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Home>European stocks jump to 10-week high, led by Alstom after Siemens deal

European stocks jump to 10-week high, led by Alstom after Siemens deal

European stocks jump to 10-week high, led by Alstom after Siemens deal

09/27/2017

By Sara Sjolin, MarketWatch

European stocks moved higher on Wednesday, led by gains for Alstom SA and Siemens AG after the two agreed to merge their rail operations.

A weaker euro also helped boost the region's stock indexes, breaking out of days of rangebound trading.

The Stoxx Europe Index added 0.5% to 384.97, setting it on track for its fifth straight advance. If it closes at this level, it'll mark the highest finish since July 19, according to FactSet data.

Alstom-Siemens deal: Helping the pan-European benchmark move higher on Wednesday were shares of Alstom (ALO.FR) , which leapt 4.8%, and Siemens AG (SIE.XE)(SIE.XE) , which climbed by 1.8%.

The companies agreed to merge their rail operations (http://www.marketwatch.com/story/alstom-siemens-to-merge-creating-rail-giant-2017-09-26), aiming to create a European giant with the scale to fight growing competitive threats from state-backed Chinese rivals.

"Siemens-Alstom targets annual synergies of EUR470 million after four years, which looks overly ambitious, in our view," analysts at Deutsche Bank said in a note.

"Unlike car making, economies of scale are not significant in train production and many smaller tier-2 suppliers have actually proven very successful at winning tenders," they added.

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