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Euroshares higher midday, Dow seen up on Countrywide cash injection
08.23.07, 9:02 AM ET



LONDON (Thomson Financial) - Europe's leading exchanges were higher midday as the Dow looks set to post strong gains in opening deals as news of Bank of America's handout to Countrywide Financial inspires confidence.

At 12.33 am, the Dow Jones STOXX 50 added 35.63 points, or 0.96 pct, to 3,741.15 as the STOXX 600 rose 3.78 points, or 1.03 pct, to 372.4.

Spread bettor IG Index said the Dow looks set to rise 80 points in opening deals as investors express new faith in the strength of the US markets.

The good mood was boosted after Countrywide Financial shares surged 20 pct in after hours trade after the US mortgage lender obtained 2 bln usd of new capital from Bank of America Corp.

In macroeconomic news, German second-quarter GDP, which grew 0.3 pct in seasonally-, price- and calendar-adjusted terms, suggests the country's economic recovery is still solid despite the slowdown in the pace of overall GDP growth, economists said.

Recent turmoil in financial markets is unlikely to derail the economic expansion, they said.

Banking and financial stocks were heavily featured on European leader boards as recent fears about the state of the global credit markets waned. Allied Irish Banks added 1.81 pct, Societe Generale added 1.52 pct and Aegon was up 1.34 pct.

Northern Rock was 6.04 pct higher as investors tried to cover their short positions. The gains in early trade prompted talk the group -- which has been heavily sold amid the recent market turmoil -- was a takeover candidate, with dealers saying ING was the latest name in the frame.

ING, though, rejected the speculation.

ING spokesman Peter Jong said Northern Rock 'is not on our radar screen'.

Standard Chartered was up 1.52 pct on press reports it is in talks to buy South Korean broker Hannuri Investment & Securities. Separately, the bank said it had acquired a 49 pct stake in Indias UTI Securities for around 36 mln usd.

Nordea added 1.5 pct after its shares were upped to 'neutral' from 'sell' in a Goldman Sachs banking review.

Even the news that Goldman Sachs had downgraded Deutsche Bank to 'neutral' from 'buy' couldn't overshadow the good mood.

HSBC slipped back 0.55 pct after reports Bank of China holds 9.7 bln usd of sub-prime assets.

Sweden's OMX added 0.83 pct as Sweden's FSA said that said Borse Dubai's press release about its bookbuilding process in OMX amounted to a public takeover offer and that the Middle Eastern exchange breached the law. But the FSA said it will take no action because Borse Dubai has since complied with the law.

'The FSA's decision was more or less as expected. It is a detail in the big picture, but leaves the road clear (for a bid battle),' a dealer at a European investment bank said.

Holcim charged 2.38 pct ahead after beating expectations with its first-half results and positive outlook.

Although the market had very high expectations, the Swiss cement group still managed to beat them, said a Zuercher Kantonalbank analyst.

The good news lifted other plays in the sector. Lafarge -- up 2.82 pct -- led the STOXX 50 risers board. Italcementi added 1 pct and Cimpor added 0.29 pct.

HedilbergCement added 0.86 pct on the day the High Court of Justice in England and Wales gave the green light to its takeover of Hanson, at a price of 1100 pence per share.

TUI was one of the leading gainers in Germany --up 2.04 pct -- as speculation continues that Geveran Trading Co, one of shipping billionaire John Fredriksen's investment vehicles, may be interested in raising the 3.07 stake it currently holds in TUI and possibly aim for a break up of the tourism and shipping giant.

Flughafen Wien was 0.73 pct higher as it released better-than-expected first-half net profit and lifted its passenger growth forecast for the year to 8 pct from 5 pct.

Even stripping out any special provisions, the half-year results are much better than our estimates with strong operative turnover in all segments, said Bernd Maurer, an analyst at Raiffeisen Centrobank.

Elsewhere, hotel group Accor rose 2.2 pct after Kepler upgraded the French hotels group to 'buy' from 'hold', as well as on continued bargain-hunting by investors after the severe correction of recent weeks.

In a note this morning, Kelper analysts argued that the recent drop in the stock was 'excessive' and offers a buying opportunity.

Air Berlin was off earlier lows but down 2.35 pct after the group denied a rumour that it will issue a profit warning imminently.

A spokesman said it would be inaccurate to say the airline would give a profit warning today.

The rumours surfaced after Commerzbank said it was lowering its earnings forecasts for the carrier following TUIfly.com's weak second-quarter traffic results and disappointing indications for Air Berlin's second-quarter yields.

But Kuoni Reisen Holding shed 5.56 pct after it reported a disappointing first-half net profit of 3.5 mln sfr and issued a 'vague' outlook statement.

A trader at a Swiss brokerage said the figures were lower than he had been hoping for and the outlook is vague.

'There was no confirmation of the mid-term guidance,' he said.

In the automotive sector, Fiat was trading 1.73 pct higher after Moody's upgraded the group's corporate family rating and other long-term senior unsecured ratings yesterday to 'Ba1' from 'Ba2' with a positive outlook.

Staying with autos, MAN AG added 1.93 pct as traders noted that press reports of a possible joint venture in China were giving some support.

'We don't have that much information on the deal, but right now we would tend to believe that this is positive news,' Robert Heberger, analyst at Merck Finck said.

DaimlerChrysler -- up 2.39 pct -- and other car groups also found support as the price of oil wallowed below 70 usd. Daimler also overcame a hurdle in the renaming of itself as Daimler following an agreement with Ford Motor Co, whose Jaguar brand owns the rights to the name. Renault -- which launched its new Laguna model yesterday -- was up 0.69 pct.

deborah.hyde@thomson.com

dlh/slj

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