European markets gains advance led by miners, budget airlines decline (MarketWatch) (04-02-2008)

LONDON (MarketWatch) - European stock markets advanced on Monday morning as interest rose for shares in mining, technology and industrial firms, although airlines came under pressure following the worsening outlook of low-cost airline Ryanair Holdings Plc.

The pan-European Dow Jones Stoxx 600 index moved up 0.9% to 331.34, led by mining companies as Anglo American rose 4.4%, while shares in Vedanta Resources climbed 3.6% as gold prices inched higher in electronic trading and the sector continues to mull potential takeover moves for Rio Tinto .

Rio Tinto shares moved down 0.7% as this week's bid deadline from BHP Billiton looms. BHP Billiton shares lost 0.4%.

Technology stocks such as chip maker Infineon Technologies and industrials such as Siemens were also putting in a strong performance as investors hunted for bargains.

The German DAX 30 index rose 0.9% to 7,027.85, the French CAC-40 index climbed 0.6% to 5,009.33 although the U.K. FTSE 100 index tuned negative by mid-morning.

Ryanair shares sank 15% in London after Europe's largest low-cost airline reported a 27% drop in adjusted third-quarter profit on lower ticket prices, and warned that higher fuel prices and weaker consumer spending could cut next year's profit by as much as 50%.

Other low cost airlines were also under pressure as easyJet lost 7%, and shares of German budget carrier Air Berlin fell 2.7%.

Meanwhile, a bit of deal speculation gave Mitchells & Butlers' shares a boost. Shares in the pub operator rose 4.4% after rival Punch Taverns said that it outlined a possible merger to the board of Mitchells & Butlers on Feb. 1.

Punch said that, under its proposal, Punch and Mitchells & Butlers shareholders would each own 50% of the merged company. Mitchells & Butlers shareholders also would receive a cash payment of 175 million pounds.

Separately, Mitchells & Butlers noted the proposal from Punch Taverns as well as continued expressions of interest in the company from third parties. The board said that it will give careful consideration to all proposals.

Source: MarketWatch