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Europe shares flat, near 27-month high; SAS soars

Published 12/23/2010, 06:46 AM
Updated 12/23/2010, 06:52 AM
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* FTSEurofirst 300 little changed, near 27-month high

* SAS shares rise on report that Lufthansa plans takeover * Novo Nordisk up on trial result

* Weak metals hurt miners

By Brian Gorman

LONDON, Dec 23 (Reuters) - European shares were little changed in thin pre-Christmas trade on Thursday, hitting 27-month high for a fourth day, with Scandinavian carrier SAS up on a report that Lufthansa planned a takeover.

SAS soared 12 percent. Lufthansa and SAS both declined to comment on the report.

At 1120 GMT the FTSEurofirst 300 index of top European shares was little changed at 1,147.52 points after rising earlier to 1,149.05, the highest level since the collapse of investment bank Lehman Brothers more than two years ago.

The index is on track for its biggest monthly gain since July, 2009 and is up more than 77 percent from its lifetime low of March, 2009, with several major economies having emerged from recession, helped by stimulus from governments and central banks worldwide. "The rally we've seen reflects the stronger growth expectations around the world," said Ronan Carr, European equity strategist at Morgan Stanley.

"Sentiment indicators have also rebounded. But the tug-of-war between this and the sovereign debt issues in Europe will continue to be a theme into the new year."

Danish company Novo Nordisk rose 2.4 percent after the company overnight announced positive results from Phase III trials with its new-generation insulin Degludec. The STOXX 600 European healthcare index rose 0.5 percent.

But miners slipped as key base metals prices eased on profit taking. Kazakhmys and Xstrata fell 0.6 and 0.8 percent respectively.

Rio Tinto was 1.2 percent lower after offering $3.9 billion to buy African-focused coal miner Riversdale in an agreed deal that is likely to be challenged by rivals seeking to secure coking coal reserves.

Across Europe, Britain's FTSE 100 was up 0.1 percent, edging closer to the 6,000 mark. Germany's DAX was up 0.1 percent and France's CAC 40 fell 0.3 percent.

"The corporate picture still looks very bright, the trend towards higher profits is going to continue and public policies should remain shareholder-friendly," said Henk Potts, equity strategist at Barclays Wealth.

ERICSSON FALLS

Ericsson fell 1.2 percent after Goldman Sachs cut its rating on the Swedish mobile equipment maker to "neutral".

Among other individual companies, Swedish specialty steelmaker SSAB fell 3.2 percent after saying its operating profit for the fourth quarter had been hit by weak shipments and production problems and would probably be close to zero.

Investors are due to get a batch of U.S. economic figures later in the session, including November durable goods and the weekly jobless claims, as well as November new home sales data.

The market was not moved by North Korea's minister of armed forces saying its military was prepared to wage a "holy war" against the South using its nuclear deterrent after what he called Seoul's attempt to initiate conflict.

"You get the feeling China will make them behave," said one trader. (Additional reporting by Atul Prakash; Editing by Jon Loades-Carter)

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