Weakness in the automobile manufacturing sector hurt European stock markets on Tuesday, but strength in other sectors allowed the FTSE Eurofirst 300 to close 0.2 percent higher at 1,321.46.
The steel sector saw advances as ThyssenKrupp did the best among blue-chip stocks with a gain of 3.8 percent to €28.64 after it said it will buy back as much as 5 percent of its shares. West LB saw this as a sign that further consolidation in the sector will follow the Arcelor-Mittal merger.
Banks also did well amid mergers and acquisitions rumors. BBVA of Spain added 1.9 percent to €16.55 on talk that it could merge with HSBC. It was also helped by hopes that the results of the presidential election in Mexico, where it generates a substantial part of its earnings, could be beneficial to business. Elsewhere in the Spanish banking sector, Deutsche Bank issued positive comments about Banco Santander Central Hispano and Banco Pastor, sending their share values up 0.4 percent to €11.49 and 2.9 percent to €10.60 respectively.
Among carmakers, Volkswagen dropped 0.1 percent to €55.14 and Peugeot declined by 0.9 percent to €48.85. DaimlerChrysler fell 0.7 percent to €38.50 after new data showed that while its Mercedes Benz sales were up by 14 percent last month, sales by its US Chrysler unit were down 15 percent in the month. In addition, Morgan Stanley cut DaimlerChrysler’s target share price from €50 to €46.
Elsewhere in the sector, Fiat was down 1.8 percent to €10.349 on a downgrade from “neutral” to “sell” from Merrill Lynch. Renault was also 1.8 percent lower, to €82.70, after it said that it will explore the idea of an alliance with General Motors if GM proposes such a move.