Thales shares drop after broker downgrade; Northern Foods surges
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European shares edged higher Wednesday, recovering some ground after the previous session’s heavy losses as officials from the Europe Union and the International Monetary Fund announced talks with Ireland about the best way to provide potential aid.
The Stoxx Europe 600 index (ST:STOXX600 266.51, +0.53, +0.20%) gained 0.1% to 266.17, with drug companies among the strongest performers after the announcement of a cost-cutting plan from Roche Holding (CH:ROG 144.70, +2.20, +1.54%) and a positive drug recommendation for GlaxoSmithKline (UK:GSK 1,238, +24.50, +2.02%) (GSK 38.54, -0.69, -1.76%) (GSK 38.54, -0.69, -1.76%) .
The U.K.’s FTSE 100 index (UK:UKX 5,678, -4.01, -0.07%) was little changed at 5,682.37, while the French CAC 40 index (FR:PX1 3,770, +7.22, +0.19%) rose 0.1% to 3,765.26.
The German DAX 30 index (DX:DAX 6,683, +19.97, +0.30%) was up 0.3% at 6,679.91.
Benchmark indexes in Europe’s peripheral nations also posted gains. Ireland’s ISEQ index rose 0.3% to 2,660.69 after euro-zone finance ministers said officials from the European Central Bank, IMF and European Commission would conduct a “consultation” with Ireland about the best way to provide any necessary support to address market risks, especially regarding the troubled Irish banking sector.
The statement came after Irish Prime Minister Brian Cowen told parliament that Ireland had not yet requested any aid. Read more on the European response to Ireland's crisis.
Among stocks in focus Wednesday, GlaxoSmithKline jumped 2.2% after a Food and Drug Administration panel recommended that the agency approve Benlysta, a lupus drug developed by Glaxo and Human Genome Sciences Inc. (HGSI 25.88, 0.00, 0.00%) .
Roche rose 1.4% on the SIX Swiss Exchange after announcing cost-cutting plans that will result in the loss of around 4,800 jobs, or 6% of its workforce. The company expects to save around 2.4 billion Swiss francs ($2.41 billion) a year, beginning in 2012 See story on Roche’s plans.
On the downside, shares in Thales (FR:HO 27.43, -1.00, -3.52%) dropped 3.9% in Paris after the electronics and security group was downgraded two notches to sell from buy at UBS.
The broker cut its forecast for earnings before interest and taxes, saying it’s no longer confident that Thales can hit the top end of its margin guidance range.
Among smaller companies, shares in Northern Foods (UK:NFDS 56.00, +10.75, +23.76%) surged 24% and Greencore Group (UK:GNC 1.25, +0.22, +20.77%) jumped 19% after the pair agreed to merge.
Shareholders of each company will control 50% of the merged business, to be called Essenta Foods, while the deal will also help cut costs by around 40 million pounds ($64 million) a year, the companies estimated.
