Ibex 35 pulled up short

6 December 2007

MADRID – The Spanish stock market closed higher in line with the rest of Europe in the wake of some positive economic news out of the United States. However, the local bourse underperformed as it was held back by losses in leading stocks Iberdrola and Telefónica.

US labour productivity in the non-farm business sector rose by 6.3 percent year-on-year in the third quarter – the strongest growth in four years – suggesting the world’s biggest economy is not as weak as previously thought.

At the same time, a downward revision in labour costs to an annual 2 percent from a previous estimate of 0.2 percent suggested easing inflationary pressure, giving the Federal Reserve more scope to cut interest rates.

The Spanish blue Ibex 35 added 0.66 percent to 15,802.20 points after trading in a range of 15,737-15,849. The Madrid general index put on 0.57 percent to 1,713.94 points. Open-market deals in the continuous market amounted to about EUR 3.9 billion.

In the rest of Europe, Frankfurt gained 2.83 percent, Paris added 2.02 percent, while London shone with an advance of 2.83 percent on UK interest-rate cut hopes.

Telefónica shed 0.56 percent on profit taking, while Iberdrola was down 0.63 percent after Belgian magnate Albert Frère reduced his stake in the power utility.

Wind-turbine manufacturer Gamesa led blue chips higher, adding 4.80 percent to EUR 31.68 after HSBC raised its target price for the stock to EUR 40.

Biopharmaceutical firm Zeltia added 5.92 percent to EUR 7.34 after earlier hitting an intraday high of EUR 8.15 on rumours rival Novartis was lining up an imminent takeover bid in the next few days. Zeltia said it was unaware of any moves on the company.

Subject: Spanish news