Auto makers up after Daimler's move to sell stock to Abu Dhabi A rally in European stocks continued on Monday as an anticipated bank-rescue plan out of the U.S. cheered investors. In late morning trade, the U.K. FTSE 100 rose 1.7% to 3,907.73, the German DAX 30 rose 2% to 4,146.13, and the French CAC 40 rose 1.6% to 2,834.58. The pan-European Dow Jones Stoxx 600 rose 1.8% to 175.71. Over the past two weeks, the FTSE 100 rose 8.8%, the German DAX 30 gained 11% and the French CAC 40 advanced 8.2%. Ian Scott, chief global and European strategist at Nomura International, said the rally has been more a reversion of cheap valuations than a bounce in "low quality" stocks. He noted that Nomura's European Composite Value index has rallied 15.7% since March 9, but its low profitability and highly geared companies indexes have underperformed. "Value strategies in Europe have rebounded in recent weeks following nearly two years of near-continuous underperformance. We think that value stocks should perform well at this stage in the cycle and would expect this trend to continue," Scott said in a note to clients. Monday's action was focused on Washington, where U.S. Treasury Secretary Timothy Geithner will at 8:45 a.m. Eastern outline a series of public-private investments to soak up as much as $1 trillion in troubled loans and securities. U.S. stock futures climbed, with futures on the Dow Jones Industrial Average rallying 215 points. Currencies like the euro, which have been correlated with moves in stock markets, also advanced, with the shared currency up 0.4% to $1.3642. See Indications. Financials advanced throughout Europe. Deutsche Bank shares climbed 6.2%, shares of ING Group added 18% in Amsterdam and shares of Unicredit rose 8.9% in Milan. "Banking is probably the own truly global business," said Heino Ruland of Ruland Research. "If we start to rescue the largest credit market in the world, everyone strongly believes that other action will be taken in other markets." That said, he thinks the rally in bank shares is close to an end, noting the doubts about future profitability under their new business models. Daimler shares rose 1.9% as the maker of Mercedes-Benz cars over the weekend outlined a plan to make a special issue of shares and sell them to Aabar Investments of Abu Dhabi for 1.95 billion euros at a 4% discount to Friday's close. See Daimler story. Shares of arch-rival BMW climbed 2.4%. "That is pure short covering," Ruland said of the Daimler move. But he did say that markets appreciated that the Abu Dhabi investment will be a long-term one. "They are a long-term player with a long-term vision," he said. Though not specifically mentioning the Daimler deal, Goldman Sachs analysts said it's the best time to buy European auto shares in 10 years. "We now see light at the end of the tunnel - we believe European car-sales declines troughed in February. Historically, such troughs have marked highly attractive entry points, preceding both absolute and sector-relative performance," said the analysts. Analysts at UBS, however, kept a sell rating on Daimler. "The lack of premium and the exclusion of existing shareholders will likely increase concerns about Daimler's financial and strategic position," they said, adding that the newly issued shares offset the impact of the buyback of stock during 2007 and 2008. Vodafone Group ) shares rose 0.9% and Telefonica shares added 1.5% as the European mobile phone network operators announced a deal to share mobile network infrastructure in Spain, the U.K., Germany and Ireland. The companies said the deal is expected to deliver cost savings of "hundreds of millions of pounds" for each of them over the next 10 years. Suedzucker shares slumped 6.1% in Frankfurt, as the sugar producer was downgraded to conviction sell from neutral by Goldman Sachs as part of a note on European consumer staples. The broker expects average earnings to fall by 5% this year, the largest decline over the past 35 years. Despite an upgrade by the same broker, Aryzta fell 4.9%. Novozymes shares slumped 3.4% after it was downgraded to sell from neutral. There were two winners from the Goldman note: Danone shares rose 2.3% on an upgrade to neutral, and SABMiller added 3.3%, with the brewer also upgraded to neutral.

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