European Stocks Hit By Oil Surge

Ivaylo
14 Jul, 2006
New York City

European markets moved lower by mid-morning on Friday after escalating violence in the Middle East pushed crude oil to a record high and prompted sharp drops in global markets in the previous session. Following sharp drops in early trade, markets moved off their worst levels of the morning. The U.K. FTSE 100 index shed 0.5%, the German DAX Xetra 30 index declined 1.1% and the French CAC-40 index dropped 0.9%.

[R]6:30AM Europe plunges due to oil price rise and geopolitical tensions.[/R]
European markets traded lower by mid-morning session. The U.K. FTSE 100 index lost 0.5% at 5,733, the German DAX Xetra 30 index sank 1.1% at 5,468 and the French CAC-40 index shed 0.9% at 4,809. Oil hit auto investors, as Volkswagen came off 1% while BMW lost 0.8% and Peugeot also fell 0.8%. Renault attracted early focus in light of its prospects for an alliance with General Motors with a meeting between the two carmakers scheduled for Friday. Renault declined 1% in Paris.

Chipmaker Infineon Technologies lost 1.3% after 34 U.S. states were expected to file a lawsuit on Friday against seven makers of DRAM memory chips, alleging that price-fixing from 1998 to 2002 forced up the prices of computers that use them.

Energy price boosted, oil and gas companies bucked the trend, with BP Royal Dutch Shell and Total all higher on the back of the rising oil price. Stada Arzneimittel of Germany also advanced, up 1.3% after it said it has agreed to buy Serbian generic drugmaker Hemofarm for 485 million euros ($617 million) in cash. Food equipment maker Enodis surged 9.2% after it said its board is considering a takeover proposal from the Manitowoc Co.

Oil prices topped $78 per barrel Friday, near record highs, as mounting tensions in the Middle East raised concerns of a possible disruption of oil supply. Light sweet crude for August delivery was up $1.35 to $78.05 a barrel. The Brent contract for August at London''s ICE Futures exchange, which expires at the close of trading Friday, surged $1.16 to $77.85 per barrel. Gold opened Friday at a bid price of $660.60 a troy ounce, up from $645.50 late Thursday.

The dollar gained against the euro and the yen Friday after Japan''s central bank hiked interest rates for the first time in almost six years. The U.S. dollar was trading at 116.05 yen, up from 115.24 yen late Thursday in New York. The euro fell to $1.2657 on Friday, down from $1.2692 in late New York trading. The British pound also slipped to $1.8366, from $1.8442.

[R]5:00AM Gold surges on the back of oil prices jump.[/R]
August gold futures ended $3.20 higher at $654.40 a troy ounce on the NYME. September silver closed 7 cents lower at $11.485 an ounce after hitting an $11.68 session high. October platinum shed $3.60 to finish at $1,264 an ounce, while September palladium finished $4.10 lower at $334.05 an ounce. The most-traded September copper contract gained 1.15 cents to end at $3.6765 per pound.

Oil prices advanced further into uncharted territory, hitting a new record of more than $76 a barrel on concern over the broadening Israel-Lebanon conflict. The August crude contract surged to a record intraday high of $76.85 before ending $1.75 stronger at $76.70 a barrel. The August gasoline contract advanced 4.41 cents to close at $2.3000 a gallon. On the New York Board of Trade, July Arabica coffee futures climbed 0.80 cent to finish at 99.35 cents a pound, and September coffee gained 0.75 cent to end at $1.0070 a pound. Among futures on raw sugar in foreign ports, October finished 0.15 cent higher at 16.42 cents a pound, and March gained 0.13 cent to finish at 16.81 cents a pound.