European Markets Recover, Oil Producers Fail to Freeze Output

Lucy Stoeva
18 Apr, 2016
New York City

European markets recovered from the morning decline after oil producers failed to agree on production freeze. Caixabank made a new takeover offer for Banco BPI. Reckitt Benckiser first-quarter sales rose 5%. L''Oreal and Rio Tinto advanced ahead of earnings reports.

[R]4:00 PM Frankfurt, Germany - European markets recovered from the morning decline after oil producers failed to agree on production freeze. Caixabank made a new takeover offer for Banco BPI. Reckitt Benckiser first-quarter sales rose 5%. L''Oreal and Rio Tinto advanced ahead of earnings reports.[/R]

European markets recovered and closed slightly higher after taking a hit in the morning after oil producers in Doha failed to reach an agreement to freeze output.

The widely anticipated deal on oil production curbs collapsed on Sunday after Saudi Arabia insisted to include Iran in the agreement, while Iran has confirmed that it wants to return its production to pre-sanction levels before considering capping its output.

Brent crude oil futures fell 0.3% to $42.96 per barrel and WTI crude oil futures dropped 1.2% to $39.86 per barrel.

Among oil-related shares, Subsea 7 fell 2.1% and Statoil shed 1.2% in Oslo, Royal Dutch Shell erased 0.8% in Paris, and Total lost 0.7% in Paris.

On the positive side, shares of travel operators and airlines advances, as these companies benefit from lower oil prices.

Travel operators TUI jumped 2.7% and Thomas Cook Group rose 0.7%. Among airlines, EasyJet gained 0.7% and International Consolidated Airlines, the parent of British Air added 0.3%.

In London, the FTSE 100 index inched up 9.77, or 0.15%, to 6,353.52, while in Frankfurt, the DAX index gained 11.67, or 0.26%, to 10,120.31.

In Paris, the CAC 40 index rose 11.67, or 0.26%, to 4,506.84.

HSBC Holdings Plc eased down 0.5% to 448.3 pence on media reports that Stuart Gulliver, the CEO, will leave in two years as the bank replaces its top leadership.

Reportedly, HSBC has started the search and narrowed its list of internal candidates and the board may look at other candidates outside the bank as well.

Caixabank plummeted 3% after the Spanish bank made a new takeover offer of $1 billion for the 56% of Portuguese bank Banco BPI that it does not already own.

L''Oreal SA jumped 1.1% to 160.45 ahead of its earnings report scheduled to be released after the market close.

Rio Tinto Plc added 1.7% to 2,269. The miner is scheduled to release its latest earnings report tonight.

Reckitt Benckiser Group Plc advanced 2% to 6,868 pence after the consumer goods maker reported 5% growth in comparable first-quarter revenues on better than expected consumer-health products sales.

Some of the brands in the health unit include Nurofen painkillers, Strepsils throat pastilles and Scholl foot products.

The consumer products maker confirmed its full-year outlook and said sales are expected to grow between 4% and 5% in 2016 sales with moderate margin expansion.