Oils help Europe to fresh 4½ year high

Strength in the oil sector helped the FTSE Eurofirst 300 to a fresh 4½ year high yesterday. The index rose 3.08 points, or 0.2 per cent, to 1,345.92.

The oil sector was strong as crude climbed again with Statoil up 3.5 per cent to €178 and Saipem, Europe’s largest oil field services company, rising 3.1 per cent to €16.04.

There were mixed fortunes for pharmaceutical stocks, however. Schering rose 3.3 per cent to €58.39 after the German drugmaker reported a 30 per cent increase in fourth quarter operating profits, slightly above the consensus market forecast. News of a €500m share buyback and improved margin guidance also helped.

But Serono fell 2.2 per cent to SFr959 on concerns its multiple sclerosis drug Rebif could face greater competition from Schering’s Betaferon. Schering said it expected approval in the third quarter for the treatment of patients in the early stages of the disease.

Schering said it planned to buy all the property and equipment used by US partner Chiron to produce Betaferon, known as Betaseron in the US. The cost of the deal, driven by Novartis’s planned purchase of Chiron, was yet to be finalised. Novartis shares were 0.1 per cent higher at SFr71.50.

Sanofi-Aventis fell 3 per cent to €71.70 after US regulators delayed final approval of Acomplia, its experimental weight management treatment and also rejected the product as an aid to stopping smoking.

Citigroup downgraded Sanofi from “hold” to “sell” due to “a likely delay in approval from three months upwards and our increased concerns about the safety of Acomplia in weight-loss overhanging any eventual sales”.

Citigroup also warned generics could erode up to a fifth of Sanofi’s earnings by 2008.

Mediobanca was driven to a record high, up 4.2 per cent to €17.60, on the latest round of takeover speculation in the Italian banking consolidation saga.

The talk of Mediobanca as possible prey, according to La Repubblica, came despite a core shareholder pact that controls 54 per cent of the bank. Capitalia, another possible target, rose 2.8 per cent to €6.325.

EFG Eurobank climbed 4 per cent to €33.06 after JP Morgan raised its price target from €40 to €44. “Eurobank’s accelerating south eastern and central European expansion will create one of the leading regional retail platforms,” the broker said.

Ciba Speciality Chemicals fell 1.6 per cent to €82.70 after its struggling Textile Effects was sold for what many saw as a disappointing price. The cash sale to Huntsman Corp was below book value at SFr332m including SFr75m of assumed debt.

Electricite de France rose 2.2 per cent to €41.56 amid hopes for consolidation in the European utilities sector. Wulf Bernotat, chief executive of Eon, 0.6 per cent firmer at €93.44, said he expected just three dominant players to emerge in an interview in the Financial Times.

Deutsche Borse fell 1 per cent to €105.06. The German exchange operator is one of the vertically integrated exchanges a powerful alliance of banks and financial groups are urging the European Commission to break up. They argue that bourses that control both trading operations and also clearing and settlement services produce higher trading costs.

Hellenic Exchange, the controller of Greece’s equity and derivatives markets, fell 3.7 per cent to €12.24 after Citigroup downgraded the stock from “hold” to “sell”. The broker said the very strong start to trading on the exchanges was already in the price.

Van der Moolen initially rose more than 6 per cent on a newspaper report that the Dutch specialist market maker was being offered for sale for a price of €300m to €400m. The company denied the report and the stock closed 5.7 per cent higher at €8.88 .

Deutsche Telekom fell 0.3 per cent to €13.58 after JPMorgan downgraded the company from “neutral” to “underweight”. There was also a report that its T-Mobile unit’s acquisition of Austria’s Telering might be blocked by the European Commission.

On the European telecoms industry, JPMorgan suggested avoiding the incumbent operators with low or declining broadband market share and favouring their broadband competitors.

Orkla