Europe: Oil and mining firms pace a bullish session

KODE PPC ANDA

European stocks rose Monday, led by BP and mining companies, as oil gained in early trading and metals rallied to a record level.

Mining shares in the Dow Jones Stoxx 600 index are trading at an all- time high as investors bet rising prices of industrial metals would continue to fuel earnings. Energy stocks had their biggest gain in more than a month.

"We have an overweight exposure to both oil and mining companies," said Richard Robinson, a manager at Ashburton. "China's growth story is still there, and analysts are starting to increase their estimates for commodity prices."

Allianz paced insurance companies, rising to its highest level since 2002 after Merrill Lynch advised buying more shares of the insurer. Old Mutual gained as its earnings beat analysts' estimates.

The Stoxx 600 rose 1.64 points to 382.17, while the Stoxx 50 added 14.57 points to 3,831.45 and the Euro Stoxx 50, a measure for the 13 countries sharing the euro, gained 26.33 points to 4,272.32.

Bad news for drug makers

Drug stocks limited gains after U.S. regulators delayed the introduction of a Novartis medicine and Novo Nordisk said that it would not seek to register a blood-clotting drug.

National benchmarks rose in 13 of 18 West European markets. The CAC 40 in Paris added 46.16 points to 5,762.54. The FTSE in London rose 33.20 points to 6,434.70, and the DAX in Germany climbed 35.01 points to 7,027.59.

Nickel climbed to a record on the London Metal Exchange for a second consecutive session, and lead posted a new high for a seventh session. Copper also advanced, tracking gains in Asia. Imports of copper and copper products into China, the world's biggest user of the metal, jumped 44 percent in January from a year earlier.

BP rallied 2 percent to 545.5 pence. Rio Tinto, one of the largest mining companies, advanced 33 pence to 2,940 pence.

"There is a long-term bull market in commodities," said David Hart, a senior analyst at Fat Prophets in London. "We are looking for new highs, and commodity producers will do well."

Allianz, the biggest insurer in Europe, rallied €4.86 to €168.92 after Merrill raised the stock to "buy" from "neutral."

Allianz's "restructuring story is alive and well, with more near-term catalysts than we had expected," wrote Brian Shea, an analyst at Merrill Lynch in London. Allianz last week reported a better-than-expected 60 percent increase in full-year earnings.

Separately, UBS raised its share- price estimate to €180 from €167, saying that cost-reduction programs in all Allianz divisions seemed to be making better progress.

More mergers predicted

Mergers and acquisitions of European industrial companies may jump to a record number of deals this year, according to a survey of private equity firms by KPMG International.

The Netherlands, Germany and France may be among the most active markets for mid-market-size transactions, KPMG said in an e-mailed statement on Monday.

"National boundaries are beginning to fall away with increasing levels of foreign buyers for mid-market assets," said Steven Halbert, head of mid-markets at KPMG's corporate finance unit in Britain

Deals in Europe surged 53 percent to $1.68 trillion in 2006 from a year earlier, according to Bloomberg data, with private-equity firms fueling the increase in deals.

Old Mutual, one of the biggest insurers in Britain, climbed 6 pence to 187.5 pence after it said that second-half profit fell less than analysts estimated and raised its dividend as the Skandia acquisition paid off.

Novartis, one of the largest drug makers in Europe, dropped 1.25 Swiss francs to 70.95 francs after U.S. regulators requested more information on its experimental diabetes treatment, Galvus, delaying the introduction of one of the drug maker's most important new products.

Novo Nordisk, the world's largest insulin maker, dropped 27.50 kroner, or 5.4 percent, to 485.50 kroner. The company said it would seek to register the blood-clotting drug NovoSeven to treat strokes after data showed that it did not improve patients' recovery. The shares fell the most in nearly two years.

Ambereen Choudhury contributed reporting.

KODE PPC ANDA