Europe Gains on Banks, Retailers

Ivaylo
23 Jan, 2007
New York City

European markets edged higher on Tuesday as modest gains for heavily-weighted banking and oil stocks, as well as miners and retailers helped offset falling techs following an earnings warning from Alcatel-Lucent, which declined more than 8%. Cap Gemini and Ericsson were worst hit, while miners Rio Tinto and BHP Billiton gained. In early trade, the FTSE 100 in London added 0.2%, Frankfurt Xetra Dax was flat, and the CAC 40 in Paris was fractionally higher.

[R]6:30 AM European shares advanced on strong banks, miners and oil stocks.[/R]
European markets were higher Tuesday. In early trade, the FTSE 100 in London added 0.2% to 6,229.7, Frankfurt Xetra Dax was flat at 6,690.61, and the CAC 40 in Paris was fractionally higher at 5,583.53.

Advancers

Swatch, the biggest watchmaker in the world, continued the rally, up 1.7% after Credit Suisse reiterated its outperform rating and raised its price target. Oil groups made gains as crude prices held near the $53-a-barrel level. British BP added 0.6%, while Spanish Cepsa gained 0.7%.

Credit Suisse, the Swiss investment bank, gained 1% after it said on Monday it was to initiate a $6.4 billion share buyback programme and ruled out any major acquisitions. Austrian banks benefited from the sentiment. Raiffeisen, upgraded by both Morgan Stanley and Fox-Pitt, Kelton on Monday, gained a further 1.2%. Erste Bank gained 1.2% after an upgrade from Czech brokerage Wood & Company.

SAP gained 1.7% after Morgan Stanley lifted its rating from equal weight to overweight and lifted its price target. L’Oreal climbed 1.6% after JPMorgan raised its recommendation from neutral to overweight.

Decliners

Alcatel-Lucent plunged 9.9% after warning of a decline in Q4 earnings. Adjusted proforma sales for Q4 of 2006 stood at around 4.42 billion euros, compared with 5.25 billion euros last year.

Sugar company Tate & Lyle shares declined 15.1% in London after it announced that a lower-than-expected contribution from its sucralose product, Splenda, means that its fiscal-year profit is likely to be lower than market expectations.

Luxury goods retailer Richemont shed 3% after recent gains. Van der Moolen dropped 0.7% after it announced that it will immediately reduce around 30% of its U.S. work force as the NYSE completes its move to its hybrid trading system.

Oil and gold

Crude oil rose on higher demand for heating oil in the U.S. and Europe amid colder weather. Crude oil for March delivery rose as much as 73 cents, or 1.4%, to $53.31 a barrel, in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for March gained as much as 70 cents, or 1.3%, to $53.40 a barrel in electronic trading on the ICE Futures exchange in London.

Gold traded in London at $637.50 per troy ounce, down from $638.70 late Monday. In Zurich, gold traded at $635.30, down from $637.10.

Currencies

The dollar fell against other major currencies in European trading Tuesday. The euro traded at $1.3012, up from $1.2954 late Monday. The British pound rose to $1.9858, up from $1.9764. The dollar bought 121.40 Japanese yen, down from 121.61.

[R]5:00 AM Gold declined Monday on profit-taking and weak oil futures.[/R]
Most-active February gold lost $2.30 to end at $634.10 a troy ounce on the New York Mercantile Exchange while the most active March silver gained 8 cents to finish at $13 an ounce. April platinum slipped $3.40 to close at $1,165.10 an ounce after touching a session high of $1,174.80. March palladium settled up $1.80 at $346.70 an ounce.

The front-month February crude oil contract dipped 86 cents to end at $51.13 a barrel. February heating oil declined 0.51 cent to emd at $1.5084 a gallon. Front-month gasoline settled down 2.26 cents at $1.3754 a gallon. Front-month February natural gas futures advanced 43.3 cents to stop at $7.319 a million British thermal units.

On the New York Board of Trade, the March Arabica coffee futures contract declined 2.35 cents to end at $1.1735 a pound, while May fell 2.35 cents to $1.2055. Futures on raw sugar in foreign ports for May closed up 0.10 cent at 11.06 cents.