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* STOXX 600 up 0.2 pct
* Euro zone business activity hits 6-year high
* Wood Group, Amec Foster Wheeler up on increased deal
* Petrofac hit by broker downgrades
* ISS rises on U.S. acquisition
By Helen Reid
LONDON, April 5 European shares struggled to
find direction on Wednesday, making slight gains as strength in
oil and basic resource stocks outweighed weaker autos and
The pan-European STOXX 600 index was up 0.2 percent
by 0925 GMT.
Euro zone businesses had their best quarter in six years,
construction purchasing managers' indexes showed, with
individual countries' data also improving, indicating
broad-based growth in economies across Europe.
Though major indexes were little changed after the data, it
added to an improving picture for investors looking at European
"It's the most positive economic backdrop that we have seen
since Mario Draghi's been head of the ECB," said Mike Bell,
global market strategist at JP Morgan Asset Management.
"Investors are not fully pricing in that improvement in
economic fundamentals, perhaps understandably because of
political concerns," he added, noting caution around the French
"We think that now is a good opportunity to be buying
European equities while others are still fearful."
Merger and acquisitions deals continued to drive European
Danish business support services firm ISS was a top
gainer, up 2.9 percent after saying it would buy U.S. catering
firm Guckenheimer for 1.5 billion Danish crowns ($222.3
Oil services groups Wood Group and Amec Foster
Wheeler were up 2.8 and 2.5 percent respectively, after
Wood Group said it expected about 36 percent more cost savings
from its deal to buy Amec for 2.2 billion pounds ($2.7 billion).
"Wood Group’s increase to the synergies estimate from this
deal is in line with our expectation that the original $134m
target materially underestimated the opportunities for cost
savings," said RBC oil services analyst Victoria McCulloch.
Chipmaker AMS was the top gainer, up 4.8 percent.
Broker Northern Trust said Apple's decision to drop Imagination
Tech from supplying its graphics technology was probably
a one-off, and should not be read across to peers AMS and Dialog
Swedish industrials firm Alfa Laval was among top
gainers, up 3.2 percent after it won a 125 million Swedish crown
order for marine exhaust gas cleaning systems.
While peers Wood Group and Amec Foster Wheeler enjoyed the
limelight, Petrofac was a top faller, down 3.4 percent
after broker downgrades from Deutsche Bank and Bernstein.
Deutsche Bank cited a "dislocation" between contracting outlook
Outdoor advertising company JCDecaux dipped 3.3
percent after JP Morgan cut it to "neutral" from "overweight",
saying contract losses such as the Velib Paris bicycles
contract, and a slow recovery to profitability for major
contracts suggested limited earnings upside.
Autos stocks were again the worst-performing
sector, down 0.5 percent.
Finnish utility Fortum and Swedish engineering
company Skanska were top fallers after going
(Editing by Alison Williams)