Europe Retreats on Energy Stocks

Ivaylo
28 Aug, 2006
Frankfurt

European markets edged lower in early trading as crude oil prices fell to below $72 a barrel after a hurricane in the Caribbean was downgraded to tropical storm, reducing the threat of damage to oil production facilities in the Gulf of Mexico. Also shares in Banca Intesa and Sanpaolo IMI slid after the two agreed a merger plan over the weekend, while Unilever climbed after agreeing to sell its European frozen food business.

[R]6:30AM European markets were lower Monday morning on oil, banks.[/R]
European markets were lower by mid-morning on Monday. Broadly the French CAC 40 index dipped 0.4% at 5,091 and the German DAX 30 index fell 0.4% at 5,788 as the U.K. market remained closed Monday due to a bank holiday. The energy sector was hit, forcing Norsk Hydro down 1.2% and rival Statoil 1.1%. Banca Intesa and Sanpaolo IMI both pulled back from some of the previous week''s gains after they approved the outline of a merger plan over the weekend. Shares in Banca Intesa fell 1.5% as Sanpaolo IMI gave up 1.4%.

Other European banks also fell. Capitalia shed 1% in Italy and BNP Paribas slipped 0.8% in Paris, while Commerzbank added 1.1% in Frankfurt. In other corporate news, Unilever gained 0.4% in Amsterdam after the group agreed to sell the majority of its European frozen food business to Permira Funds for 1.73 billion euros ($2.21 billion).

Oil prices dipped Monday as concerns eased about threats to U.S. oil supply after a storm in the Caribbean weakened. Light sweet crude for October delivery fell 76 cents to $71.75 on the NYME. Gold was trading at $622.70 an ounce, up 45 cents from Friday''s close. The euro was higher against the U.S. dollar on Monday as investors examine whether European interest rates are likely to rise faster than those in the United States.

The euro bought $1.2794 in early European trading, up from $1.2758 in New York on Friday, regaining some of the ground it lost last week. The British pound gained to $1.8910 from $1.8868 on Friday, while the dollar slipped to 117.11 Japanese yen from 117.24 yen.

[R]5:00AM Gold and silver rose amid subdued trading on Friday.[/R]
December gold contract ended $2.30 higher at $630.80 a troy ounce on the NYME. September silver closed 6 cents up at $12.37 an ounce. October platinum settled $4.70 lower at $1,233 an ounce while September palladium added $1.35 to $345.80 an ounce. The September copper contract gained 1.40 cents to settle at $3.4425 per pound. December added 1.25 cents to $3.4315.

October crude oil advanced 15 cents at $72.51, well off its intraday high of $73.75 a barrel. September gasoline rose 3.36 cents to $1.8951 a gallon and September heating oil finished up 0.04 cents at $2.0298 a gallon. September natural gas settled up 7.8 cents at $7.157 a million British thermal units. On the New York Board of Trade, September Arabica coffee ended down 0.85 cent at $1.0620 a pound while December shed 0.90 cent to $1.1025. Futures on raw sugar] in foreign ports for October were unchanged at 12.30 cents a pound.