7:00PM Frankfurt, Paris; 1:00 PM New York – Deutsche Telekom and France Telecom agreed to merge their UK operations as recession erodes revenues and profits. German factory orders increase for the fifth month in a row. Euro gains against dollar and yen.
European markets closed higher after finance ministers and others at G-20 meeting kept the fiscal stimulus in place and showed no hurry to lower. UK stocks surged after the rise of copper and other base metal prices and a takeover approach from Kraft for Cadbury.
In London FTSE 100 Index closed higher 81.48 or 1.68% to 4,933.18, in Paris CAC 40 Index increased 54.07 or 1.50% to close at 3,652.83, in Frankfurt DAX index higher 79.08 or 1.47% to close at 5,463.51. In Zurich trading SMI increased 62.90 or 1.03% to close at 6,181.97.
The dollar fell against euro to $1.433 and yen declined to 132.98.
Seasonally adjusted factory orders in German increased for the fifth month in a row in July. The orders increased 3.5% from June after gaining 3.8% in the month. The orders were driven by a surge of 10.2% in local orders and 2.3% fall in international orders.
T-Mobile UK and Orange Merger UK Operations
Deutsche Telekom SA and France Telecom SA have agreed to merge their UK units to stem the declining customer base and profitability. The announcement is expected tomorrow morning and the news was first reported by Dow Jones and confirmed with three sources in London and Frankfurt.
The T-Mobile division of Deutsche Telekom and Orange of France Telecom will be merged into new unit to be named later will be a joint venture with France Telecom with a majority stake. The merged unit will have the largest market share in the UK with 30 million subscribers.
Telefonica with its brand O2 leads the UK market with 27.7% of the industry revenue followed by Vodafone with 24.7% market share and Orange controlled by France Telecom with 21.5%.
Gainers & Losers
Accor SA rose 2.9% to €36.47 after the hotel company was upgraded to “overweight” from “equal weight” at Barclays Capital.
Air France-KLM edged lower 0.5% to €10.06.
ArcelorMittal added 2.5% to €25.41 after the steelmaker said its Mexican operation during 27 day strike lost 386,100 tons of steel production.
Bayer AG added 3.7% to €44.09 after the German drug and chemical maker was added to the “Europe 1” list at Bank of America Merrill Lynch.
BioMerieux SA added 5.2% to €71.45 after the maker of tests for HIV and hepatitis said first-half sales rose 11.6% to €589.5 million from €528.2 million a year ago. Net profit in the first-half rose 12% to €63 million or €1.59 per diluted share compared to net profit of €56.3 million or €1.43 per share a year ago.
Deutsche Telekom AG increased 2.0% to €9.60 and Deutsche Bank AG rose 0.3% to €48.67.
Fortis N.V increased 2.9% to €3.10 after the insurer and Reuters reported that RSA Insurance Group Plc is exploring bids for the units of American International Group, Inc. and Fortis N.V., funded through the proceeds of £614 million ($1 billion) rights issue.
France Telecom S.A increased 1.4% to €18.08 after the phone company was upgraded to “bullish” from “neutral” at Nomura Holdings Inc.
Groupe Eurotunnel SA rose 8.0% to €4.57.
Ipsen SA rose 3.6% to €36.85 after the company and Swiss based Debiopharm Group entered into licensing agreement for the treatment of cancer.
MBB Industries AG the buyout firm whose businesses include bullet-proof doors rose 1.2% to €7.39.