Michael Page tumbles in London; Aker deal boosts drilling sector
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European stock markets pared early gains to trade flat to higher Monday, with mining and oil-services shares among the winners, while retailer Hennes & Mauritz AB fell after reporting a drop in same-store sales.
The Stoxx Europe 600 index XX:SXXP -0.11% was flat at 237.55 in early afternoon trading. Stocks remained choppy, though the swings were more muted than in recent days — the Stoxx 600 gained 6.3% over the previous two sessions but is still down more than 10% since the end of July.
Markets in Italy, Greece and Austria remained closed for a holiday, while trading volumes in other European countries were well below average.
Asian markets posted strong gains, including a 1.4% rise for Japan’s Nikkei Stock Average JP:NIK +1.34% after data showed the Japanese economy shrank less than expected as the country continued to be affected by the impact of the devastating March earthquake and tsunami.
U.S. stock market futures were also pointing to modest early gains for Wall Street.
French bank stocks remained volatile following their sharp drop early last week and the subsequent introduction of a short-selling ban in several countries.
Shares of Credit Agricole SA FR:ACA +0.95% rose 1.4%, while BNP Paribas FR:BNP -0.71% dropped 1.3%.
The French CAC 40 index FR:PX1 +0.38% edged up 0.2% to 3,219.30.
German lenders were higher, including a 2.1% gain for Commerzbank AG DE:CBK +3.76% , ahead of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday.
The pair will be looking for ways to stem the market turmoil of recent weeks. Over the weekend, Giulio Tremonti, Italy’s minister for economy and finance, added his voice to the growing call for greater fiscal consolidation in Europe, which could include issuing eurobonds that spread the debt burden across the euro zone.
“In reality we all know that there are just two choices. Either Germany decides to become the backer of last resort for the whole euro zone by agreeing to the issuance of EU bonds, or they choose not to emasculate themselves on the altar of political union and drop the whole mess onto the backs of the individual sovereign states,” said Simon Denham, CEO of Capital Spreads, in an email.
“Either way they are pretty much doomed to a poorer future,” he added.
Aker Drilling soars
In deal news, shares of Norwegian drilling rig operator Aker Drilling ASA NO:AKD +96.26% virtually doubled in Oslo after Transocean Ltd. RIG +0.34% CH:RIGN +3.15% agreed to buy the firm in a $2.23 billion deal that also includes the assumption of $800 million of debt.
Shares of Transocean rose 4% in Swiss trading, while Aker ASA NO:AKER +11.34% , which holds a 41% stake in Aker Drilling, rallied 10%.
Oil and gas engineering firms were also among the top gainers in London, including a 2.2% advance for John Wood Group PLC UK:WG +2.33% and a 4% move higher for Amec PLC UK:AMEC +4.31% .
Mining stocks traded higher in London as well, including a 2% gain for Kazakhmys PLC UK:KAZ +1.97% . The FTSE 100 index UK:UKX +0.32% rose 0.4% to 5,340.73.
However, shares of recruitment firm Michael Page International PLC UK:MPI -10.34% slumped 12% in London. The company said that first-half pretax profit fell 26% and that profit growth from its banking recruitment business has slowed in the last few weeks due to hiring freezes by major firms.
Hennes & Mauritz SE:HMB -1.54% [ HNNMY +0.16% , also ranked among the weaker stocks across Europe after the Stockholm-based fashion retailer reported a 6% drop in same-store sales for July.
Germany’s DAX 30 index DX:DAX +0.49% rose 0.7% to 6,041.29, led by the gain for Commerzbank as well as a 1.9% rise for Deutsche Bank AG DE:DBK +1.90% DB +3.66% .
Simon Kennedy is the City correspondent for MarketWatch in London.
