Europe Erases Early Gains

Ivaylo
09 Aug, 2006
Frankfurt

The Fed held rates for the first time in two years at 5.25%, but left the door open for further rises saying it still saw risks from inflation. U.S. markets reacted negatively to the Federal Reserve

[R]6:30AM European markets erase early gains over economic growth worries.[/R]
European markets were lower in Wednesday morning trading. The FTSE 100 in London sank 0.6% to 5,781.5, the Xetra Dax in Frankfurt declined 0.6% to 5,619.70 and the CAC-40 in Paris edged down 0.3% at 4,955.27. Commerzbank of Germany, fell 7.2%, as its second-quarter net profit missed market expectations due to the underperforming of earnings from small business loans.

Hypo Real Estate, the German property lender, fell 4.8%, having slightly missed expectations with a 21.7% gain in second-quarter net profit as lending revenues rose but commission income slipped, while telecoms group SwissCom fell 3.2% after missing forecasts with a 32% fall in first-half net profit, hit by a one-off charge related to a fine for overcharging other telecoms.

Infineon fell 0.9% after its memory chip unit Qimonda raised $546 million in its initial public offering in New York, below expectations. Adidas, the German sports goods maker, added 1.9% after it beat expectations with a 24% rise in second-quarter net profit. The auto sector held up though against the broader market decline with Michelin, up 0.4%, Continental, up 0.1% and Nokian Renkaat, 2.5%. Among the car makers Volkswagen was 0.6% higher.

Light, sweet crude oil for September delivery was up 2 cents at $76.33 a barrel in midmorning electronic trading on the NYME. Gold traded lower in Wednesday at $641.00 an ounce, down $5.00 an ounce from Tuesday''s close of $646.00. The euro was lower against the U.S. dollar Wednesday. The euro bought $1.2822 in early European trading, down from $1.2843 in New York late Tuesday. The British pound slipped to $1.9046 from $1.9079. The dollar advanced against the Japanese currency, rising to 115.35 yen from 115.08 yen.

[R]5:00AM Gold withdraws slightly as Fed pauses in raising the rates.[/R]
December gold finished down $2.20 at $657.30 an ounce on Tuesday and September silver settled 0.5 cent lower at $12.26 an ounce. October platinum ended $10.90 lower at $1,256 an ounce. September palladium closed $3.80 lower at $323.75 an ounce. September copper ended down 0.85 cent at $3.6020 per pound.

The September crude oil contract settled down 67 cents at $76.31 a barrel after rising to $77.45 earlier. September gasoline finished down 2.53 cents at $2.2263 a gallon. September heating oil settled down 2.71 cents to $2.1164 a gallon. August natural gas moved up 25.1 cents at $7.158 a million British thermal units. On the New York Board of Trade, September Arabica coffee edged down 0.05 cent to close at $1.0710 a pound. October futures for raw sugar in foreign ports shed 0.28 cent to 13.99 cents a pound.