Europe Higher on Banks

Ivaylo
04 Oct, 2006
New York City

Most European stock markets advanced in early trading on Wednesday after an overnight plunge in oil and gold prices sent the Dow industrials to a record high, but another profit warning from Airbus owner EADS and a decline from oil giant BP limited gains. The FTSE 100 in London gained 0.1%, Frankfurt Xetra Dax added 0.3% and in Paris, the CAC 40 was 0.2% higher.

[R]6:30AM European stocks were mostly higher Wednesday on bank shares.[/R]
European markets were higher by mid-morning on Wednesday. The FTSE 100 in London gained 0.1% to 5,939.4, Frankfurt Xetra Dax added 0.3% to 6,010.55 and in Paris, the CAC 40 was 0.2% higher at 5,227.92.

In focus

Oil company British Petrolium declined in London after reporting expected lower margins while EADS announced late Tuesday that it will push back the already-delayed delivery schedule of A380 superjumbo jets by up to another year.

Advancers

Banks advanced after the US bank Citigroup was reported to be setting out on an acquisition course. Among those identified as targets, BNP Paribas of France gained 1.6%, Société Générale added 1.6% and BBVA of Spain gained 1.5%.

Companies that benefited from the decline in oil prices included British Airways with its shares up 2.4%, and cruise operator Carnival, which gained 1.4%. Chipmaker Infineon Technologies was also up 2.4% following an upgrade to buy from neutral from Goldman Sachs.

Decliners

EADS led the decliners. The aerospace group fell 6.7% after it announced further delays to its troubled Airbus A380 superjumbo, prompting top buyer Emirates to put its purchases under review.

DaimlerChrysler shares slipped 0.8%. The automaker last night also posted a narrower-than-expected 2.3% monthly drop in U.S. auto sales on strength from its Mercedes. Mining stocks moved lower on commodity exchanges. BHP Billiton lost 3.4% and Rio Tinto shed 3.3%.

Oil and gold

Oil prices fell for a third day Wednesday. Light sweet crude oil for November delivery fell 18 cents to $58.50 a barrel in electronic trading on the New York Mercantile Exchange. November Brent crude fell 41 cents to $58.02 at London''s ICE Futures exchange. Gold traded in London at $578.50, down from $581.80 late Monday.

Currencies

The U.S. dollar advanced against other major currencies in European trading Wednesday morning. The euro traded at $1.2696, down from $1.2727 late Tuesday in New York. The British pound traded at $1.8824, down from $1.8872. The dollar bought 118.05 Japanese yen, up from 117.89.

[R]5:00AM Gold and silver futures fell Tuesday due to the crude oil price plunge.[/R]
The most-active December gold sank $21.80 at $581.50 an ounce and the most-active December silver contract slipped to $11.02 an ounce, its lowest level since Sept. 21. The contract closed at $11.045, down 59.5 cents. January platinum moved dowwn $29.30 to end at $1,129.90 an ounce while December palladium settled $7.70 lower at $306.45 an ounce. The December copper contract fell 14.70 cents to finish at $3.2825 per pound.

The front-month November crude oil contract lost $2.35 to $58.68 a barrel, its lowest close since Feb. 16. November heating oil declined 4.79 cents to $1.6539 a gallon and November unleaded gasoline was off 4.567 cents to $1.455 a gallon, also a seven-month low. October natural gas advanced 11.6 cents at $5.759 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed up 0.70 cent at $1.0425 a pound and March gained 0.70 cent to $1.0810. Futures on raw sugar in foreign ports for March sagged 0.43 cent to end at 10.89 cents a pound and May lost 0.38 cent to 11.12 cents.