European stock close

European stocks advanced to a six-year high as companies from Scania AB to Dixons Retail Plc rallied amid heightened mergers-and-acquisitions activity, outweighing a drop in HSBC (HSBA) Holdings Plc which posted worse-than-estimated profit.

The Stoxx Europe 600 Index rose 0.6 percent to 338.19 at the close of trading, its highest level since Jan. 14, 2008. The benchmark climbed 0.8 percent last week to its highest level since January 2008 as companies from Meda AB to Valeo SA posted better-than-forecast earnings.

In Germany, a report showed the Ifo Institute’s business climate index, based on a survey of 7,000 executives, unexpectedly rose to 111.3 in February from 110.6 a month earlier. Economists had predicted a drop to 110.5 this month.

National benchmark indexes climbed in 16 of the 18 western European markets.

FTSE 100 6,865.86 +27.80 +0.41% CAC 40 4,419.13 +38.07 +0.87% DAX 9,708.94 +51.99 +0.54%  

Scania surged 32 percent to 194.5 kronor. Volkswagen, which controls a majority of Scania’s shares and 89.2 percent of voting rights, said late Feb. 21 that it is offering 200 kronor per share for the remaining stock. Preferred shares of Volkswagen fell 6.5 percent to 187.90 euros, its biggest drop in a year. Europe’s largest automaker also reported fourth-quarter earnings that missed estimates.

Dixons rose 6.7 percent to 50.3 pence and Carphone Warehouse climbed 8.8 percent to 333 pence. The two companies said in a joint statement they are in preliminary talks for a merger. Betaville blog reported earlier, without citing sources, that they are discussing an all-share merger.

Bunzl Plc jumped 6.9 percent to 1,585 pence, its highest price since at least 1988, after saying full-year earnings excluding currency swings rose 15 percent to 82.4 pence per share. That beat analysts’ projections for 78.5 pence a share.

HSBC fell 2.8 percent to 635.7 pence. Europe’s largest bank reported 2013 pretax profit of $22.6 billion, trailing the $24.6 billion median estimate.

PostNL NV tumbled 20 percent to 3.44 euros, its biggest drop in 13 months, after the Dutch mail service reported a full-year net loss of 170 million euros. Analysts on average had projected a loss of 156 million euros.

RSA Insurance Group Plc retreated 3.7 percent to 97.5 pence after the insurer said it is considering a share sale as a way of replenishing capital. The company may say this week, when it reports full-year results, that it will raise as much as 800 million pounds, the Sunday Times reported yesterday.