By Carla Mozee, MarketWatch
Nokia cements deal to purchase Alcatel-Lucent
European stocks pushed toward 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 414.17, led by the oil and
gas , consumer goods and industrial sectors.
The pan-European benchmark was above its record closing high 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 feeding through to 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."
The euro (EURUSD) dipped below $1.06 during Draghi's press
conference, but later rose to $1.0626 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.
German bunds and other sovereign bonds were little changed as
Draghi spoke. The yield on the 30-year German bund was off 3 basis
points at 0.51% 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 gained 0.4% to
12,275.32, and the U.K.'s FTSE 100 rose 0.4%
(http://www.marketwatch.com/storyno-meta-for-guid) to 7,102.11, on
course for its best close on record, with gains for apparel
retailers Burberry Group (BURBY) and Next PLC .
Tech stocks lagged the broader European market, with ASML
Holding NV (ASMLD) down 1.2% as 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 2% to 743.60, 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 0.9% to 5,264.46. But
shares of Alcatel-Lucent SA (ALU) were driven 13% 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).
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 0.9%.
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