By Carla Mozee, MarketWatch
Nokia cements deal to purchase Alcatel-Lucent
European stocks marked a new record closing high Wednesday, as
European Central Bank chief Mario Draghi said the bank's massive
bond-buying program is rolling along "smoothly" and conditions in
the eurozone are showing improvement.
The Stoxx Europe 600 climbed 0.6% to 414.06, led by the oil and
gas , consumer goods and industrial sectors.
The pan-European benchmark finished above the record close of
413.63 reached on Monday, with analysts saying equities have
benefited from the ECB's EUR1.1 billion bond-purchasing program, or
so-called quantitative easing, launched in March. The program is
targeted toward boosting inflation and reviving economic growth in
the eurozone.
At its policy meeting Wednesday, the ECB left interest rates
unchanged, as expected.
During his afternoon press conference, which was briefly
interrupted by a confetti-throwing protester
(http://www.marketwatch.com/story/draghi-jumped-by-confetti-wielding-protester-at-ecb-presser-2015-04-15),
Draghi said the bank has seen borrowing conditions in the eurozone
improve, and that the ECB's measures are having an impact on the
real economy.
"In essence, Draghi 'stuck to the script,' shooting down any
suggestion that ECB was planning on winding down its QE program
prior to the promised 18 months...or imminently planning on
expanding the program," said Matt Weller, senior technical analyst
at Forex.com, in a note. "Beyond the early protest, the press
conference passed with minimal drama."
Euro and bonds: The euro (EURUSD) traded around $1.06, dipping
below that level during Draghi's press conference. It briefly
recovered ground following a weaker-than-expected reading on U.S.
industrial production
(http://www.marketwatch.com/story/us-industrial-output-weakens-in-march-2015-04-15)
in March. However, the shared currency was pushed back to $1.0591
as a fall in yields across European bonds showed signs of picking
up pace Wednesday afternoon.
The yield on Germany's 10-year bond fell 3 basis points to 0.10%
and the 30-year German bund was off 5 basis points at 0.49% after
hitting a record-low 0.54% earlier. The yield on 10-year Spanish
debt was 1.26%, down 2 basis points. Yields and prices move
inversely.
On the country indexes, Germany's DAX 30 pared its gain to
nearly 4 points at 12,231.34. The U.K.'s FTSE 100 rose 0.3%
(http://www.marketwatch.com/storyno-meta-for-guid) to 7,096.78, its
best close on record, with gains for apparel retailers Burberry
Group (BURBY) and Next PLC .
Tech stocks lagged the broader European market, in part as ASML
Holding NV (ASMLD) fell 2.8%. The Dutch semiconductor-equipment
maker's second-quarter sales outlook of EUR1.6 billion was short of
the EUR1.64 billion consensus estimate from Thomson Reuters.
Greece: The Athex Composite fell 1.9% to 743.95, weighed down by
worries about Greece's cash crunch and the country's future in the
eurozone. Negotiations between Greece and its international
creditors are moving very slowly
(http://www.marketwatch.com/story/eu-says-greek-bailout-talks-are-far-from-resolution-2015-04-15),
a senior European Union official said.
The ECB on Tuesday raised the amount of money Greek banks can
borrow under an emergency-lending program
(http://www.wsj.com/articles/european-central-bank-lifts-ceiling-on-greek-loans-1429040433?KEYWORDS=draghi)
to EUR74 billion ($78.9 billion) from EUR73.2 billion the previous
week.
The emergency-lending program for Greek banks "is the only thing
that is preventing capital controls being imposed," said Angus
Campbell, senior analyst at FxPro, in a note early Wednesday.
Alcatel: In Paris, the CAC 40 tacked on 0.7% to 5,254.35. But
shares of Alcatel-Lucent SA (ALU) were driven 15.5% lower after
Nokia Corp. (NOK) agreed to buy the French
telecommunications-equipment maker in an all-stock deal that values
Alcatel at EUR15.6 billion ($16.6 billion)
(http://www.marketwatch.com/story/nokia-agrees-to-buy-alcatel-lucent-in-166-billion-deal-2015-04-15).
Alcatel shares had climbed 16% on Tuesday after Nokia confirmed
talks about a tie-up were taking place.
The [b]id on Alcatel-Lucent is long-term strategically correct,
but highly risky. We are hesitant to its potential for value
creation, the true picture will only emerge in a couple of years,"
wrote Swedbank in an note. With shares of Alcatel dropping "we can
conclude they anticipated a higher bid."
Nokia shares turned lower, by 1.5%.
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