European shares rose yesterday, helped by a rally in HBOS stock on relief that it would not be sucked into a bidding war for Abbey, but Cadbury Schweppes fell after a profit warning from Coke.
Cadbury dropped 2.8 per cent to 437-1/2p, Nestle lost 0.7 per cent and Danone shed 1.3 per cent. Coke warned that second half earnings would fall short of market expectations due to weakness in key markets.
On the upside, Deutshe Bank rose on a bullish broker report. Other winners included French contract caterer Sodexho, up 4.5 per cent at €22.1, on news its Chief Operating Officer Michel Landel would replace founder Pierre Bellon as chief executive, resolving succession uncertainties.
By 1127 GMT, the FTSE Eurotop 300 index was 0.2 per cent stronger at 995.48 points and the DJ Euro Stoxx 50 index was up 0.2 per cent at 2,776.41 points.
Around Europe, London's FTSE 100 rose 0.5 per cent, Paris's CAC-40 added 0.19 per cent. Zurich's SMI rose 0.6 per cent and Frankfurt's DAX put on 0.4 per cent.
HBOS had said last month it was considering a bid for Abbey to rival the agreed £8.8 billion offer from Spain's Santander Central Hispano.
But it walked away from the bid, saying the risk of overpaying or being blocked on competition grounds was too high compared with concentrating on its existing business.
"There is a relief bounce they have not bid for Abbey," said Mark Tinker of Execution brokers. Shares in HBOS rallied 4.5 per cent, topping the list of European blue-chip winners.
Investors can now discard the cloud that hung over HBOS and focus on the strong first-half results it has already posted.
"Also the whole banking sector rallied so broadly in the past month, and investors are now picking their way through the sector," said Execution's Tinker.
Abbey's shares fell five per cent to 579p as the prospect of a bidding war faded, while Santander eased 1.2 per cent to €8.15.
Deutsche Bank advanced 2.3 per cent to €60.4, buoyed by Credit Suisse First Boston upgrading its rating on the stock to "neutral" from "underperform", citing a more bullish outlook for fixed-income revenue.
Shares in France's LVMH, the world's biggest luxury goods group, fell 2.1 per cent to €54 as it failed to offer a detailed full-year outlook despite beating forecasts with a 14 per cent rise in first-half operating profit.
LVMH reiterated its outlook for significant growth in operating profit for the full year, but traders had expected precise targets.