Euro Stocks Gain for Second Day Running
European stocks closed firmly higher for the second straight session Wednesday, led by gains in financial and mining shares, on the back of central bank moves to ease liquidity in the credit markets.
The coordinated move by central banks to boost liquidity raised investors' hope of an end to the market's funding pressures and led the Dow Jones Industrial Average's fourth-largest point gain on record Tuesday. Asian stocks also rallied, and U.S. stocks were broadly higher Wednesday.
But the enthusiasm in Europe may not last.
“The measures fight the symptoms of the credit crisis … but do not solve the underlying problems of the crisis,” Dr. Tammo Greetfeld, analyst from UniCredit, said adding that recent gains don't mark a turning point for stocks.
In Europe, the banking sector was the best performer after the liquidity boost and a report from Belgian newspaper De Standaard said that Fortis is in talks with China's Ping An over a $3.07 billion deal to boost the bank's solvency.
In corporate news, shares in Standard Life jumped 12.9 percent after the UK insurer beat forecasts in 2007 with a 43 percent rise in profit, boosted by its cost-cutting program and strength in UK pensions. The company warned that 2008 could be a challenging year, however.
Shares in Societe Generale remained firmly higher after police arrested another employee of the French bank as part of its inquiry into an alleged rogue trading scandal.
Outdoor advertising group JCDecaux plans to hike its dividend by 5 percent after it reported a solid rise in 2007 profit, helped by the strong demand in its transport division.
And shares in Deutsche Lufthansa gained 4.7 percent after the German carrier said the growing travel market would boost its operating profit again this year.
London's FTSE-100 remained higher after UK Chancellor Alistair Darling cut his economic growth forecast for the year to an annual rate of 1.75-2.25 percent from 2-2.5 percent, as widely expected.
Kazakhmys was the biggest gainer on the FTSE, jumping 16 percent, after Kazakh mining group Eurasian Natural Resources said it held preliminary talks about buying the mining giant.