By Carla Mozee, MarketWatch
Nokia cements deal to purchase Alcatel-Lucent
European stocks pushed toward a new record closing high
Wednesday, as investors waited for what European Central Bank
President Mario Draghi will say about the prospects for the
eurozone economy.
The Stoxx Europe 600 climbed 0.7% to 414.60, led by the oil and
gas and basic resources sectors.
Germany's DAX 30 gained 0.6% to 12,305.06, and the U.K.'s FTSE
100 rose 0.5% (http://www.marketwatch.com/storyno-meta-for-guid) to
7,109.37, with gains for apparel retailers Burberry Group (BURBY)
and Next PLC .
The Stoxx 600 was above its record closing high of 413.63
reached on Monday, and analysts have said 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.
The ECB will release its latest monetary policy decision at
12:45 p.m. London Time, or 7:45 a.m. Eastern Time, followed by a
press conference by ECB President Mario Draghi at 1:30 p.m. London
time.
"There could be questions about whether the ECB might begin
tapering its QE program earlier than scheduled if, as it now
projects, inflation rises back above 1.0% at the beginning of 2016
as the effects of low energy prices drop out of the annual rate of
change," said Marshall Gittler, head of global currency strategy at
IronFX Global Ltd., in an note. "I expect Draghi to emphasize that
the ECB is planning to continue its easing programs as
scheduled."
Greece: Draghi may also field questions about progress on
resolving Greece's debt troubles and about the likelihood that
Greece will eventually have to leave the eurozone. Greece's Athex
Composite fell 1.6% to 746.50, underperforming the broader European
market Wednesday.
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.
Alcatel: In Paris, the CAC 40 tacked on 0.7% to 5,252.99. But
shares of Alcatel-Lucent SA (ALU) were driven 12% 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).
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 were up 1.3%.
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