LONDON (ShareCast) - Banks lead the advance in Europe, boosted by comments from German Chancellor Angela Merkel which expressed strong support for the 'save the euro at any cost' stance of European Central Bank (ECB) president Mario Draghi.

Merkel's rhetoric in a meeting with Canadian prime minister Stephen Harper in Ottawa revealed that she completely agreed with the ECB's strategy while stressing that "time is of the essence".

The mood shift has seen Credit Agricole, SocGen and BNP Paribas advance in France and Commerzbank and Deutsche Bank climbing in Germany, but the big gains are to be seen on Spanish lenders Santander, BBVA and - especially - Banco Popular Espanol and Bankia. The Reuters news agency reported yesterday that Bankia will receive some bailout funds soon.

After a newspaper report yesterday suggested that Rome was considering cutting taxes to help spurt growth in its economy, Italian Prime Minister Mario Monti has flatly denied the story stating that they must forge ahead with austerity measures.

He did clarify that reducing the fiscal burden on the country’s citizens is still one of the government’s main objectives, but that implementing tax cuts at the current juncture would be premature.

“The tax burden on individuals and businesses in Italy is definitely excessive, but right now the efforts to balance public finances cannot be slackened,” he said

Airlines hit by downgrade

In a report on the European airlines sector, Morgan Stanley has lowered the price targets for several airlines.

Morgan Stanley lowered its price target for International Airlines Group (IAG) to €2.25 from €2.50. It also lowered its price target for Lufthansa to €14.70 to €15.70 and EasyJet to 620 from 650p.

Air France gained altitude after the airline's biggest pilots union voted in favour of a new management plan that will cut work-force numbers.

Life's little pleasures

Booze related firms are in focus, although brandy and champagne maker LVMH Moet Hennessy Louis Vuitton might baulk at being described thus. Be that as it may, the luxury goods maker is attracting attention after a news report suggested China may cut import levies on luxury items.

Dutch brewing colossus Heineken, meanwhile, is a bit flat as speculation mounts that it is pondering buying out the rest of Asia Pacific Breweries.

Swiss stocks

Insurance company Swiss Life beat expectations with its net profit for the first half of 2012.

Tourist attraction builder Orascom Development said it expects its first half 2012 revenues will be between one-fifth and one-quarter higher than the corresponding period of 2011. Full year post-tax profit is expected to come in below last year's level, however, largely because of increased building costs and a higher tax charge.

Swiss textile machinery and coating business Schweiter Technologies reported an 11% fall in first half net revenue to CHF.378m. Net profit edged up from CHF.23.1m in the first half of last year to CHF.24.6m, but the company warned that it expects the second half will be tougher than the first.

Other markets

The price of Brent crude has eased, with the September futures contract 183 cents lower at $113.44 a barrel.

As investors pile into equities, German government bonds are being cold shouldered. The yield on the benchmark 10-year bund is little changed on the day at 1.52%.

DAX risers
Commerzbank € 1.25 +2.53%
Deutsche Bank € 26.43 +2.38%
Daimler € 41.60 +2.07%

DAX fallers
Deutsche Lufthansa € 9.86 -1.37%
Bayer € 62.61 -0.93%
Deutsche Post € 15.74 -0.93%

CAC 40 - Risers
Peugeot (UG) € 6.83 +2.83%
Credit Agricole (ACA) € 4.28 +2.78%
Alcatel-Lucent (ALU) € 1.00 +2.78%
ArcelorMittal SA (MT) € 13.01 +2.52%
Societe Generale (GLE) € 21.43 +2.32%
Vallourec (VK) € 38.39 +2.10%
Alstom (ALO) € 28.82 +1.57%
BNP Paribas (BNP) € 34.97 +1.27%
Technip (TEC) € 89.53 +1.12%
Renault (RNO) € 38.22 +1.02%

CAC 40 - Fallers
Publicis Groupe Sa (PUB) € 41.63 -1.00%
EDF (EDF) € 16.73 -0.92%
Sanofi (SAN) € 67.43 -0.91%
Air Liquide (AI) € 95.32 -0.88%
Lafarge (LG) € 37.73 -0.70%
Pernod Ricard (RI) € 86.76 -0.64%
Carrefour (CA) € 16.15 -0.52%
France Telecom (FTE) € 11.43 -0.48%
LVMH (MC) € 132.40 -0.45%
Saint Gobain (SGO) € 26.94 -0.41%

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