Europe Falls On Oil And Banks

Ivaylo
30 May, 2006
Frankfurt

Rising money supply and credit growth in the eurozone provoked worries of tighter monetary conditions, although there are talks that a 25-basis-point rate increase at the next European Central Bank meeting next week was a done deal. London

[R]6:30AM European shares decline on fears over interest rates and oil.[/R]
European markets traded lower in the morning. London’s FTSE 100 dropped 1.3% to 5,716.5, while Frankfurt’s Xetra Dax fell 1.1% to 5,691.51 and the CAC 40 in Paris, shed 1.1% to 4,961.06. Developments in the steel sector became obscured as opposition to Arcelor’s merger with Severstal stepped up. Mittal Steel, on the other hand said it would be content with a minority stake in Arcelor In this way, Mittal Steel, together with Severstal would become the two biggest shareholders. Stocks in Arcelor shed 0.9% while Severstal dropped 2.6% and Mittal edged down 0.8%. The chances of a more aggressive 50-point hike affected the market to a greater extent, hitting bank stocks. Among the biggest decliners were Commerzbank, falling 3.1% and National Bank of Greece, shedding 2.2%. There was a lot of volatility in the oil sector. OMV plunged 4.5% and France’s Total slid 1.1%. UK benchmark Vodafone had all eyes on its final results. It posted surprising revenue results, proving its loss was not as bad as expected.

Light, sweet crude oil for July delivery rose 4 cents to $71.41 a barrel, while July Brent crude at London''s ICE Futures exchange advanced 3 cents to $70.62 a barrel. Gold traded higher on Tuesday at $654.30 an ounce, up $5.30 an ounce from Monday''s close of $649.00. The dollar fell against the euro. The European currency advanced to $1.2836 from $1.2751, while the British pound rose to $1.8762 from $1.8594. The dollar fell more than half a yen to below 112 yen at one point before rising again to 112.01 yen.