EQUITIES as a percentage of any PORTFOLIO

Paris shares close sharply up at fresh 5-yr high on M&A hopes UPDATE
Date : 02/01/2007 @ 17:01
Source : AFX
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Paris shares close sharply up at fresh 5-yr high on M&A hopes UPDATE


(updates with full report)
PARIS (AFX) - Shares prices closed sharply higher in midday trade, topping
the 5,600 mark for the first time since May 2001, as the market took a firmly
optimistic stance on the prospects for equities in 2007, dealers said.
Suez rose after billionaire Francois Pinault confirmed his interest in the
group, refusing to rule out a counter-bid, and banks rose on speculation of
substantial M&A activity to come.
The CAC-40 index ended up 75.95 or 1.37 pct at 5,617.71, its highest closing
level since May 24 2001.
Volume for the day was was 3.8 bln eur.
37 CAC-40 stocks closed up and three down.
The euro was at 1.3285 against the dollar, compared to 1.3233 earlier today.
A Paris-based dealer commented: "The year 2007 is shaping up rather well and
should end up with an increase of at least 10 pct for the CAC-40 as (corporate)
profits rise 9-10 pct throughout Europe."
In 2006, the CAC-40 rose 17.5 pct year-on-year.
The dealer added: "The two question marks involve the dollar, which could
become more volatile, and long-term interest rates... will they stay so low?"
He said M&A prospects are encouraging: "It's very tempting to anticipate
buyouts of CAC-40 companies by investment funds, which is quite possible as they
have more and more money at their disposal."
Suez ended up 0.57 or 1.45 pct at 39.80 after Artemis SA, Pinault's holding
company, said in a statement: "No decision has yet been taken concerning the
possibility of an offer targeting Suez."
"All options remain open," Artemis said in the communique, which it said was
in response to a request by markets regulator AMF.
Suez last week made an official request to AMF to obtain clarification from
Pinault on whether or not he intends to pursue a takeover bid for the group.
Artemis' statement was broadly in line with press reports today claiming
that Pinault would issue a carefully-worded statement leaving him room for
manoeuvre.
But Suez objected to the statement and called on AMF to seek further
clarification from Pinault on his intentions towards the group, in accordance
with market regulations governing M&A speculation, it said.
It described Pinault's statement as vague and imprecise.
"I think Mr Pinault is above all trying to keep all his options open in the
event of the deal coming back up for discussion after the elections," a
Paris-based analyst commented.
Suez plans to merge with GDF in a deal sponsored by the French government,
but press reports last week claimed Pinault might launch a 70 bln eur
counter-bid for Suez as early as this week.
Suez' current market capitalisation is below 52 bln eur.
President Jacques Chirac's office has denied a report he had given his
blessing to Pinault for a bid.
Banks were sharply higher as investors anticipated a new wave of M&A
activity, with Societe Generale 2.80 or 2.18 pct at 131.40, Credit Agricole up
0.80 or 2.51 pct at 32.66 and Dexia up 0.53 or 2.55 pct at 21.28.
BNP Paribas ended up 2.05 or 2.48 pct at 84.70.
A study by l'Agefi named the bank as the number one M&A advisor in France in
2006, with 50 deals worth a total of 119 bln eur.
Alcatel-Lucent added 0.28 or 2.57 pct at 11.18, resuming its upwards
trajectory after profit-taking last week.
The sharpest single gainer was Arcelor-Mittal, up 0.87 or 2.72 pct at 32.85
as speculation in the sector grew after news of an agreed 1.07 bln usd bid from
Nucor for Canada's Harris Steel and after a press report claimed Tata may raise
its bid for Corus by 7-10 pct.
Vallourec was up 1.90 or 0.82 pct at 222.10, underperforming the index after
it agreed to pay 75 mln usd to acquire the 43.7 pct held by Titanium Metals Corp
of the US in their Valtimet welded stainless steel and titanium tubing joint
venture.
Vallourec is already the majority partner, with a 51.3 pct controlling stake
in Valtimet, and in a statement, it said the deal raises its stake to 95 pct.
On the downside, Veolia gave away 2.40 or 4.11 pct at 56.00 after bounding 9
pct on Friday amid speculation it may be a target for an investment fund.
paris@afxnews.com
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