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Auto, insurance stocks lift Europe
LONDON, England (CNN) -- European markets climbed higher in midday trading on Monday, led by UK insurers after British regulators stepped in to stop them selling shares. London's FTSE 100 rose 98.5 points, or 2.8 percent, to 3,665.6 and Frankfurt's electronically traded Xetra Dax gained 0.7 percent to 2,767.8, while the CAC 40 blue chip index in Paris also climbed 0.7 percent to 2,959.61. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 1.9 percent. UK insurers, Aviva (AV), Royal Sun & Alliance (RSA) and Prudential (PRU), all soared more than 7 percent in London, after the Financial Services Authority said it would relax rules that force them to sell shares to meet solvency targets. Insurance companies hold vast amount of money in stocks but falling equity markets have reduced the value of their holdings. That has forced them to cut payouts to some policy holders and many have asked shareholders for more money to prop up their balance sheets. France's Axa (PEX), Europe's second-largest insurance company, rose 4.9 percent to 11.98 euros, the continent's No. 3 Allianz (FALZ) climbed 2.4 percent to 79.75 euros and Belgium's ING, the biggest insurer, gained 3.2 percent to 14.61 euros. "The UK financial watchdog's decision to ease solvency requirements for UK insurers should be positive for the pan-European insurance sector as their troubles were weighing on everyone,'' Gert de Mesure, head of equity strategy at Delta Lloyd Securities in Antwerp, told Reuters. "Wall Street's gains and the dollar's small recovery over the weekend should help stock markets.'' And German car stocks rose after Chancellor Gerhard Schroeder's Social Democrats lost seats in two regional elections. Schroeder had planned to introduce higher company car taxes but now his government may have to scarp the plans after the conservative opposition CDU party increased its majority in the upper house of parliament. (Full story) DaimlerChrysler (FDCX), the world's third-largest automaker, rose 3.8 percent to 29.55 euros, luxury car maker BMW (FBMW) gained 1.8 percent to 27.76 euros and Volkswagen (FVOW), Europe's biggest carmaker, added 1 percent to 38.96 euros. Vivendi Universal (PEX), Europe's biggest media company, rose 3.6 percent to 16.21 euros after sources told Reuters that the debt-laden group was considering a bid from billionaire oilman Marvin Davis for its U.S. entertainment assets. Davis has made an offer of $20 billion for the assets. One of the worst performing stocks in Europe was Sweden's Ericsson, which dived 11.7 percent to 6.40 crowns, after the company posted bigger-than-expected fourth-quarter loss. (Full story) The AEX index in Amsterdam rose 1.8 percent and Milan's MIB30 index gained 1 percent, while the SMI in Zurich added 1.1 percent. In the U.S. on Friday, blue-chip stocks surged on the heels of positive corporate news out of a few Dow components and a strong regional manufacturing report, but the market still closed out the week and the month in the red. For the week, the Dow lost 0.9 percent, the S&P 500 lost 0.7 percent and the Nasdaq lost 1.6 percent. But on Friday, the Dow Jones industrial average rose 1.3 percent, or 108.68 points, to 8053.81 and the S&P 500 index also added 1.3 percent, or 11.09 points, to 855.70, while the Nasdaq composite was little changed, up just 1.44 point, to 1320.91. Wall Street was expected to open higher later on Monday. S&P 500 index futures rose 6.5 points to 861.20 on the Globex trading system, while fair value, a measure that takes account of interest costs and dividend payments, was calculated at 854.65.
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