Monday, December 10, 2007

European Stocks Rise, Led by Lafarge, UBS, Philips Electronics

By Marco Bertacche

Dec. 10 (Bloomberg) -- European stocks rose, led by construction companies and banks, after Lafarge SA shares climbed the most in at least 17 years on an acquisition in the Middle East and UBS AG said it will shore up capital by selling stakes.

Lafarge, the world's biggest cement maker, jumped 12 percent. UBS, the region's largest bank by assets, Credit Suisse Group and Deutsche Bank AG gained. Royal Philips Electronics NV rallied after two hedge funds said they teamed up to review the company's results and capital structure.

The Dow Jones Stoxx 600 Index added 0.4 percent to 374.42 at 11:53 a.m. in London. Stocks advanced last week on speculation lower U.S. interest rates and a government plan to avert more loan defaults will support corporate earnings and bolster the world's largest economy. Futures on the Standard and Poor's 500 Index advanced 0.2 percent.

The UBS sale ``shows that there is still liquidity in the system,'' said Lucy MacDonald, who helps manage $100 billion as chief investment officer of global equities at RCM Ltd. in London. ``It gives more security and stability to the whole financial market.'' She owns UBS shares.

The dollar gained against 12 of the world's 16 most-active currencies today. Futures contracts show a 74 percent chance the Federal Reserve will cut its key rate by a quarter-percentage point tomorrow.

National benchmarks increased in 12 of the 18 western European markets. France's CAC 40 advanced 0.3 percent, and Germany's DAX rose 0.3 percent. The U.K.'s FTSE 100 increased 0.1 percent. The Stoxx 50 gained 0.4 percent, while the Euro Stoxx 50, a measure for the euro region, added 0.3 percent.

Lafarge, UBS

Lafarge surged 12.89 euros to 120.56, the biggest gain since at least January 1990 when Bloomberg data on the shares began, on plans to buy the unit for 8.8 billion euros ($12.9 billion), becoming the biggest cement producer in Egypt, Algeria and the United Arab Emirates.

Lafarge will finance the purchase with 6 billion euros of debt and the sale of 22.5 million new shares, the Paris-based company said today. Orascom Chief Executive Officer Nassef Sawiris will buy the shares, taking an 11.4 percent stake in Lafarge, as part of the agreement.

UBS climbed 1.9 percent to 58.3 Swiss francs, after earlier losing as much as 3.4 percent.

Europe's largest bank by assets plans to raise 13 billion francs ($11.5 billion) selling bonds that will convert into shares to Government of Singapore Investment Corporation Pte. and an unidentified Middle Eastern investor, Zurich-based UBS said in a statement today. The sale will replenish capital after the bank wrote down U.S. subprime mortgage investments by $10 billion.

``We believe that we have made sufficient value adjustments now,'' Chairman Marcel Ospel told Swiss radio DRS.

Credit Suisse, SocGen

Credit Suisse, the second-largest Swiss bank, climbed 3.7 percent to 72.4 francs. Deutsche Bank, Germany's biggest bank, rallied 2.1 percent to 92.08 euros.

Societe Generale SA rose 1.3 percent to 107.95 euros. The Paris-based bank said it will take $4.3 billion of assets onto its balance sheet by consolidating a structured investment vehicle it sponsors.

Philips gained 4.5 percent to 29.76 euros. Jana Partners LLC and D.E. Shaw Group plan ``to act together to jointly communicate their views, publicly or privately, regarding operating performance and capital structure'' of Philips, the New York-based firms said.

Jana and D.E. Shaw plan to enter talks with Philips, Dutch newspaper Het Financieele Dagblad reported earlier today.

Philips holds ``frequent'' talks with ``a great many'' of its shareholders, company spokesman Arent Jan Hesselink said by telephone today. He declined to say if Philips has had discussions with the funds.

Air France, EasyJet

Air France-KLM Group, Europe's biggest airline, added 2.3 percent to 25.3 euros. EasyJet Plc, the second-largest discount carrier, advanced 2.3 percent to 575.5 pence. UBS analysts upgraded the stocks to ``buy'' from ``neutral.''

``The airlines are already discounting very bad circumstances in 2008,'' UBS analysts, including Tim Marshall, wrote in a research note dated today. ``We are positive on the sector.''

Union Fenosa SA, Spain's third-largest power company, fell 4 percent to 45.87 euros. Iberdrola SA, the country's second- biggest power producer, dropped 1.4 percent to 10.84 euros. Spain's government reduced rates for utilities related to carbon- dioxide emissions.

PSA Peugeot Citroen, Europe's second-largest carmaker, added 4 percent to 55.85, after Societe Generale raised the stock to ``buy'' from ``hold.''

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