Trucks, Cars Make Europe Soar

November 26, 2007 at 2:06 pm Leave a comment

Industries do have a say about a country’s economy. Say Europe. Haven’t you noticed? The land’s auto industry is making the continent soar.

Engineering and metals stocks lifted European equities on Monday thanks to a broad recovery of the industrial sectors, hit in recent weeks by fears of economic slowdown denting demand, Financial Times reported.

In late morning trade in London, the FTSE Eurofirst 300 was up 0.8% to 1,487.59, Frankfurt’s Xetra Dax added 0.4% to 7,641.96, the CAC 40 in Paris gained 0.4% to 5,542.1 and the FTSE 100 in London climbed 0.3% to 6,282.0, the report continued.

Among the top gainers were Scania and Volvo, the Swedish truckmakers. With such growth, experts say the European truck market will continue to enjoy robust sales thus offsetting weak sales in the North American market.

Volvo recently reported that its unit sales in the 9 months to the end of October rose by 2%. Its shares B shares increased 4.6% to SKr107.25, while the B shares of Scania, which makes the bulk of its earnings in Europe, rose 5.7% to SKr148.

According to the report, industrial metals groups were similarly moved. SSAB, the Swedish group whose steel is used in the truckmaking industry, increased 5.5% to SKr154.50. French steelmaker ArcelorMittal, which was said to be eyeing an auto industry steel joint venture in China, was up 3% to €49.89. Germany’s Salzgitter rose 3.7% to €108.88.

Automakers were inspired by hopes that the confidence of European shoppers would survive the worst of the financial crisis of recent months. Brokers, meanwhile, were a little more cautious.

”We still believe the sector can deliver on its promise of above-market earnings growth in 2008, on the back of emerging markets growth and lower costs. However, until the market’s mood lightens we think investors will prefer more defensive sectors,” noted Michael Tyndall at Nomura, recommending an “underweight” stance on the sector.

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