Banks, Metals Support European Markets

Ivaylo
01 Nov, 2001
New York City

European stocks were slightly higher Wednesday as banks dominated following merger updates from Banco Popolare di Verona e Novara and Banca Popolare Italiana. Oil companies and metal stocks also helped the markets, with BP and Total advancing. Rio Tinto and BHP Billiton gained after zinc prices touched record highs and as gold prices also strengthened. In early trade, the FTSE 100 in London gained 0.2%, Frankfurt Xetra Dax climbed fractionally, and the CAC 40 in Paris was flat.

[R]6:30AM Strong metal shares and banking mergers help Europe higher Wednesday.[/R]
European markets were marginally higher in early trading on Wednesday. The FTSE 100 in London gained 0.2% to 6,138.4, Frankfurt Xetra Dax climbed fractionally to 6,270.62, and the CAC 40 in Paris was flat at 5,348.88.

Advancers

Banks were among the best performing stocks after Banco Popolare di Verona e Novara and Banca Popolare Italiana, the two Italian co-operative banks, announced they had signed a memorandum of understanding. This confirms the structure of the new bank, as well as the terms and conditions of the planned merger. Shares in BPVN gained 2.7% and BPI added 2%.

Natexis Banques Populaire, the French mutual lender, gained 2%. It is merging its Natexis investment banking unit with Ixis, the wealth management division of Caisse d’Epargne. Nordic banks were also performing well, with Swedbank up 1.5%, and DnB Nor 1% higher.

Metal stocks were also in demand after zinc prices touched record highs and as gold prices also strengthened. BHP Billiton and Rio Tinto gained more than 1.1%

Telecoms advanced again after TeliaSonera, which reported on Tuesday forecast-beating third-quarter numbers, gained 0.5% following target price upgrades from Morgan Stanley, Deutsche Bank and UBS. Greek mobile group Cosmote gained 1.5%, while Vodafone added 0.6%.

Decliners

Telenor bucked the telecoms trend, retreating from some of its recent gains that followed strong third-quarter results, falling 1.5%.

Tyre makers led the decliners on Wednesday, as Continental, the German tyre and car parts maker, fell 0.8% after it reported a fall in third-quarter core operating profit as raw materials costs mounted and auto industry production in the US stalled. Michelin also fell 1.1%.

Oil and gold

Crude oil for December delivery fell 47 cents, or 0.8%, to $58.26 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for December declined 41 cents to $58.62 a barrel on the ICE Futures exchange in London.

Gold prices rose for a seventh consecutive trading session in London amid concern about a slowdown in the U.S. economy. Gold for immediate delivery in London rose $5.40, or 0.9%, to $612 an ounce.

Currencies

The U.S. dollar was little changed before a U.S. report on manufacturing growth today. The greenback traded at 117.04 yen. in London from 116.98 yen in New York late yesterday. It was at $1.2755 per euro from $1.2762 on Tuesday. The British pound traded at $1.9095 against the dollar from $1.9081 yesterday.

[R]5:00AM Gold futures dropped Tuesday on profit-taking, oil prices.[/R]
The most-active December gold moved 60 cents lower to end at $606.80 a troy ounce. December silver rose 2 cents to finish at $12.27 an ounce. January platinum settled at $1,086.50 an ounce down $6.70. December palladium declined $6.05 to close at $322.70 an ounce. December copper contract lost 1.30 cents to settle at $3.3455 per pound.

December crude oil advanced 37 cents to end at $58.73 a barrel, after falling below $58 a barrel earlier in the day. November heating oil settled down 1.46 cents to $1.5869 a gallon. November gasoline added 0.91 cent to end at $14646 a gallon. December natural gas settled up 11.8 cents at $7.534 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 0.25 cent higher at $1.0825 a pound. March futures on raw sugar in foreign ports egded 0.10 cent higher to finish at 11.55 cents a pound.