Tensions And Oil Depress Europe

Ivaylo
13 Jul, 2006
New York City

European markets opened lower on Thursday as investors continued to worry about the early progress of the U.S. second quarter earnings season and as crude oil prices topped $75 a barrel once more amid heightened geopolitical tensions. The U.K. FTSE 100 index declined 0.7%, the German DAX Xetra 30 index sank 1.3% and the French CAC-40 index lost 1.1%.

[R]6:30AM Europe declines on higher oil prices and geopolitical concerns.[/R]
European markets were lower by mid-morning trading. The U.K. FTSE 100 index lost 0.7% at 5,818, the German DAX Xetra 30 index declined 1.3% at 5,563 and the French CAC-40 index declined 1.1% at 4,885. Britain insurance company Aviva attracted the attention. The company was partially responsible for the insurance sector decline. It traded 1% lower following its statement that it would place shares to partly finance its $2.9 billion purchase of U.S. insurance company AmerUs.

Emap fell 7.2% after the UK media group warned that underlying first half revenues were likely to drop and that trading conditions were likely to remain difficult. Swedish technology company Ericsson shed 0.9%, having announced that jointly owned mobile phone venture, Sony Ericsson, produced a 91% rise in second-quarter net income but average selling price dropped slightly sequentially in the quarter.

German subscription TV provider Premiere AGbucked the downtrend, soaring 23% in the wake of its announcement that it has agreed a deal to market Arena, a new TV channel for the German Bundesliga soccer league, to its cable TV customers.

Oil prices hit a record Thursday as an escalation of violence in the Middle East triggered concerns about stability in the region. Light, sweet crude for August delivery rose 93 cents to $75.88 a barrel. Gold bullion opened Thursday at a bid price of $650.10 a troy ounce, down from $653.40 late Wednesday.

The euro was higher nominally against the dollar Thursday, even though the prospect of higher European interest rates kept gains for the European currency at bay. The euro bought $1.2701 in afternoon European trading, up from $1.2699 in New York late Wednesday. The British pound dropped to $1.8335 from $1.8343 while the dollar fell to 115.43 Japanese yen from 115.52 yen as traders took the opportunity to buy the currency at a cheaper price before an expected interest rate increase from the Bank of Japan.

[R]5:00AM Geopolitical worries push gold prices up.[/R]
August gold closed at $651.20 an ounce on Wednesday, up $8.10. During the session the contract hit its highest level in six weeks at $657. September silver contract setttled 0.5 cent higher at $11.555 an ounce. During the session the contract reached $11.82, its highest level since June 7. October platinum settled $13.60 higher at $1,267.60 an ounce while September palladium closed 95 cents higher at $329.95 an ounce. The most-traded September copper contract ended up 3 cents at $3.6650 per pound.

The August crude oil contract advanced 84 cents to a high of $75.05 before falling back to close just below that level at $74.95, up 79 cents. August heating oil finished up 0.78 cent at $2.0184 a gallon. August gasoline finished up 6.34 cents at $2.2559 a gallon. On the New York Board of Trade, July Arabica coffee futures settled up 0.20 cent at 98.55 cents a pound while September gained 0.15 cent to 99.95 cents a pound. Futures on raw sugar in foreign ports for October ended down 0.30 cent at 16.27 cents a pound and March declined 0.26 cent at 16.68 cents a pound.