DJ GLOBAL MARKETS

Mon Jul 19 07:27:00 EDT 2010

European Stocks Rebound; Resource Stocks

Rise
By Ishaq Siddiqi & Andrea Tryphonides
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--European stocks rebounded from opening lows Monday, with basic
resource stocks pushing higher on firmer commodity prices, while merger and activity action in
Europe helped to lure in buyers.
Basic resource stocks led Monday's rebound as buying activity in base metals picked up after
copper recovered for the first time in three days in Asia after a two-week low on purchases by
Chinese traders. The demand for commodities held up in the European session, and by 1100
GMT, the Stoxx 600 Europe basic resource index rose 1.0%.
Meanwhile, French power company GDF Suez confirmed it is in preliminary talks with the
U.K.'s International Power to merge assets outside of Europe in a deal that would make the
French company the majority shareholder in International Power. International Power's shares
were 9.4% higher, while GDF Suez was up 1.7%, after the companies confirmed the talks.
In London, shares in engineering and manufacturing company Tomkins rose 32%, after it
received a 325 pence a share, or GBP2.86 billion cash bid approach from Canadian private
equity firm Onex Corp. and the Canada Pension Plan Investment Board.
This recovery in Monday's price action has been demonstrated by expectations for Wall Street to
open higher, with September futures contract on the Dow Jones Industrial Average up 0.5% at
10,108, while the September Standard & Poor's 500 futures contract added 0.5% at 1068.70.
The fuel in appetite for risk helped BP shares battle off earlier lows after reports a seep has been
detected near the Gulf of Mexico oil well, following the installation of a new cap on the well.
Shares in the oil giant were last seen down 1.8% having opened over 5% lower.
Overall, by 1105 GMT, the Stoxx Europe 600 index gained 0.3% to 248.9. London's FTSE 100
index was up 0.7% at 5194.98, Frankfurt's DAX index was 0.6% higher at 6075.74, but off lows,
and Paris's CAC-40 index rose 0.8% to 3527.25.
However, Dublin's ISEQ index dropped 0.6%, after credit agency Moody's cut Ireland's debt
rating, citing its rising debt, a weak growth outlook and the high cost of rebuilding its bank
system.
Still, the euro has been able to shrug off Ireland's credit rating downgrade as the reduction is only
a couple of pips below treble A which still means that it is deemed a quality investment grade,
said Simon Denham, head of Capital Spreads in London.
"Downgrades have been seen to be buying opportunities in recent weeks so traders have been
nervy of selling the euro first thing," added Denham.
And although the single-currency has problems that will go on for years and years to come and
problems that will bury some of the weaker members, "if the political will is to hold the structure
together, come what may, and to make the harder choices that will enable this to be the case then
the argument for the demise of the euro become less overwhelming. Yes, the euro is probably
over valued but not to the extent that will force its capitulation," said Denham.
By 1120 GMT, the euro was at $1.2958, up from $1.2927 in late New York trade on Friday, and
at Y112.91 from Y111.93.
Earlier, Asian shares closed mostly lower Monday after Wall Street slipped on Friday, but
merger and acquisition activity helped keep the region from matching the magnitude of losses in
the U.S.
South Korea's Kospi Composite shed 0.4% and Hong Kong's Hang Seng Index slipped 0.7%,
while the Shanghai Composite rose 2.1%. Japanese markets were shut for Marine Day.
Elsewhere, spot gold was at $1190.05 per troy ounce, down around $3 from late New York trade
Friday, while the front-month August Nymex crude oil futures contract was up 36 cents at
$76.37 per barrel on Globex.
The core sovereign debt markets have pushed lower Monday, as money has gone into the more
risky equity markets. At 1125 GMT, the benchmark September bund contract pushed 0.45 lower,
to 128.71.
"It seems to be fund driven and trading volumes have generally been declining, which has made
the fall look bigger," said a London-based trader.

Disclaimer
(This article is general financial information, not personalized investment advice, as it does not
consider the unique circumstances affecting an individual reader's decision to buy or sell a
specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the
information in this article, and any errors will not be made the basis for any claim against Dow
Jones. The author does not invest in the instruments or markets cited in this article.)