Nestle helps European shares snap 4-day slide, after stake sale

by **hlk** Fri 06 Dec 2013, 18:43

Business & Markets 2013
Written by Reuters
Friday, 06 December 2013 18:23
A + A - Reset
(06/12/13 17:28:10)
* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.2 pct
* Nestle rallies as Givaudan stake sale frees up capital
* U.S. payrolls could trigger selloff -BTIG
LONDON (Dec 6): European stocks snapped their longest losing streak in six
months on Friday, boosted by Swiss food firm Nestle, as it sold its Givaudan
stake, potentially freeing up more than a billion dollars for buybacks or
acquisitions.
Traders expected indexes to stay within a tight range and volume to be
subdued until U.S. jobs data is published at 1330 GMT. This was expected to
shed light on the state of the world's largest economy and, indirectly, on when
the Federal Reserve's equity-friendly stimulus programme may be dialled back.
Nestle rose 1.5 percent, making it the single biggest contributor to the
FTSEurofirst 300's rise, as it offloaded its 10 percent shares in fragrance and
flavour maker Givaudan — worth 1.145 billion Swiss francs ($1.27 billion),
fuelling bets that it may use the money for share buybacks or bolt-on
acquisitions.
"They don't need it and (shares) had a great rally, so they might as well... make
a better use of the capital, whether it's buying another business or buying back
shares," Nick Xanders, head of strategy at BTIG, said.
L'Oreal, in which Nestle owns a 29.5 percent stake, rose 3.1 percent.
The two stocks added nearly a point to the FTSEurofirst 300 index, which was
up 4.26 points, or 0.3 percent at 1,265.56 points, at 0848 GMT. This put the index on track to end a four-day slide — longest reversal
since June.
The blue-chip Euro STOXX 50 index was up 0.2 percent, at 2,958.75 points.
The FTSEurofirst 300 is down nearly 4 percent, since hitting a 5-1/2 year peak in November.
It has been weighed down by concerns about a growth slowdown in the euro zone, and the possible curbing of the Fed's asset purchase
programme, which has driven investors out of low-yielding bonds into shares, in the past year.
Recent U.S. data has been generally strong, fuelling speculation that the Fed may start cutting the quantitative easing programme (QE)
earlier than March — the market's base case expectation — and possibly as soon as this month.
Non-farm payrolls are expected to have increased by 180,000 last month, down from October's gain of 204,000 jobs. The unemployment
rate is forecast to slip a tenth of a percentage point, to 7.2 percent.
"It all depends on this data," BTIG's Xanders said. "If it's over 200,000, there's a real risk that everyone gets their knickers in a twist, and
we go down further. If it's more like 175-180,000, I think people would be generally more positive."
Justin Haque, a pan-European broker at Hobart Capital Markets, was buying into recent share price dips, betting that the Fed was unlike
to start cutting its programme before the new Fed's chairman, Janet Yellen, replaces Bernanke on Feb 1.