Europe Dips as Metals Fall

Ivaylo
16 Jan, 2007
New York City

European markets were lower on Tuesday ahead of the re-opening of US markets after a long weekend, with a decline in miners including Lonmin offsetting strength in the technology sector. Metal producers were also hit as base metal prices dropped due to rising supply, while gold slipped after hitting a two-week high in the previous session. In early trade, FTSE 100 in London shed 0.3%, Frankfurt Xetra Dax was fractionally lower, the CAC 40 in Paris was unchanged.

[R]6:30AM European shares were lower Tuesday on weak miners, oil producers.[/R]
European markets traded lower on Tuesday. In early trade, FTSE 100 in London shed 0.3% to 6,246.5, Frankfurt Xetra Dax was fractionally lower at 6,730.33, the CAC 40 in Paris was unchanged at 5,630.32.

Decliners

Xstrata shed 3% and Antofagasta lost 2.6%. Norsk Hydro, the Norwegian oil and aluminium producer, shed 1.1%. SGS, the Swiss raw materials quality controller, fell 1.1% in spite of reporting a better-than-expected 19% rise in 2006 net profit. UBS, the Swiss investment bank, downgraded the shares from buy to neutral. Oil and gas producers fell in line with crude prices. The benchmark US Nymex front month contract fell below $53 a barrel in early trade on Tuesday. Norway Statoil fell 1.5 %, while Spain’s Repsol eased 0.5%.

Advancers

Safran, aerospace group, gained 4.1% after reporting unexpectedly strong full-year sales and targeting strong growth in 2007. Beverage makers advanced after a number of upgrades in the sector. Heineken, brewer, gained 2.5% after Morgan Stanley raised its rating from equal weight to overweight. Inbev, the Belgian beermaker, rose 1.7% after Sanford C Bernstein raised its price target.

Oil and commodities

Oil prices hovered above $53 a barrel on Tuesday, under pressure from warm weather and ample supplies. In early trading in London on Tuesday, U.S. crude was 18 cents higher at $53.17, while Brent futures gained 39 cents to $53.51.

Gold declined in London on speculation of increased investor sales because of declines in commodities. Gold for immediate delivery dropped 90 cents to $625.80 an ounce while copper gained on, erasing an earlier decline. Copper for delivery in three months on the LME gained $10, or 0.2%, to $5,640 a metric ton.

Currencies

The dollar traded at 120.48 yen in early trade, from 120.50 yen late yesterday, after reaching 120.74 yen, the strongest since Dec. 12, 2005. Against the euro, it was at $1.2898, from $1.2892 on Monday. The British pound traded at $1.9648, up from $1.9643.