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Economic data boosts Europe stocks
LONDON, England (Reuters) -- European equity markets held onto their gains late on Tuesday as an asset sale boosted British American Tobacco and stellar sales from the mobile phone unit of Verizon buoyed Vodafone. But nerves ahead of an interest rate decision by the Federal Reserve due at 1915 GMT kept a lid on market gains amid concern that the bank could signal a shift from its low-rate stance. Gains were widespread, with technology issues among the biggest climbers after bullish comments from STMicroelectronics boosted chip-related shares. But Ahold was a sore spot, off 7.3 percent after the Dutch retailer posted a seven-percent fall in third-quarter sales as shoppers shunned its stores and a weaker dollar ate into U.S. revenues. By 1700 GMT, with only Frankfurt still officially trading, the FTSE Eurotop 300 index of pan-European blue chips was up 0.98 percent at 912 points, just 18 points away from its 2003 highs hit in early September. The narrower Euro STOXX 50 index was 1.14 percent higher at 2,540 points. Around Europe, the FTSE 100 closed 0.5 percent higher, the CAC 40 added 1.4 percent and the Swiss blue-chip index rose 0.5 percent. Frankfurt added 1.6 percent by 1700 GMT as on Wall Street the Dow Jones industrial average was 0.5 percent higher and the tech-heavy Nasdaq Composite added one percent. Fed unnerves, M&A cheersAll eyes were on the Federal Reserve, widely expected to keep interest rates steady at 40-year lows. But investors are nervously awaiting what the central bank says on the state of the U.S. economy. "We don't expect a change. The Americans seem more determined than the UK to stimulate their economy for longer but they have got an election next year," said Hilary Cook, chief investment strategist at Barclays Stockbrokers. Some strategists feared that recent signs of further economic recovery could make the central bank more comfortable about raising borrowing costs, which they said was still premature as it could hurt consumer spending. Economic data on Tuesday added to a scenario of recovery, as two separate U.S. reports showed robust U.S. business spending in non-defence capital goods in September and an improved consumer confidence in October. A sixth consecutive monthly rise in the widely watched German Ifo business climate index in October also helped underpin European market gains. British American Tobacco, the world's second biggest cigarette maker, was one of the session's stars after it sold its U.S. cigarette and tobacco businesses for more than $3 billion to R.J. Reynolds Tobacco Holdings. The deal pleased BAT investors as it eased concerns over U.S. litigation and added to a picture of bustling merger and acquisition activity which analysts said showed growing confidence in the health of business and the stock market. BAT shares closed up 12 percent at a 13-month high. Technology issues also helped fuel market gains with STMicro up 2.5 percent after saying it expected the global chip market to grow by 18 to 20 percent in 2004. Chip-equipment maker ASML rallied 8.5 percent on STMicro's comments and also on news that Taiwan Semiconductor Manufacturing, one of the Dutch firm's key clients, planned a large increase in capital spending. Philips Electronics, which owns a fifth of TSMC, was also hoisted 2.7 percent higher after the Taiwanese group posted solid results. In the telecom sector, Vodafone closed 3.6 percent higher after Verizon Wireless, the largest U.S. wireless telephone company, reported an 18-percent jump in quarterly revenue. Other climbers included ABB, up 8.8 percent after it unveiled a radical recapitalisation plan that includes raising $2.5 billion from a rights issue, which will almost double its share base but provide finance for the indebted Swiss engineering firm through 2006. HVB perked up four percent, with traders saying Monday's bumper $47-billion U.S. banking merger had fuelled hopes the German bank could become a takeover target. The bank reports its quarterly earnings on Wednesday. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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