U.K. equities were the center of European markets' attention
Friday, with construction firms Balfour Beatty PLC and Carillion
PLC both soaring more than 10% on merger talks, and Royal Bank of
Scotland Group PLC rocketing 15% after the bank posted impressive
quarterly earnings a week earlier than expected.
In a joint statement late Thursday responding to media
speculation, Balfour Beatty and Carillion said work is under way to
develop a strategy and business plan for a combined entity, that
would create a firm worth about over 3 billion pounds ($5.12
billion) based on their closing share prices Thursday.
RBS on Friday, meanwhile, said it had nearly doubled its
first-half pretax profit. The lender wasn't expected to release
results until next week.
On the downside, British pay- and satellite-television giant
British Sky Broadcasting Group PLC was one of the biggest fallers,
down 2.5% after it confirmed it agreed to buy all of Sky Italia and
most of Sky Deutschland AG from Rupert Murdoch's 21st Century Fox,
for about GBP5.35 billion, mostly in cash.
21st Century Fox was until June 2013 part of the same company as
News Corp, publisher of The Wall Street Journal and Dow Jones
Newswires.
Despite several big climbers across Europe, however, broader
indexes edged lower Friday, with any additional optimism inspired
by strong consumer sentiment data out of Germany also offset by
lasting geopolitical concerns and some disappointing U.S. corporate
earnings figures overnight.
The pan-European Stoxx 600 index edged 0.3% lower in early
trade, with Frankfurt's DAX falling 0.4% even though figures showed
that consumer sentiment in Germany has risen to its highest level
in nearly eight years.
The Nuremberg-based GfK institute, however, did warn that the
downing of Malaysia Airlines Flight 17 could still cloud the
consumer mood in coming months. Most of the month's GfK survey was
conducted before the July 17 crash.
Late Thursday, U.S. defense and diplomatic officials said that
Russia is firing artillery across its border at Ukrainian military
positions. Those assertions came in the wake of European Union
diplomats saying that they are moving to place sanctions on a range
of Russian economic sectors, in what would be a significant
escalation of the bloc's efforts to isolate Moscow for its alleged
support of rebel groups in eastern Ukraine.
Moscow's Micex index dropped 0.6% in early trade while the
country's dollar-traded RTS lost 0.7%. The ruble was marginally
higher against the dollar at 35.03, but has still depreciated
almost 7% against the greenback year-to-date.
The violent conflict in the Middle East persisted too.
Elsewhere Friday, corporate earnings remained in focus. Late
Thursday, web retailer Amazon.com Inc. reported a
wider-than-expected loss of $126 million for the second quarter
despite a 23% jump in revenue. Earlier in the session General
Motors reported profit had plummeted 80% in the quarter, due to a
number of recalls.
Later in the day, investors will be eyeing the first release of
second-quarter gross domestic figures out of the U.K.
"We predict second quarter to have grown 0.8%
quarter-on-quarter, consistent with 3.1% annual growth. We expect
growth to have been driven by domestic demand, which continues to
display the same strength as in the first quarter," Barclays
economists wrote in a note.
In commodity markets, Brent crude was marginally higher at
$107.18 a barrel while gold edged 0.1% higher to $1,292 per troy
ounce.
Write to Josie Cox at josie.cox@wsj.com
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