Europe Higher on Carmakers

Ivaylo
31 Oct, 2006
New York City

Banks reversed earlier losses and also insurers made strong earnings-driven gains. Carmakers recovered some of the previous losses, with DaimlerChrysler leading the advance on speculation it may sell its poorly-performing US Chrysler group. UBS, the biggest wealth manager in the world, impacted the market negatively as it posted a worse-than-forecast 21% drop in third-quarter net profit. By mid morning, the FTSE 100 rose 0.3%, Frankfurt Xetra Dax added 0.4%, the CAC 40 in Paris climbed 0.1%.

[R]6:30AM European shares advance on Tuesday on strong carmakers rally.[/R]
European markets were higher on Tuesday by mid morning. The FTSE 100 in London rose 0.3% to 6,145.9, Frankfurt Xetra Dax added 0.4% to 6,284.89, the CAC 40 in Paris climbed 0.1% to 5,368.77.

Advancers

DaimlerChrysler shares were up 3.4%, while Renault of France gained 2%, and Fiat of Italy added 1.4%. UBS shares fell 4.6%. Rival Swiss bank Credit Suisse shed 0.9%.

Insurers gained supported strong third-quarter revenues from Friends Provident of Britain, which gained 5.3%. European life groups ING and CNP Assurances advanced 1.1% and 1.1% respectively. Among the non-life groups, Generali jumped 1.3% and Munich Re moved up 1.1%.

Telenor, the Norwegian mobile operator, gained 1%. It reported better-than-expected numbers last week, prompting several broker upgrades.

Decliners

Sanofi-Aventis, the French drugmaker, fell 3.9% after reporting an 11.6% fall in third-quarter profit. Swedish paper products maker SCA fell 3.8% after reporting third-quarter pre-tax profits that fell shy of expectations.

KPN, the Dutch fixed-line telecoms group, declined after its 4.4% rise in third-quarter earnings fell just short of market forecasts, despite a strong performance at E-Plus, its German mobile division.

Dexia downgraded the group from “add to neutral, disappointed by dividend outlook and performance of KPN at its fixed-line business. The shares fell 1%.

Oil and gold

Oil prices edged higher Tuesday, recouping some of their losses after plunging more than $2 a barrel the previous day as traders looked to U.S. supply data due out this week that is expected to show rising inventories of crude. Light, sweet crude oil for December delivery climbed 2 cents to $58.38 a barrel in electronic trading on the NYME, after slipping $2.39 Monday to settle at $58.36 a barrel. Brent crude rose 6 cents to $58.74 a barrel on the ICE Futures exchange.

Gold traded at $600.70 an ounce on Tuesday, up $6.80 an ounce from Friday close of $593.90.

In morning European trading, the euro fell to $1.2685, compared with $1.2729 in New York late Monday. The British pound declined to $1.9001 from $1.9020. The dollar rose to 117.75 Japanese yen from 117.41 yen on Monday after the Bank of Japan suggested it would not rush into another rate increase.

[R]5:00AM Gold and silver futures soared Monday on buying from funds.[/R]
December gold surged to end at $613.20, its strongest level since Sept. 11. December silver jumped to finish at $12.295 an ounce, and January platinum climbed $13.50 to $1,093.20 an ounce. December palladium gained $5.75 to $328.75 an ounce. The most active December copper contract settled down 4.65 cents at $3.3585 per pound.

The front-month December crude oil contract on declined $2.39 to close at $58.36 a barrel. November heating oil settled down 9.29 cents to $1.6015 a gallon amid forecasts for warm fall weather. November unleaded gasoline lost 10.44 cents to end at $1.4555 a gallon. November natural gas dropped 41.1 cents to close at $7.416 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed unchanged at $1.08 a pound. March futures on raw sugar in foreign ports settled 0.34 cent lower at 11.45 cents a pound.