Banks And Miners Push European Stocks Higher

Banks were among the biggest risers after BNP Paribas beat expectations with its second-quarter earnings report.

European stocks rose on Wednesday, with banks gaining ground after BNP Paribas delivered better-than-expected earnings and commodities rallying after Xstrata launched a $10 billion bid for Lonmin.

The FTSEurofirst 300 index of top European shares closed 0.9 percent higher at 1192.99 points, tapping a seven-week closing high following a 2.6 percent rally on Tuesday. Markets were relatively calm and the FTSEurofirst traded between 1,181.95 and 1,194.40.

Banks were among the biggest risers after BNP Paribas beat expectations with its second-quarter earnings report. The stock gained 5.2 percent, while the DJ Stoxx European Banks index rose 1.2 percent.

In a note to clients, Cheuvreux highlighted the group's resilient performance in its French and Italian retail operations as well as a good overall corporate and investment banking performance.

Societe Generale added 3 percent and UBS rose 3.7 percent. Commerzbank on the other hand fell 1.5 percent on disappointment over its outlook despite solid second-quarter numbers.

"The results from BNP and Commerzbank were ok, which helped and the Federal Reserve also reassured at the margins," said Bernard McAlinden, market strategist at NCB Stockbrokers in Dublin.

"Its statement implicitly seemed to signal that they are not close to raising rates and that helped as well," he added.

Investors are now awaiting rate decisions by both the Bank of England and the European Central Bank, due on Thursday.

Although economists do not expect the European central bank to change rates, the focus will be on the statement by President Jean-Claude Trichet. "There are some concerns that it (the ECB) won't be moving in a dovish direction even though we had evidence of a weakening economy," McAlinden noted, adding that when looking at the central bank's monthly bulletin, the focus was very much still on wage settlements.

Around Europe Britain's FTSE was up 0.6 percent, Germany's DAX up 0.7 percent and France's CAC up 1.4 percent.

M&A PUSHES MINERS AND AUTO STOCKS

Miners were in focus after Xstrata unveiled a $10 billion takeover bid for the world's third-largest platinum producer, Lonmin. Shares in Lonmin, which swiftly rejected Xstrata's takeover bid, jumped 47.7 percent, while Xstrata fell 1 percent, Anglo American added 3.2 percent and Vedanta gained 3 percent.

Corporate takeover talk also pushed automotive stocks higher. Daimler rose 3.2 percent on the back of a report in the Financial Times which said the luxury car maker was discussing defence strategies with Deutsche Bank against a possible hostile investor.

Supplier Continental was up 1 percent as Handelsblatt reported the group was in talks with private equity firms Apollo and KKR about a white knight approach to thwart unwanted advances from Schaeffler. A financial source told Reuters that KKR was not interested, while Continental declined to comment.

Oil heavyweights BP, Total and Shell added between 0.6 and 1.8 percent as crude recovered a little bit, but still stayed shy of $120 a barrel.

The day's casualties included Novartis which lost 3.1 percent after JPMorgan downgraded the stock to "neutral" and said it sees no fundamental or newsflow momentum for further near-term outperformance.