CADIZ TRADERS THREAD

German shares up midafternoon as US seen firm, liquidity strong; VW, TUI shine
FRANKFURT (AFX) - Shares remained higher in midafternoon trade on the back
of strong liquidity and as US stock futures pointed to a firm start to 2006 on
Wall Street, with Volkswagen leading large caps higher on the back of a report
Germany's Sitz has joined the bidding for the automaker's rental car business
Europcar, dealers said.
At 2.47 pm, the DAX 30 index was flirting with today's session high, up
45.16 points or 0.83 pct at 5,495.14, having moved between 5,450.48-5,496.34 so
far.
The MDAX was at 7,461.39, up 78.64 points or 1.07 pct, while the TecDAX was
at 609.06, up 8.23 points or 1.37 pct.
The DAX futures index was at 5,522.50, up 47.00 points or 0.86 pct, while
bund futures were at 121.33, down 0.20.
The euro last traded at 1.1874 usd, compared to 1.1885 in London midday
trade.
VW remained at the top of the DAX, up 1.51 eur or 3.35 pct at 46.61.
The Financial Times, citing people familiar with the bidding, reported that
VW has attracted six bidders for Europcar, including Sixt, whose entry into the
bidding marks a surprise twist in VW's sell-off plans.
Munich-based Sixt had denied interest in the company, which analysts
estimated would attract bids of up to 2.5 bln eur, including debt.
The planned sale of Europcar is being carried out partly to raise funds to
pay for extensive restructuring measures at VW.
Peer DaimlerChrysler was up 0.28 at 44.14, though BMW lost 0.17 to 37.23.
TUI continued to recover from its sharp fall in the latter half of 2005,
which market participants believe was excessive, gaining 0.54 to 18.37.
One analyst said the stock was undervalued, which had created a strong
demand for the shares.
ThyssenKrupp shares were also in demand, adding 0.56 to 18.50, for
chart-technical reasons, according to market participants.
News the German steel conglomerate raised its offer for Dofasco to 63.00 cad
per share, matching Arcelor's December offer for the Canadian steelmaker in the
ongoing bidding war between the two companies, had a very limited impact on the
share price.
One analyst argued that the increased bid had been widely expected by the
market and that the difference between ThyssenKrupp's original bid and the
raised bid price was "manageable".
Adidas-Salomon continued to gain, up 2.97 at 167.17, on yesterday's upbeat
comments by CEO Herbert Hainer.
He said the sporting goods manufacturer will exceed its 1 bln eur sales
target for football-related products for 2006 and that it is aiming to post more
than 1 bln eur in sales for those products in 2007.
He also said that Adidas expects an approval from the European cartel
authorities of its takeover of Reebok in the next few weeks.
Commenting on yesterday's gains, equinet said: "Adidas shares were pushed by
positive statements of Mr Hainer regarding the Reebok integration and sales in
the football segment."
The broker added that while the statements were not surprising, they
underline the strong prospects for Adidas in 2006, ahead of the football World
Cup in Germany in the summer.
equinet reiterated its 'buy' rating and 180 eur price target on the issue.
Bayer extended earlier gains, adding 0.58 to 36.20, as it said it has
purchased European rights to GlaxoSmithKline's blood pressure treatment
termisartan -- Pritor and PritorPlus -- for an undisclosed price.
The business had an annual turnover of approximately 65 mln eur in 2005,
Bayer said.
Utility giants RWE and E.ON were higher too, up 0.41 at 63.14 and 0.20 at
88.42 respectively, as Dresdner Kleinwort Wasserstein hiked its price targets on
the stocks to 100 eur from 90 and to 71 eur from 64 respectively, reiterating
its 'buy' ratings on both issues.
"As a result of changing our medium-term commodity price assumptions and
updating our forecasts post Q3 results and announcements since then (E.ON
selling its Degussa stake, RWE announcing the disposal of the water operations
of Thames Water and American Water) we raise our price targets...," said DKW.
The shares were also in focus as E.ON Ruhrgas, the biggest importer of gas
in Germany, said that supplies of Russian gas to the country had returned to
normal after a disruption linked to the dispute between Moscow and Kiev.
Bucking the trend, MAN fell 0.29 eur or 0.64 pct to 45.15, while Henkel lost
0.60 to 86.69.
On the MDAX, KarstadtQuelle soared 0.90 eur or 6.96 pct to 13.83, on the
back of a weekend press report that business over Christmas was better than
expected, and on hopes business will improve in 2006 and for chart-technical
reasons.
Douglas rose 0.89 to 33.59, after Goldman Sachs upgraded its stance on the
stock to 'outperform' from 'in-line' and hiked its fair value estimate for the
issue to 37 eur from 35.5.
"We would highlight Douglas as one of the winners in the German retail
sector, as we believe that it will outperform the competition owing to its
strong market shares, merchandising skills and retail formats," said Goldman
Sachs.
Meanwhile, Fielmann dropped 0.94 eur or 1.57 pct to 58.86.
On the TecDAX, Medigene jumped 0.52 eur or 6.23 pct to 8.87, while Evotec
slid 0.02 eur or 0.79 pct to 2.51.
niklas.magnusson@afxnews.com
nm/hjp

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