North Korea Worries Weigh Europe Lower

Ivaylo
09 Oct, 2006
New York City

Oil prices also rose above $60 a barrel, with Iran adding to international tensions after it announced on Sunday it would not suspend its nuclear programme in spite of the increasing likelihood of sanctions from western powers. In Europe carmakers dropped in response to the higher direction of oil prices. Frankfurt Xetra Dax shed 0.5% and the CAC 40 in Paris lost 0.3%. London FTSE 100, however, added 0.3%.

[R]6:30AM European stocks declined Monday morning on geopolitical concerns.[/R]
European markets were broadly lower by mid-morning on Monday. Frankfurt Xetra Dax shed 0.5% to 6,058.62 and the CAC 40 in Paris lost 0.3% to 5,265.38. London FTSE 100, however, added 0.3% to 6,017.8, buoyed by its greater weighting in oil and mining stocks, as crude and metals prices rallied.

Advancers

Shire, the drugs company, gained 9.1% after getting the go-ahead in the US for a new attention deficit drug. Oil companies advanced. Austria OMV gained 2.4%, Italy Eni added 1% and Norway’s Statoil climbed 2%.

TeliaSonera, the Nordic region largest telecoms operator, gained 2.9% after Cevian, the activist fund bought 72 million shares to become the fourth-largest shareholder.

Decliners

Volkswagen fell 1.1% after the Financial Times reported MAN would drop its bid for Scania, its rival truckmaker, so the three companies can enter negotiations to enter a three-way alliance.

Investor, the Swedish fund manager and second-largest shareholder in Scania, fell 2.5%. Renault shares slipped 0.4% as expectations of a tie up with General Motors faded. Peugeot, shed 2% after Morgan Stanley downgraded the stock from overweight to equal weight.

Banking stocks gave back some of their recent, M&A-driven gains. Austria Erste Bank fell 1.9%. It is awaiting judgement today from Romanian lawmakers on its intended acquisition of the country top bank BCR. Raiffeisen, Erste domestic rival, and competitor in high-growth eastern European markets, fell 1.5%.

Oil and gold

Crude oil for November delivery rose 51 cents to $60.27 a barrel in electronic trading on the NYME. In London, November Brent gained 38 cents to trade at $60.21 a barrel on the ICE Futures exchange.

Gold rose after North Korea carried out its first nuclear-weapons test and as higher base metals prices boosted purchases of commodities as a basket. Gold for immediate delivery rose $5.63, or 1%, to $579.72 an ounce.

Currencies

The euro was barely changed Monday against the U.S. dollar, while the Japanese yen was slightly lower after North Korea claimed to have tested a nuclear weapon. The euro bought $1.2601 in morning European trading, compared with $1.2595 late Friday in New York. The British pound slipped to $1.8678 from $1.8705. The dollar rose to 119.12 yen from 118.98 yen.

[R]5:00AM Gold futures rose on North Korea nuclear plans and short covering.[/R]
December gold gained $1.30 to settle at $576.80 a troy ounce on NYME. December silver advanced 10.5 cents to settle at $11.175 an ounce. January platinum dropped $5.40 to close at $1,080.80 an ounce, while December palladium shed 90 cents to finish at $300.25 an ounce. December copper moved up 8.85 cents with help from technical buying to end at $3.3885 per pound.

The November crude oil contract fell 27 cents to finish at $59.76 a barrel. November unleaded gasoline was off 1.23 cents to close at $1.5042 a gallon, but November heating oil gained 0.20 cents to finish at $1.6940 a gallon. November natural gas futures settled 12.9 cents higher at $6.427 per million British thermal units, helped by cold weather forecasts and technical buying.

On the New York Board of Trade, Arabica coffee futures ended lower after an early flurry of speculative sales, with the December contracts closing 0.60 cents weaker at $1.0390 a pound. March futures on raw sugar in foreign ports settled 0.07 cents lower at 11.07 cents a pound, while the May contracts lost 0.03 cents to finish at 11.32 cents a pound.