Confirmation that Ford was to pay 50 billion Swedish kroner (€5.65 billion) for Volvo's car business, leaving the Swedish group free to concentrate on the development of its lucrative commercial vehicle activities, sent Stockholm higher.
Volvo shot up to an early SKr231 (€26.10), but pulled back to close just SKr0.50 (57 cents) higher at SKr211 (€23.84) on the view it would be made to pay a high price for any company that it targeted for a takeover. Truck and busmaker Scania, in which Volvo bought a 13 per cent stake earlier this month, jumped to a day's high of SKr263 (€29.71).
Telecoms group Ericsson shot up 8.9 per cent on relief that 1998 results were largely in line with expectations. It rose SKr17.50 (€1.98) to SKr210 (€23.72) as the company launched a new line of mobile telephones.
By the close, the general index was 61.61 higher at 3,288.30, off a high of 3,327.47.
Paris rose 101.5 to 4,199.67 on the CAC-40 index. Motors and banks vied for top sector honours in a market partly boosted by technical activity ahead of today's futures expiry.
Both Renault and Peugeot bounced on the news that Ford was snapping up Volvo's car division. The former jumped €3.27, or 7.8 per cent, at €45.12 amid talk of some form of consolidation within the French car sector. Peugeot gained €6 at €145.50.
Banks were active following a statement about Brazilian exposure from Societe Generale. The bank put this at $588 million (€515 million), excluding trade finance, whereas most analysts had pencilled a figure well in excess of $1 billion (€876.5 million). The news helped lift some of the Latin American gloom that has hung over bank shares in recent months. SocGen rose €8, or 5.2 per cent, at €161, Paribas gained €3 at €86 and BNP added €3.35 at €82.
Frankfurt closed higher, but off its best levels, after a day in which Deutsche Telekom and MAN both surged on merger speculation. The Xetra DAX index finished 42.72 higher at 5,080.93.
Telekom jumped €1.85 to €37.85 as the market heard rumours that the company was seeking to make an acquisition to lift its business as it faced up to a price-cutting war with rivals. MAN soared €12, or 5.7 per cent, to €224 as it became embroiled in takeover speculation in the wake of the Ford-Volvo link-up. Volvo and VW had both been mentioned as potential suitors.
Analysts said that the Ford-Volvo deal was now likely to shift investors' attention on to BMW which, along with Volvo, had been considered a prime takeover candidate. However, BMW was flat at €610, while DaimlerChrysler edged 40 cents higher to €90.40 and VW eased 51 cents to €67.50.
Deutsche Bank was marked €1.81 higher at €47.41 in response to news of a 22 per cent rise in the proposed 1998 dividend, the first increase since 1995. -
