European stocks rise as BNP buys Community Bankshares for $1.2bn

EUROPEAN stocks climbed after BNP Paribas SA agreed to buy Community First Bankshares Inc for $1.2 billion in cash.

Iberia Lineas Aereas de Espana SA had its second-biggest jump this year after the Elconfidencial.com website said a purchase by British Airways will be announced in coming days.

Iberia dismissed the report and British Airways called it a false alarm. “Takeovers are always good for the market,” said Luca Martina, head of international equities at Credit Suisse Private Banking in Milan, which oversees about $2.8bn including shares of Vinci SA and Groupe Danone.

The Dow Jones Stoxx 50 Index advanced 0.6% to 2663.67. The Stoxx 600 added 0.5%, with banks accounting for two-fifths of the gain. The Euro Stoxx 50, a benchmark for the 12 countries sharing the euro, rose 0.6%.

Worldwide, merger and acquisition activity more than doubled to $474bn this year. Banks are making purchases to widen their branch networks and increase their product offerings.

The BNP deal is the fifth takeover worth more than $1bn of a US bank this year, including JP Morgan Chase & Co’s $55bn purchase of Bank One Corporation in January.

Benchmark indices rose in 14 of the 17 western European markets. Germany’s DAX Index added 0.3%. France’s CAC 40 Index rose 0.4%. The British FTSE 100 Index advanced 0.4%. March futures on the Euro Stoxx 50 gained 0.8%.

Spain’s IBEX 35 Index climbed 1.4%, its second-biggest increase this year. The benchmark slid 7.2% in the three previous sessions after attacks that killed 200 and injured 1,500 in Madrid and an election that unexpectedly put the Socialist Party in government.

BNP, France’s biggest bank by assets, gained 2.7% to 48.85 euro after its BancWest Corp. subsidiary agreed to pay $32.25 a share for Community First to win customers in the US.

“The west of the US is the area with the highest potential growth after New York,” said Xavier de Champsavin, who helps manage $3.1bn, including BNP shares, at Meeschaert Asset Management in Paris.

The acquisition will boost net income at BNP’s retail banking business by €5m in 2004 and €24m in 2005, Pierre Mariani, head of international retail banking and financial services, said. BNP expects cost savings of $50m in 2005.

Other banks also rose. Credit Suisse Group added 1.7% to 45.85 Swiss francs. Banca Nazionale del Lavoro SpA climbed 3.9% to €1.95.