European equities were higher on Wednesday as rising oil prices lifted energy stocks, while banking sector gains were led by HVB Group after majority shareholder Unicredit said it planned to buy out minority investors.

By midday, the FTSE Eurofirst 300 was up 0.7 per cent to 1,523.41, Frankfurt’s Xetra Dax added 0.6 per cent to 6,719.64, the CAC 40 in Paris gained 0.8 per cent to 5,616.86 and London’s FTSE 100 climbed 1.1 per cent to 6,298.3.

Shares in Germany’s HVB gained 4.9 per cent to EU36.25 and Bank Austria added 5.2 per cent to EU132.12 after Unicredit, which owns 95 per cent in both businesses, said it was to tender for the remaining shares in the two banks.

The Italian lender said late on Tuesday it would offer a “fair cash compensation” to minority shareholders for the remaining stock. Unicredit’s shares gained 1.3 per cent to EU7.19.

A number of Italian banks were stronger following upgrades to the sector late on Tuesday by Morgan Stanley. Banca Monte dei Paschi di Siena edged 0.4 per cent higher to EU4.94, while Capitalia nudged up 1.5 per cent to EU6.97 after the broker raised its rating on both from “underweight” to “equal weight”.

Banca Popolare di Vicenza e Novara gained 2.5 per cent to EU23.99 after Morgan Stanley added the stock to its model portfolio.

MAN, the German truckmaker, gained 3.1 per cent to a record EU78.15 after it dropped its EU10.5bn hostile bid for Swedish rival Scania. The company said on Tuesday it still favoured a merger, but would pursue friendly talks. Shares in Scania, which announced it had won a 500-truck order with UK haulier Eddie Stobart, gained 1 per cent to SKr469.75.

SAP, the German business software maker, fell 4.4 per cent to EU36.69 after it said margins would fall in 2007, while its failure to provide the market with an outlook for licence sales also weighed.

Crude prices rallied overnight after the US said it wanted to double the capacity of its emergency reserves stockpile. The front-month Nymex contract rallied 4.7 per cent on Tuesday to $55.04.

European oil producers all benefited. France’s Total (NYSE:TOT)added 1.1 per cent to EU52.60, Spain’s Cepsa climbed 1.1 per cent to EU57.40 and Norway’s Statoil (NYSE:STO) rose 2.3 per cent to NKr164.75.

Mining and metals groups were also higher as gold and base metals prices rose on international commodity exchanges. London-listed miner Kazakhmys rose 3.8 per cent to £11.08, while Mittal Steel gained 5 per cent to EU34.95 and aluminium producer Norsk Hydro (NYSE:NHY) added 2.7 per cent to NKr197.

FT.com

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