Leading shares in Europe staged a modest rally off 2004 lows this week in spite of the seemingly inexorable rise of oil prices and initial concerns about the reinsurance sector.
The FTSE Eurotop 300 index ended yesterday at 951.26, down 0.2 per cent on the day but 1.1 per cent firmer on the week.
Essilor International, the French lens maker, was yesterday’s biggest blue-chip casualty as investors showed their disappointment that the stock would not, as had been expected, take the place of drugs group Aventis in the benchmark CAC 40 index at the end of September.
Aventis, which was taken over by smaller rival Sanofi-Synthelabo, will instead be replaced by advertising group Publicis.
Essilor shares fell 3.8 per cent yesterday to €49.53 while Publicis pared an early advance to close 0.2 per cent firmer at €21.79. Membership of the index is important as funds often link their portfolios to constituent stocks.
Widespread market fears that the insurance sectors of the FTSE Eurotop 300 would come under heavy selling pressure following the swathe of damage wrought by Hurricane Charley across Florida last weekend were proved wrong as the week unfolded.
One by one the reinsurers calmed investors’ nerves by issuing reassuring statements on the extent of their losses caused by the hurricane.
Germany’s Munich Re, the world’s biggest reinsurer, got the ball rolling, saying that its losses would come in around the low three digit million euros, much lower than the market had speculated.
Scor, the French reinsurer followed quickly and said its losses would be only between €1m and €10m, while Switzerland’s Converium said it stood to lose less than $25m. Swiss Re, meanwhile put its exposure at less than $200m.
And Zurich Financial Services said its losses caused by the hurricane would total around $150m. Zurich’s estimate was released along with an impressive set of interim figures. Zurich shares added 1.4 per cent to SFr17925 yesterday, extending the rise on the week to 6.4 per cent.
Scor shares dipped 1.6 per cent to €3.15 yesterday but retained a rise of 7.6 per cent over the week. Munich Re shares, which eased 1 per cent to €75.87 yesterday, were 1.1 per cent higher over the five-day period. Swiss Re dipped 0.4 per cent to SFr69.80 - 2.3 per cent higher on the week.
Converium, which is scheduled to unveil details of its previously announced capital increase on August 31, rose 0.4 per cent to SFr25.70 yesterday - for a week’s gain of 3 per cent.
Telekom Austria provided the week’s main talking point in the telecoms sector as talks about its possible takeover by Swisscom collapsed.
The failure of the deal sent shares in state-owned Telekom plunging. They ended the week with a decline of nearly 15 per cent at €11.01, while Swisscom closed at SFr409, up 0.4 per cent.
The OIAG, Austria’s state holding agency, said that in spite of agreement between the two parties on most points, it had been forced to end the talks because of insufficient political support.