Weaker Oil, Stronger Euro Lift Europe

Ivaylo
27 Dec, 2006
New York City

As there is almost no activity on the corporate front the focus is laid on US new home sales due later in the afternoon which will provide some clues about the US economy growth. Otherwise, the advance today is simply a reversal from the losses in Friday. Shares were also supported by the rise of the euro against and the dollar and the weaker oil futures. In early trading, the FTSE 100 in London was up 0.8%, Frankfurt DAX gained of 1.2%, and the French CAC 40 rose 0.9%.

[R]6:30AM Europe advanced in early trade Wednesday on stronger euro, weaker oil.[/R]
European markets were higher on Wednesday. In early trading, the FTSE 100 in London was up 0.8%, Frankfurt DAX gained of 1.2%, and the French CAC 40 rose 0.9%.

Advancers

InterContinental Hotels led UK advancers, advancing more than 4% on bid talk. The company has turned down any comments in the past on such rumours.

Diageo and SABMiller, both beer makers, gained each around 1.5% and cigarette maker British American Tobacco edged 1.3% higher. Tobacco shares in Europe have advanced since Gallaher Group stated it was in takeover talks.

U.K. clothing retailer Moss Brothers rallied 10% after a report that it may get an 80-million-pound offer from Icelandic investment group Baugur

DaimlerChrysler AG, the fifth-largest carmaker in the world, and Arriva Plc, the biggest operator of buses in London, gained supported by lower energy costs. Daimler gained 1.2% and Arriva added 2%.

Decliners

UCB SA was the leading decliner, down 2.4%. Shares in the Belgian maker of the Zyrtec allergy drug plummeted after U.S. regulators wanted more information on its experimental Cimzia treatment for Crohn disease.

Oil and gold

Crude oil was near $61 a barrel on forecasts that mild weather in the U.S. will reduce demand for heating oil. Crude oil for February delivery dropped 1 cent to $61.09 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London. Brent crude for February settlement rose 11 cents to $61.21 a barrel on the ICE Futures exchange in London.

Gold for immediate delivery rose $2.50, or 0.4%, to $627.20 an ounce in early trade in London. Prices rose $3.95 yesterday.

Currencies

The U.S. dollar was mostly down versus other major currencies in European trading Wednesday morning. The euro traded at $1.3157, up from $1.3111 late Tuesday in New York. The British pound is set for its biggest annual gain since 1990 as it became the third-most popular reserve currency in the world and the Bank of England raised interest rates to their highest in five years. Against the dollar, the pound traded at $1.9598 early trade in London, up from $1.9534.

The dollar has plunged this month against the yen on speculation a slowing economy will make the Federal Reserve lower interest rates next year. The dollar fell to 118.65 yen from 119.15 late yesterday in New York.

[R]5:00 AM Gold and silver prices edged higher on Tuesday, restricted by oil slump.[/R]
February gold settled $4.60 higher at $626.90 a troy ounce on the New York Mercantile Exchange. March silver added 9 cents to finish at $12.725 an ounce. In other metals trading, January platinum gained $1.50 to end at $1,123 an ounce, while the April contract was steady at $1,132 an ounce. March palladium advanced $3 to settle at $329.20 an ounce. March copper contract added 2.4 cents to close at $2.8780 per pound.

In energy trading on the Nymex, the February crude oil shed $1.31 to $61.10 a barrel after plummeting as low as $60.50 a barrel, the lowest level for a front month contract since late November. January heating oil slipped 5.87 cents to $1.6233 a gallon and January unleaded gasoline finished with a loss of 5.08 cents at $1.5722 a gallon. January natural gas futures settled 52.2 cents, or 7.9%, lower at $6.113 a million British thermal units.

On the New York Board of Trade, Arabica coffee futures advanced after speculators and funds were active buyers. Overall volume flows were flat, however, as the London coffee market was closed. March coffee futures gained 2.3 cents higher at $1.2770 a pound. March raw sugar futures dipped 0.06 cents to end at 11.86 cents a pound.