Europe Lower as Euro Surges

Ivaylo
24 Nov, 2001
New York City

The euro on Friday broke through the $1.30 level for the first time since April 2005, and continued hovering above that barrier. On Wednesday, economic data showed waning U.S. consumer confidence and growing jobless claims, prompting a big dollar sell-off. Banks also fell in Europe on concerns equity market losses could hit future profits. In early exchanges, London FTSE 100 fell 0.5%, Frankfurt Xetra Dax shed 0.9%, in Paris the CAC 40 lost 0.7%.

[R]6:30AM European markets decline in early trading on Friday due to a strong euro.[/R]
European markets were lower on Friday. In early exchanges, London FTSE 100 fell 0.5% to 6,112.3, Frankfurt Xetra Dax shed 0.9% to 6,418.82, in Paris the CAC 40 lost 0.7% to 5,386.1.

Advancers

Shares of Technip jumped 9.9% in Paris trading after two French newspapers reported that Eni or partly held unit Saipem, may bid for the oil-services group. Eni shares declined 0.9% in Milan. Shares of champagne maker Laurent-Perrier rose 1% in thin trading after it said first-half net income rose 47% to 13.1 million euros ($17 million), or 2.2 euros a share, with revenue up 10.5% to 100.3 million euros. A strong price and mix effect buoyed results. Remy Cointreau built on gains on Thursday on speculation it may be bought following a decision to leave a distribution joint venture. Shares of the cognac maker rose 2.8%.

Decliners

Financial were weak in early trasing. Crédit Agricole, which was cut from hold to sell by Citigroup in the previous session, fell 1.2%, while Belgian-Dutch financial services group Fortis lost 1.2% in Brussels. Other financial stocks with exposure to equity losses fell, with Zurich Financial, the Swiss insurance group, down 1.5%.

Oil stocks were also lower as crude prices slipped back towards $58 a barrel. French Total shed 0.8%, Austria OMV lost 1.7%, and Neste Oil, the Finnish refiner, fell 1%.

Exporters fell as the euro hit its highest level this year against the US dollar. Carmakers, which realise a large percentage of their earnings in the US, were among the most severe decliners. Peugeot, the French manufacturer, fell 2.2%, while German BMW shed 2.4%.

Oil and gold

Oil rose after a report that Eni SpA halted delivery of 60,000 barrels a day of Nigerian crude because of an attack by armed militants earlier this week. Brent crude oil for January delivery rose as much as 47 cents, or 0.8%, to $59.82 a barrel on London ICE Futures Exchange. The contract traded at $59.77 a barrel in early session in London. West Texas Intermediate crude advanced 37 cents to $59.61 a barrel on the NYME.

Gold drifted higher on Friday on a weaker dollar and dealers said the market was expected to be choppy in thin trading conditions during a U.S. holiday. Gold was quoted at $636.00/637.00 an ounce in early trading, up from $630.30/631.30 late in London on Thursday. Platinum also gained, but traded much below the record high in this week of $1,395 on talk of an exchange traded fund. Other precious metals followed gold upward move.

Currencies

The euro broke through the $1.30 barrier on Friday for the first time since April 2005, rising more than a U.S. cent on speculation about a European interest rate increase in light trading. In morning European trading, the euro spiked as high as $1.3085 from $1.2959 late the day before. The dollar weakened against other major currencies as well, falling to 115.81 Japanese yen from 116.16 the day before, while the British pound rose to $1.9316 from $1.9155.

[R]5:00AM Gold steadies on Thursday as the dollar falls, platinum rises.[/R]
Gold traded in a tight $3-an-ounce range and was quoted at $630.20/631.20 an ounce, little changed from $629.90/630.90 in New York late on Wednesday. On the Shanghai Gold Exchange, platinum gained as much as 1.8% before easing to $1,163/1,178, against $1,145/1,165 an ounce in the U.S. market. Silver was at $13.10/13.17 an ounce, higher from $13.04/13.11 in New York, while palladium was unchanged at $322/327 an ounce.

Copper inventories in Shanghai Futures Exchange warehouses fell 14% to 27,141 metric tons, the lowest since June 2, 2005. Aluminum stocks plunged 34% to 17,293 tons. Nickel rose to its highest in at least 19 years in London after a report showed stockpiles may decline, reducing supply of the metal used in stainless steel. Nickel for delivery in three months on the LME gained $1,600, or 5.2%, to $32,750 a ton. Zinc was among other metals that also advanced.

Oil fell for a third day in London on expectations that a milder-than-usual U.S. winter will crimp heating demand and increase crude inventories. Brent crude oil for January delivery fell as much as 45 cents, 0.8%, to $58.90 a barrel in electronic after-hours trading in London. In New York, oil was at $59.06 a barrel on the NYME.