- STOXX 600, down 0.1 pct, set for 7th week of straight gains
- Sika shares rally after Saint Gobain dispute ends
- ZPG deal boosts DMGT, Rightmove shares
- ArcelorMittal results boost basic resources
European stocks were set to achieve their longest weekly winning streak for more than three years on Friday as M&A activity added to an advance on the back of a busy earnings season.
Shares traded in a narrow range, with the pan-European STOXX 600 index down 0.1 percent by 1010 GMT, still on course for its seventh straight week of gains and the longest winning streak since March 2015. Germany’s DAX fell 0.4 percent while Britain’s FTSE 100 was flat in percentage terms.
Though moves at the index level were muted, shares in Sika soared 8.7 percent to the top of the STOXX after the Swiss chemicals company reached an agreement with French building materials firm Saint-Gobain to end a long-standing legal dispute.
Saint-Gobain, whose shares rose 2.8 percent, is to take a large stake in Sika, but not majority control.
“We see this as positive for (Saint-Gobain), which we believe has been negatively impacted, with some investors preferring to remain on the side lines because of the uncertainties linked to the Sika operation,” Raymond James analysts said in a note.
Shares in Daily Mail and General Trust (DMGT) rose 2.3 percent, having jumped as much as 9.4 percent, after U.S.-based private equity firm Silver Lake Management Company agreed to buy ZPG, the owner of British property websites Zoopla and PrimeLocation, for 2.2 billion pounds.
DMGT is the biggest shareholder in ZPG, whose shares rocketed about 30 percent to a record high. Shares in fellow British classifieds websites Rightmove rose 6.5 percent and Auto Trader rallied 4.1 percent.
“A lot of companies that hold overseas money (are) looking in and realizing that they’re getting a bit of value at the moment with how weak the pound is, relatively speaking,” Vertex Capital Group market analyst Jasper Reimers said, referring to the UK equity market.
While the first quarter earnings season was winding down in Europe, basic resources was the best-performing sector after shares in ArcelorMittal rose 2.2 percent. The world’s biggest steelmaker beat earnings forecasts and gave an upbeat outlook for 2018.
So far blended year-on-year earnings growth for the first quarter has come in at 16 percent for MSCI EMU, in dollar terms, compared with 26 percent for the S&P 500, according to Thomson Reuters I/B/E/S.
Outside of the STOXX, earnings updates boosted shares in Italian banks. Monte dei Paschi jumped 11 percent after the bank swung to a profit in the first quarter thanks to lower costs and loan losses, while UBI Banca gained 1.2 percent after its results.
While the Italian banking sector has been under pressure recently on the back of political jitters, the sector is up more than 13 percent this year while Italy’s benchmark FTSE MIB has risen 10 percent.