Sun, Jul 13, 2003 - Page 10 News List

European stocks rise while Nokia leads the climb


European stocks recorded their first weekly advance in three amid optimism that companies such as Nokia Oyj and Royal Philips Electronics NV will benefit from a pickup in demand.

Munich Re and Allianz AG paced gains yesterday after a US Senate panel approved legislation for creating a US$108 billion fund to compensate asbestos victims, a bill that would limit liability of insurance companies.

The Dow Jones Stoxx 50 Index advanced 1.3 percent to 2429.83 yesterday in London, extending this week's gain to 1.6 percent.

The Stoxx 600 climbed 1.2 percent to 206.65, for a five-day increase of 1.7 percent. The technology group, which includes Nokia, led gains since last Friday, adding 6.2 percent.

"Investors have been shifting to technology stocks because that's where they expect the good results to come from," said Emanuele Vigano, who helps manage US$793 million at Bipielle Fondicri Sgr SpA in Milan.

Nokia, the world's biggest maker of mobile phones, jumped 11 percent in the past five sessions. The stock slipped for the first day in five yesterday, losing 1.2 percent to 15.70 euros.

Lehman Brothers Holdings Inc on Wednesday said that total sales of mobile phones in Europe climbed 14 percent in June from a year earlier, driven by demand for color screens and cameras.

Handset demand rose 10 percent in June from May, Lehman said, citing a survey by Martin Hamblin GfK, a research company.


Nokia is scheduled to report second-quarter results on July 17. The Espoo, Finland-based company will probably say profit fell 30 percent to 601 million euros (US$680 million) on costs for job cuts, according to 11 analysts surveyed by Bloomberg News.

Philips, Europe's largest maker of consumer electronics, gained 9.3 percent to 18.14 euros in the week. The Dutch company, which reports results Tuesday, probably narrowed its second-quarter net loss to 86.5 million euros from 1.36 billion a year earlier, according to the average estimate from 15 analysts. The Stoxx 600 cyclical index, to which Philips belongs, has advanced 2.7 percent since last Friday.

Fifteen of the 17 Western European benchmark indexes rose yesterday. Germany's DAX advanced 1.7 percent, the UK's FTSE 100 Index increased 0.7 percent. France's CAC 40 climbed 1.3 percent.

September futures on the Dow Jones Euro Stoxx 50 Index of companies based in the 12 countries sharing the euro climbed 1.6 percent to 2476. The index gained 1.5 percent to 2477.72.

Insurers gain

In the US, a Senate committee voted to send the asbestos bill to the House. It would end lawsuits that have bankrupted more than 60 US companies.

Munich Re, the world's biggest reinsurer by premiums, gained 4.5 percent to 92.99 euros. Munich Re has pumped US$2 billion into its American Re unit in July of last year, partly to cover asbestos claims.

Allianz, Europe's largest insurance company, rose 3.4 percent to 77.05 euros. Last year, it injected US$750 million into its US Fireman's Fund Insurance Co unit to cover asbestos-related demands.

"The US Senate's decision is being received well by the market and will help lift shares of the companies that are most involved," said Manlio Bonafede, who helps manage the equivalent of US$1.7 billion at Banca Leonardo SpA in Milan.

The Stoxx 600 insurance group led the advance, rising 2.7 percent.

Settlement Plan ABB Ltd, Europe's biggest engineering company, jumped 4 percent to 4.67 Swiss francs after a US bankruptcy court approved its proposed US$1.3 billion settlement plan for asbestos-related claims.

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