Utilities, oil stocks boost Europe
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LONDON, England (Reuters) -- Earnings optimism for utilities and energy firms boosted European stocks on Wednesday but investors were cautious ahead of a decision on U.S. interest rates by the Federal Reserve.
France's Suez topped the blue-chip league with gains of four percent on expectations that the utility, buoyed by growth in the energy business, would post healthy 2003 sales in a report due on Thursday.
Germany's E.ON added 1.8 percent and Spain's Endesa rose 1.7 percent, while Scottish Power gained 3.0 percent after the firm said it was interested in the Damhead Creek power station near London.
Heavily weighted energy stocks were boosted by a report from the American Petroleum Institute showing U.S. oil supplies were shrinking. Royal Dutch, BP and Total all outperformed the overall market.
But talk that the world's largest mobile phone company, Vodafone, is sounding out the loan market for possible acquisitions pushed the stock down 2.6 percent, despite news of robust growth in its global customer base.
The FTSE Eurotop 300 index of pan-European blue chips closed up 0.51 percent at 995.93, not far from the session high of 996.75 and less than four points away from last week's 17-month high of 999.17.
Gainers outnumbered losers by roughly four to three in healthy trading volumes.
The narrower DJ Euro Stoxx 50 index picked up 0.43 percent to 2,896.78 points.
Euro strength remained a headache for dollar-earning exporters to the United States, said Achim Matzke, head of European Index Research at Commerzbank.
"Areas like autos are still underperformers.... People are cautious, waiting for the Fed."
In New York, the technology-heavy Nasdaq Composite Index rose 0.32 percent to 2,122.82 points, while the blue-chip Dow Jones industrial average gained 0.35 percent to 10,646.59.
Markets expect the U.S. Fed to keep the funds rate at 45-year lows of one percent and will focus on a statement due later on Wednesday, in which the bank will outline risks to economic growth and prices.
Michael Macphee, a fund manager at Baillie Gifford, said the Fed's ultra-loose U.S. monetary policy was risky.
"But prior to the (U.S. presidential) election in November there's not much chance of a major change in interest rates," he said.
Strategists believe U.S. equity markets have priced in most of the good news in economic and earnings growth. But several think Europe still has value to offer investors.
"There's still a combination of decent profits and good liquidity in Europe," said Macphee.
No-frills
Across Europe, Britain's FTSE ended up 0.47 percent at 4,468.1 points, France's CAC was up 0.25 percent to 3,706.79, the German DAX rose 0.38 percent to 4,150.24 and the Swiss SMI added 0.22 percent to 5,803.3.
Among standouts, Ryanair plummeted 30.0 percent after the no-frills carrier issued its first profit warning ever, amid worries about a probe by the EU Commission into whether it received illegal state subsidies at its Belgian Charleroi hub.
UK rival easyJet dropped 7.9 percent but sector giant British Airways ended up 4.7 percent on plans to cut employee costs by 300 million pounds ($550 million) in 2004-06 as part of a drive to achieve a 10 percent operating margin.
Among blue-chip decliners, Lafarge lost 3.2 percent after the French cement maker said it did not expect demand for its products in 2004 to be significantly higher than in 2003.
Deutsche Telekom slipped 1.9 percent after German business magazine Wirtschaftswoche said state bank KfW planned to sell several million shares in Europe's largest fixed-line phone carrier.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
