World markets post solid moves in anticipation of broad U.S. rebound; Shares of Orange soar.
September 1, 2003: 12:56 PM EDT
PARIS (Reuters) - European equities raced higher Monday as AstraZeneca led drugmakers higher and signs of improving manufacturing in Europe added to hopes that an economic pickup will translate into higher corporate earnings.
London's FTSE 100 gained 1.04 percent, France's CAC 40 added 1.42 percent and Zurich's Swiss market ended 1.82 percent higher. Frankfurt's DAX, the only market still trading, gained 2.3 percent.
Strong insurance stocks also helped move the averages higher, with a broker upgrade from Morgan Stanley boosting shares in Britain's Prudential and Germany's Munich Re.
France Telecom nabbed the spotlight after it said it would buy the 13.7 percent of its mobile phone subsidiary Orange it did not already own in a deal valued at 7.1 billion, or $7.8 billion.
Shares in the debt-laden operator closed 3.9 percent lower at the Paris bourse, while Orange's surged 12 percent.
Another standout was European aerospace firm EADS, which flew 6.5 percent higher after winning a deal worth 657 million to deliver transport helicopters to Greece.
Volume on the benchmark FTSE Eurotop 300 index amounted to two billion euros -- as the Labor Day public holiday in the United States thinned investors' ranks -- with advancers outnumbering falling issues by a ratio of six to one.
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Improving manufacturing data in the euro zone and in Britain further bolstered sentiment on equity markets.
A rise in the Reuters Eurozone Purchasing Managers' Index in August showed that the sector moved closer to growth as manufacturing output stabilized, job cuts slowed and new orders grew for the first time in six months.
Separately, the PMI survey of British manufacturers hit its highest point in 15 months, and investors expected U.S. firms to tell the same story on Tuesday when the Institute for Supply Management's August index is released.
"Markets are gorging themselves with expectations of a stronger economy in the second half of the year, as government spending plans kick in the U.S. economy and elsewhere," said economist Valerie Plagnol from CIC Securities in Paris.
She added, however, there were risks to the nascent economic recovery -- namely that consumer spending could fizzle and that governments are finding it increasingly hard to keep digging into their pockets to boost growth.
"Unless we get strong signals of improvement on the unemployment front in the next three to four months, there is a risk that the current brighter economic interval will be no more than that, an interval," Plagnol said.
British drugmaker AstraZeneca rose three percent after researchers said the firm's anti-coagulant pill Exanta cut the risk of death or complications in patients who suffered a previous heart attack, opening a third potential use for the experimental drug.
Peers GlaxoSmithKline from Britain and France's Aventis and Sanofi-Synthelabo also got a boost from a global trade deal that cut the price of vital medicines for poor countries and was welcomed for the patent safeguards it offered to big drug makers.
Elsewhere, the DJ Stoxx insurance sector rose 2.6 percent after investment bank Morgan Stanley raised its stance on the sector to "in-line" from "cautious" and upgraded Prudential and Munich Re.
Japan's Nikkei also rose Monday on signs that a U.S. economic recovery is under way.
While a firming yen is causing some concern over the profits of Japanese exporters, it will not be a big issue as long as the global economy is on the mend and the dollar stays within a recent range of between 115 and 120 yen, analysts told Reuters.
The dollar fell against the yen, but rose versus the euro. The dollar purchased ¥116.42, down from ¥116.81 late last week. The euro bought $1.0966, down from $1.0986 late Friday
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