By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks advanced Wednesday, with
a ratings upgrade supporting shares of Alcatel-Lucent, but a
potential tie-up involving French telecommunications firm Orange SA
was shelved, pressuring its shares.
The Stoxx Europe 600 index picked up 0.2% at 345.68, a second
consecutive win. It closed Tuesday's session higher by 0.9%, the
strongest percentage rise in two months, according to FactSet
data.
Ocado Group PLC shares, which suffered losses in the previous
session, jumped 14% and topped the pan-European index Wednesday
following an upgrade of the British online grocer to hold from sell
at Deutsche Bank.
Also on the winning end of the index, Alcatel-Lucent picked up
3.7% after the telecommunications-equipment maker's rating was
raised to overweight from neutral at J.P. Morgan Cazenove. "With
the restructuring proceeding at a faster pace than guided
originally and the stock having pulled back because some investors
have taken profits, not because progress has stalled, we upgrade
the stock to overweight," wrote analyst Sandeep Deshpande.
AstraZeneca PLC notched a 1.1% rise, extending Tuesday's gains
after Chief Executive Pascal Soriot spent GBP2 million ($3.4
million) to raise his stake in the British drug maker.
AstraZeneca aided in pushing the U.K.'s FTSE 100 up 0.2% at
6,816.37. Meanwhile, June U.K. construction figures showed expanded
strength in the sector, topped by residential house-building. The
pound (GBPUSD)rose against the U.S. dollar to $1.718 compared with
$1.715 late Tuesday.
Wading near the bottom of the Stoxx 600 was Orange , with shares
dropping 3.5% after the telecoms company ditched its pursuit of a
potential merger or acquisition in France. After examining
possibilities that would lead to consolidation in the French
telecoms market, Orange said it "believes that it cannot pursue
this avenue at the present time as the conditions that the group
has set have not been met."
In recent weeks, Orange was reported to be in talks to acquire a
stake in mobile operator Bouygues Telecom amid a push by the French
government for telecom-sector consolidation. Bouygues SA shares
fell 2%. Shares of Iliad SA , which had previously put up a bid for
the Bouygues unit, finished down 3.5%.
A combination between Iliad and Bouygues "may happen and that it
could still be positive for the French mobile market," said RBC
Capital Markets analyst Olivia Peters in a note. "However, it seems
that the parties concerned are unable to agree on a price which
spans from EUR5-EUR8 billion."
The pullback in Orange and Bouygues shares put pressure on
France's CAC 40 equity index , which fell 0.4% at 4,444.72.
Stock in Roche lost grip of gains and closed lower by 0.3%. The
Swiss drug company said it would buy privately held U.S. biotech
firm Seragon Pharmaceuticals for up to $1.725 billion. Seragon
researches breast-cancer treatment. Under the agreement, Genentech
-- part of Roche Group -- will pay $725 million up front in cash,
plus up to an additional $1 billion based on performance of
"certain predetermined milestones." The deal is expected to close
in the third quarter.
In Frankfurt, the DAX 30 edged up 0.1% to 9,911.27.
Off major indexes, shares of Mothercare PLC rose 8.4% after the
British children's products retailer said it recently turned down a
GBP266 million ($456.5 million) acquisition offer from Destination
Maternity Corp. (DEST). Philadelphia-based Destination Maternity's
brands include A Pea in the Pod. Mothercare's board said the bid
"significantly undervalued Mothercare and its attractive
prospects," and the proposal was rejected on May 29.
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