European Stocks Gain; Cadbury, Areva, Ladbrokes Lead Advance

By Adria Cimino

Nov. 18 (Bloomberg) -- European stocks rose amid speculation Cadbury Plc may receive a joint bid from Hershey Co. and Ferrero SpA and a government report may show U.S. housing starts increased.

Cadbury advanced after the Wall Street Journal said Hershey is in talks with Ferrero concerning a joint bid for the U.K. confectionary maker. Areva SA added 2 percent as Les Echos reported Electricite de France SA may seek to control its nuclear reactor unit. Ladbrokes Plc gained 3.2 percent after BofA Merrill Lynch Global Research recommended shares of the betting company.

Europe’s Dow Jones Stoxx 600 Index rose 0.2 percent to 250.9 at 9:20 a.m. in London. The measure has climbed 58 percent since March 9 amid signs government spending and record- low interest rates are helping to drag the economy out of recession. The eight-month rally has pushed valuations in the index to more than 55 times its companies reported earnings, near the most expensive level since 2003.

“If economic numbers beat estimates or are even in line, that will push the market higher,” said Kilian de Kertanguy, a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees about $2.3 billion. “We’re looking to data for clues regarding the start of 2010. Mergers and acquisitions activity is effervescent and also will animate the market.”

Takeovers have increased as government stimulus measures help to ease credit markets. So far this month, $154 billion of acquisitions have been announced, compared with $67 billion in the whole of November 2008, according to Bloomberg data.

Housing Starts

Builders probably broke ground on U.S. houses in October at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said before reports today. Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

U.S. stocks rose yesterday, with benchmark indexes extending their 13-month highs, as a rebound in metal prices overshadowed a smaller-than-forecast increase in industrial production. Standard & Poor’s 500 Index futures were little changed today, as was the MSCI Asia Pacific Index.

Cadbury advanced 1.1 percent to 797 pence. The talks between Hershey and Ferrero have lasted for weeks and have not yet produced an offer, the Journal said.

Ferrero may be divided about making a bid for Cadbury or a tie-up with the U.K. confectioner, the London-based Times reported, without attribution.

Areva, Ladbrokes

Areva increased 2 percent to 369.95 euros. Henri Proglio, who takes over as EDF’s chief executive officer next week, told Les Echos that the nuclear reactor unit, formerly known as Framatome, should be supported by strong industrial actors. The creation of Areva in 2001 via the merger of Framatome with Cogema was “probably an error,” he told the newspaper, adding that France’s nuclear network needs to be redesigned. EDF added 0.9 percent to 38.70 euros.

Ladbrokes rose 3.2 percent to 131 pence. The owner of more than 2,300 U.K. and Irish betting shops was upgraded to “buy” from “underperform” at BofA Merrill, with a new price estimate of 160 pence.

Diageo Plc climbed 1.7 percent to 1,050 pence. The world’s largest liquor maker was raised to “buy” from “hold” at Societe Generale SA, which cited “a rebound in volumes in the U.S. market.”

A measure of basic-resources shares rose the most among the 19 industry groups in the Stoxx 600. Xstrata Plc, the world’s fourth-largest copper supplier, gained 2.6 percent to 1,103 pence. Fresnillo Plc, the world’s biggest primary silver producer, advanced 1.8 percent to 893 pence.

Copper futures rallied to the highest level in 14 months in London as the dollar’s decline boosted the appeal of raw materials as alternative investments. Silver, lead, nickel and tin also advanced.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.