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International Herald Tribune: European stocks end higher: Shares in oil companies BP, Royal Dutch Shell and Total boosted by M&A potential

EXTRACT: Shares in oil companies such as BP, Royal Dutch Shell and Total were more than 1.6 percent higher, boosted by broker comment on the M&A potential of several top European oil companies.

THE ARTICLE

The Associated Press
Published: December 5, 2006
 
LONDON: European shares ended with strong gains Tuesday, as strength from companies tied to the commodity sector and higher U.S. equity markets enabled investors to shrug off some poorly received updates from banking giant HSBC and electronics giant Philips.

The German DAX Xetra 30 index gained 1.2 percent to 6,372.80, with the help of a 3.7 percent increase from steelmaker ThyssenKrupp. The French CAC-40 index finished 1.2 percent higher at 5,359.69.

In the U.K., the FTSE 100 index ended up 0.6 percent at 6,086.40, helped by mining companies such as Kazakhmys, which rose more than 3.1 percent as metals prices stayed near recent highs.

Shares in oil companies such as BP, Royal Dutch Shell and Total were more than 1.6 percent higher, boosted by broker comment on the M&A potential of several top European oil companies.

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 Sentiment was also helped by gains in the U.S. equity markets after data showed service-sector growth improving in November, while inflation was weaker than expected in the third quarter, fueling hopes of a soft landing for the U.S. economy.

Banking giant HSBC Holdings slipped 1.5 percent after the company said revenue growth slowed in the third quarter compared to the first half, while cost growth held at the same rate. Reduced trading revenue weighed on the company.

Philips Electronics shares pulled back from sharp losses to end down just 0.1 percent. Europe’s largest consumer-electronics maker said it will spend €100 million (US$133 million) on its brand next year, while also setting new core-profit forecasts that disappointed some investors.

In London, retail shares declined as toy and entertainment retailer Woolworths expressed caution for the future.

Shares in Woolworths fell 7.5 percent after the company said it would struggle to meet analyst forecasts unless sales and margins in the rest of the Christmas trading period improved.

Tesco, Britain’s biggest supermarket chain, saw its shares slip 1 percent after it said that its 13-week sales rose 10.3 percent excluding fuel and it expects inflationary pressures to subside in the months ahead.

Shares in Carphone Warehouse rose 7.7 percent after Merrill Lynch reiterated its buy recommendation on the mobile phone retailer, saying that it appears to have seen strong trading in the first weekend of the Christmas trading period despite strong comparatives, according to comments from Carphone’s CEO, Charles Dunstone.

Sarah Turner is a correspondent for Dow Jones Newswires

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