EUROPE MARKETS: French Banks Drive Gains For European Stocks

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- European stock markets moved mainly higher Monday, drawings some support from comments made by a Federal Reserve official, but gains were limited as investors waited for U.S. earnings season to get into full swing later this week.

French banks were in the lead after a broker upgrade, while downbeat deal news prompted heavy selling in shares of TNT Express NV and PostNL NV.

The Stoxx Europe 600 index rose 0.1% to 287.39. The index posted a 0.3% loss last week.

In Paris, shares of Societe Generale SA and Credit Agricole SA rose by 4.4% and 3.9%, respectively. Credit Suisse upgraded the French banks to overweight, citing positive effects of 2012 asset disposals and inexpensive valuations relative to peers.

Credit Suisse analysts also said they were positive on Credit Agricole's refocus on its core franchise.

The banking-sector gains helped drive a 0.4% gain for the French CAC 40 index , which traded at 3,720.88.

Deal news

Also higher in Paris, shares of Compagnie de Saint-Gobain SA rose nearly 3%. The company said Ardagh Glass Ltd. has made a "binding and irrevocable" $1.69 billion offer for the French conglomerate's North American unit, which makes glass bottles and jars.

In other deal news, shares of Swatch Group AG jumped 3.8% after the Swiss watch group said it paid $750 million for the jewelry and watch brand of Harry Winston Diamond Corp. (HWD) of Toronto. Swatch also assumed as much as $250 million of pro forma net debt.

But shares of Dutch-based TNT Express plunged 40% and PostNL plummeted 34% after United Parcel Service (UPS) said Monday it expects the European Commission will refuse to approve the U.S. logistics group's proposed $6.8 billion buyout of TNT Express over competition concerns.

UPS said that if the deal's blocked, it will be terminated. PostNL is in the process of trying to dispose of its nearly 30% stake in TNT.

Evans remarks; Bernanke next

Analysts mentioned that sentiment got a boost on Monday after comments from Charles Evans, president of the Federal Reserve Bank of Chicago. Media reports about remarks he made in Hong Kong said Evans predicted the U.S. economy will grow by 2.5% in 2013, improving to a 3.5% growth rate for gross domestic product in 2014.

At the close of U.S. trading on Monday, Fed chief Ben Bernanke will give a speech in Ann Arbor, Mich., with a question-and-answer session to follow. U.S. stock-market futures were trading flat, with futures on the Nasdaq 100 index (NDH3) lower as Apple Inc. (AAPL) shares came under selling pressure in premarket trading.

In addition, economic-stimulus measures proposed by leaders in Japan continuer to provide support for equities in Europe, according to some analysts.

ETX Capital's Markus Huber said in a note to investors that a plan hatched by Japan's newly elected government to buy foreign debt in excess of $500 billion in order to weaken the Japanese yen was a positive for stocks.

Among other regional indexes, the DAX 30 index rose 0.6% to 7,761.21 in Frankfurt, led by shares of German chemicals group BASF SE , up 1%, and financials such as Allianz SE , up 1.4%.

In London, the FTSE 100 index was flat at 6,126.61.

Making gains were Shares of Eurasian Natural Resources Corp. PLC , 2.7% higher. Credit Suisse analysts upgraded its rating to outperform from neutral, saying they believe that downside risks are now limited and that there are potential re-rating catalysts this year.

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