STOCKS NEWS EUROPE-Fiat extends gains, up 12 pct

Wed Mar 4, 2009 3:07pm GMT

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15:04GMT 04March2009-Italy's Fiat extends gains, up 12 pct

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Italian car maker Fiat SpA FIA.MI extends gains to be up 12.2 percent, boosted by prospects for a deal with U.S. peer Chrysler [CBS.UL] and an outlook for flat or slightly better March sales.

"The stock is benefiting from expectations on the closing of an accord with Chrysler," a trader says. Chief Executive Sergio Marchionne is scheduled to meet U.S. officials on Thursday to outline the benefits of a planned alliance.

Brokers say February new car sales in Italy are bolstering the shares since Fiat's numbers were down less than the market overall while February orders were pointing towards flat to slightly higher March sales.

Bank of America says in a research note: "Down 85 percent from its highs, we believe that the risk/reward is significantly skewed to the upside, especially for three-month plus investors."

The stock was briefly halted from trading because of excessive gains. The DJ Stoxx car sector index .SXAP is up almost 6 percent.

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14:20GMT 04March2009-Eni down on various cash demand reports

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Italy's oil major Eni SpA (ENI.MI) falls 1 percent, underperforming the oil sector .SXEP, on fears of a cut in its dividend, brokers say.

Two brokers refer to a Portuguese newspaper report that Eni would have to subscribe its 33 percent share of a 1.5 billion euro capital increase at Galp Energia (GALP.LS).

Fears that payments by Russian gas shipper Gazprom's (GAZP.MM) on an option agreement will be delayed also are weighing on the stock.

Eni is not immediately available for comment.

"The market fears a cut in the dividend. There is the capital increase at Galp," a broker says, adding there are lower prospects Eni will get cash due on the Gazprom option.

In October, Eni Chief Executive Paolo Scaroni said Gazprom had earmarked about $4.5 billion to pay for a 20 percent stake in oil unit Gazprom Neft (SIBN.MM) under an option agreement.

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14:40GMT 04March2009-European shares hold gains after Wall St opens higher

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European shares hold on to their gains after U.S. stock markets open higher.

The FTSEurofirst 300 index of top European shares .FTEU3 is up 2.7 percent, led by a rally in basic resources on the back of copper prices MCU3 hitting a three-month high amid hopes of a China-led pick-up in demand. [ID:nL4293900]

Oil prices CLc1 rise more than 6 percent. [ID:nSP408417]

In the United States, the Dow Jones index .DJI is up 1.6 percent in eaerly trade, the S&P 500 .SPX rises 1.9 percent and the Nasdaq .IXIC trades 2 percent higher. [ID:nN04538471]

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13:55GMT 04March2009-Defensives knocked back as market rallies

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Shares in several of Europe's top supermarket and healthcare companies are coming under pressure, led down from British grocer J Sainsbury (SBRY.L) and Anglo-Swedish drugmaker AstraZeneca (AZN.L), as investors shift out of traditionally defensive stocks and into cyclicals in a rallying market.

"It looks like there's a general shift out of defensives," says Shore Capital retail analyst Clive Black, noting that other defensive players like tobacco and consumer goods stocks are also coming under some pressure.

Analysts say Sainsbury, down as much as 4.7 percent to 285 pence, may also be suffering from news its deal to buy 24 Co-op stores will slightly dilute earnings in 2009-10, with 45 million pounds being spent on store refits.

However, Pali International analyst Nick Bubb applauds the move, saying it is cheaper per store than a comparable deal struck by Wm Morrison Supermarkets (MRW.L). He also notes healthy market share data for Sainsbury on Tuesday.

AstraZeneca falls 3 percent to 2,171 pence after analysts say new research suggesting blood thinner Plavix interacts badly with common heartburn drugs could threaten Astra's Nexium rather than Sanofi-Aventis's (SASY.PA) Plavix.

For further stories please click on [ID:nL4322540] [ID:nL4871610]

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13:42GMT 04March2009-RBS price target cut weighs on Hays

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Shares in recruitment group (HAYS.L) are down 2.1 percent, underperforming the mid-cap FTSE 250 index .FTMC, after RBS cuts its price target on the company to 85 pence from 90 pence.

"Early action on costs and a focus on cash leave Hays well-placed in our view to withstand weakening market conditions. Visibility is limited, but we see a good business, an attractive valuation and a sustainable dividend," RBS writes in a note.

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13:05GMT 04March2009-Segro up after rights announcement

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Shares in property company Segro Plc (SGRO.L) rise 7.6 percent after it announces a larger-than-expected 524 million pound rights issue to pay down debt.

KBC Peel Hunt says that while "dilution of value is great at the issue price, Segro has managed to raise a substantial amount of capital and beaten its contemporary Brixton BXTN.L to the market".

Analysts at JPMorgan, meanwhile, say the amount raised is more than it expected and Segro looks out of the woods.

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