Europe Markets: Fiat surges and Peugeot plunges on plan to merge
Fiat Chrysler Automobiles shares surged while Peugeot plunged in otherwise listless European stock markets on Thursday. Fiat Chrysler
FCA, 7.85%
jumped 9.6% while Peugeot
UG, -13.59%
fell 12.1% as the two companies said they would come together in a 50-50 merger, with FCA shareholders also getting a special dividend of 5.5 billion euros and Peugeot distributing its 46% stake in car parts supplier Faurecia
EO, -2.73%
to its shareholders. Faurecia shares fell 3.8%. “Adjusted for differences in market cap and distribution, we estimate PSA is paying a 32% premium to take control of FCA and its shareholders assume more market risk,” said analysts at Jefferies. Renault
RNO, -3.51%
, which previously tried to merge with Fiat, fell 3.4%. After closing Wednesday at its second-highest level of the year, the Stoxx Europe 600
SXXP, -0.36%
dropped 0.32% to 397.43. The German DAX
DAX, -0.25%
dropped 0.46% to 12850.90, the French CAC 40
PX1, -0.41%
dropped 0.39% to 5743.43 and the U.K. FTSE 100
UKX, -0.99%
declined 0.61% to 7286.40. It was the first opportunity in Europe to react to news the U.S. Federal Reserve cut interest rates by a quarter-point, and that Chairman Jerome Powell said interest rates wouldn’t increase until inflation increased substantially. China doubts that a long-term trade deal can be reached with President Trump, according to a report from Bloomberg News, and this pressured stocks. Of movers in Europe, chip equipment maker ASM International
ASM, 5.83%
surged nearly 8% as it reported stronger new order growth than it had guided for alongside a 37% increase in profit during the third quarter. Eutelsat Communications
ETL, -10.12%
fell 11.9% as the satellite operator reported a worse-than-forecast 6% drop in comparable sales growth during the first quarter and the company’s CFO told investors there’s a higher likelihood fiscal year revenue will be at the lower end of its estimates. Air France-KLM
AF, -2.41%
fell 4.7% as the airline reported a sharp drop in third-quarter profit, with its operating profit lagging analyst forecasts. The airline also said fourth-quarter unit revenue would fall.