Europe Higher on Telecoms, Steelmakers

Ivaylo
05 Dec, 2001
New York City

European stocks markets advanced on Tuesday as sentiment was buoyed in the telecoms sector after an upgrade for Vodafone, while steelmakers were lifted by merger speculation. Mobile telecoms groups were higher after Goldman Sachs raised its recommendation on Vodafone. Steelmakers were also among the gainers after CSN of Brazil completed due diligence on Anglo-Dutch target Corus. By mid morning, London FTSE 100 climbed 0.6%, Frankfurt Xetra Dax added 0.6%, and the CAC 40 in Paris gained 0.6%.

[R]6:30AM European markets advanced Tuesday on telecoms, steelmakers.[/R]
European markets were higher on Tuesday. By mid morning, London FTSE 100 climbed 0.6% to 6,084.5, Frankfurt Xetra Dax added 0.6% to 6,331.50, and the CAC 40 in Paris gained 0.6% to 5,329.64.

Advancers

Goldman Sachs raised its recommendation on Vodafone from neutral to buy, saying the share price recovery of the company was in line with a sector-wide rally. Shares of Vodafone gained 2%, while Telenor, the biggest Nordic mobile group, gained 2.3% and Swedish rival TeliaSonera climbed 1%. Cosmote, the Greek mobile telecoms company, was up 1.7%.

Steelmakers also gained after Companhia Siderurgica Nacional of Brazil completed due diligence on Anglo-Dutch target Corus, and was reported to be poised to make a firm offer later in the week. The Amsterdam-listed shares of Corus were flat, while the London-listed stock gained 0.1%.

The wider sector was boosted by the prospect of further consolidation. Thyssen Krupp, the German steelmaker, gained 1.6%, while Salzgitter added 1%. Arcelor-Mittal added 1.1%. Deutsche Börse, the German exchange operator, climbed 1% after WestLB upgraded the stock from hold to add.

Decliners

Greek Alpha Bank was worst performing stock on the market after it completed the sale of 5.2% of its share capital. Alpha Bank fell 2.5%. Consumer electronics group Philips fell 1.1% after its targets for 2007 disappointed.

Oil and gold

Oil prices steadied on Tuesday after a $1 fall the previous day due to mild weather forecasts. U.S. crude was trading at around $62.63 a barrel after falling nearly $1 on Monday. London Brent crude was little changed on the day at $63.32 a barrel.

Gold fell the most in two weeks in London on speculation gains in the dollar against the euro will slow demand for the precious metal as an alternative investment. Gold for immediate delivery fell $3.40, or 0.5%, to $642.80 an ounce in early trading in London, the biggest drop since Nov. 16. Prices have increased 26% in the past year.

Currencies

The US dollar rose against the euro Tuesday, bouncing back from 20-month lows amid expectations of slower U.S. economic growth and higher European interest rates. In late morning trading in Europe, the euro stood at $1.3308, compared with $1.3328 late Monday in New York. The British pound continued to back off its 14-year high against the dollar, falling to $1.9744 on Tuesday from $1.9797 on Monday. The dollar fell to 114.79 Japanese yen, from 115.35 the day before.

[R]5:00AM Gold and silver futures rebounded a bit on Monday on weaker dollar.[/R]
February gold advanced 30 cents to close at $650.90 a troy ounce on the NYME. March silver rose 5.5 cents to $14.245 an ounce, after dropping as low as $14.13.January platinum gained $5.50 to $1,160 an ounce while March palladium added $3.70 to $336.45 an ounce. March copper settled up 0.40 cent at $3.1760 per pound.

January crude oil lost 99 cents to end at $62.44 a barrel, but well up from a low earlier in the day of $61.90. January heating oil settled down 3.88 cents at $1.8089 a gallon. January unleaded gasoline shed 1.81 cents to finish at $1.6674 a gallon. December natural gas settled down 61.6 cents at $7.806 a million British thermal units.

On the New York Board of Trade, December Arabica coffee futures closed 3 cents lower at $1.2020 a pound. March futures of raw sugar in foreign ports slipped 0.50 cent to close at 11.76 cents a pound.