Although widely expected, confirmation that the German Constitutional Court (GCC) is OK with the legality of the European Stability Mechanism (ESM) triggered gains in European equity markets.

The GCC approved the ESM, albeit with conditions, paving the way for Germany's parliament to ratify the ESM, save that any liability over the 190bn euro mark will have to be voted on.

Standard and Poor's (S&P) reacted in a positive manner to the German Constitutional Court's approval of the European Stability Mechanism (ESM), deeming the attached conditions not to be a significant restriction to Germany's efforts against the euro crisis.

S&P said that the contribution cap is a "mild" restriction. It expects the ESM to be able to carry out more flexible financial interventions such as the direct capitalisation of banks and bond purchases in the primary market. The latter would allow the European Central Bank (ECB) to begin its 'Outright Monetary Transactions' (OMT) as announced last week.

Banking stocks in particular welcomed the decision, with Commerzbank topping the pile in Frankfurt. Insurance companies such as ING, AXA and Allianz were also wanted.

There was some late excitement as news broke of a possible combination between UK defence group BAE Systems and European aerospace giant EADS, the company behind Airbus.

"BAE Systems and EADS have a long history of collaboration and are currently partners in a number of important projects, including the Eurofighter and MBDA joint ventures," BAE said in a statement.

"The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA."

Wind power specialist Vestas was off the pace after a downgrade from Sanford Bernstein.

Spanish utility group Iberdrola has reiterated that it will maintain its dividend pay-out.

Shares of Santander moved higher following an upgrade out of Morgan Stanley.

In its review the International Monetary Fund reiterated Ireland's strong program implementation. In a separate report it concluded that Portugal's
own adjustment is on track.

Industrial production data comes in ahead of expectations


Eurozone industrial production rose by 0.6% month-on-month in July (Consensus: 0.1%).

Front month Brent crude futures rose 40 cents to $115.44 a barrel,



DAX - Risers
Commerzbank € 1.58 +7.22%
Volkswagen € 146.85 +2.37%
Infineon Technologies € 5.76 +2.36%

DAX - Fallers
K + S € 38.27 -1.40%
Deutsche Telekom € 9.71 -1.17%
Fresenius SE € 87.51 -0.83%

CAC 40 - Risers
Peugeot (UG) € 6.87 +6.48%
Credit Agricole (ACA) € 5.89 +5.78%
ST Microelectronics (STM) € 4.85 +4.57%
Lafarge (LG) € 42.66 +3.76%
Renault (RNO) € 39.39 +2.64%
Technip (TEC) € 89.12 +2.44%
France Telecom (FTE) € 10.78 +2.23%
AXA (CS) € 12.77 +2.00%
Schneider Electric (SU) € 51.85 +1.85%
Cap Gemini (CAP) € 32.56 +1.69%

CAC 40 - Fallers
EADS (EAD) € 28.00 -5.63%
LVMH (MC) € 125.25 -2.00%
Safran (SAF) € 27.66 -1.55%
Essilor International (EI) € 72.72 -1.21%
Pernod Ricard (RI) € 85.85 -0.76%
Danone (BN) € 48.94 -0.72%
L'Oreal (OR) € 97.00 -0.72%
ArcelorMittal SA (MT) € 12.53 -0.67%
PPR (PP) € 124.70 -0.44%
Bouygues (EN) € 20.59 -0.44%


JH

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