ending within a whisker of the day's high following the recent recovery for international oil prices. The stock rose €2.05 to €41.35.
Zurich closed higher, led by Roche and CS Group, and the SMI index put on 120.7, or 1.7 per cent, to 7,106.8. Roche certificates added 310 Swiss francs (€195) to SFr18,780 (€11,806) as the market interpreted the stock's break above SFr18,550 (€11,661) as a buying signal. The company also reported that the European Commission had approved its drug Zenapax, used to prevent organ rejection after kidney transplants. Novartis put on SFr20 (€12.57) to SFr2,520 (€1,584).
