By Blaise Robinson
PARIS, Feb 4 (Reuters) - European shares rose in early trade
on Monday, adding to the previous session's strong gains as
merger and acquisition fever propelled basic resources stocks
higher.
Shares in Ryanair <RYA.I> tumbled 14 percent after the
airline posted a sharper-than-expected fall in quarterly net
profit and warned that high oil prices, an economic slowdown in
the UK and weak sterling meant profits may fall up to 50 percent
next year.
Societe Generale <SOGN.PA>, the French bank hit by a trading
scandal, dropped 3.9 percent as investors expected the company
to announce a discounted rights issue later this week.
At 0913 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.4 percent at 1,359.57 points. The
index, which gained 1.8 percent on Friday, has lost about 10
percent since the start of 2008, hit by worries over the
prospect of a U.S. recession.
But recent M&A-related news fuelled a tentative recovery in
stock markets worldwide. Shares rose on Wall Street on Friday
after Microsoft Corp <MSFT.O> unveiled a $44.6 billion bid for
Yahoo Inc <YHOO.O> and eclipsed weak U.S. jobs data.
Anglo American <AAL.L> gained 3.3 percent on Monday,
Salzgitter <SZGG.DE> rose 5.9 percent, and Antofagasta <ANTO.L>
added 1.9 percent.
China teamed up with U.S. aluminium producer Alcoa <AA.N> to
buy a $14 billion stake in Rio Tinto <RIO.L> on Friday,
threatening miner BHP Billiton's <BLT.L> efforts to take over
Rio.
Rio Tinto <RIO.L> was down 1.6 percent and BHP Billiton
<BLT.PA> up 0.1 percent.
"We might have reached a floor, but only in the very short
term I think," said Edmund Shing, strategist at BNP Paribas, in
Paris.
"The bailout of the bond insurers will be the big question.
If we get a deal for MBIA and Ambac to reinforce them so they
don't get downgraded, I think the market could go higher, if not
we may be held hostage to macroeconomic news and we may be
actually looking to get back lower again," he said.
A group of large banks has joined together to find ways to
shore up Ambac Financial Group Inc <ABK.N>, a large bond insurer
battered by the global credit crunch, two people briefed on the
talks said on Friday.
Another group is looking at ways to rescue other bond
insurers, one of the people said.
Bond insurers, which guarantee more than $2.4 trillion of
debt, are expected to suffer billions of dollars of losses after
insuring repackaged subprime mortgages. They are looking to
raise capital to protect their credit ratings.
Banking shares were mixed on Monday, with Royal Bank of
Scotland <RBS.L> up 1.2 percent, BBVA <BBVA.MC> up 0.3 percent,
and Fortis <FOR.AS> down 1 percent and UBS <UBSN.VX> down 0.6
percent.
Around Europe, Germany's DAX index <> was up 0.7
percent, UK's FTSE 100 index <> down 0.1 percent and
France's CAC 40<> up 0.3 percent.
Inmobiliaria Colonial <COL.MC> surged 12 percent after the
Investment Corporation of Dubai (ICD) said the main two
shareholders in the troubled Spanish property firm have agreed
to sell if the Dubai fund launches a takeover bid.
Denmark's Vestas <VWS.CO>, the world's biggest maker of wind
turbines, gained 8.5 percent after it raised its full-year 2007
sales and profit outlook, saying development in the fourth
quarter had been strong, sending its shares higher.
(editing by Elizabeth Fullerton)
