Banks Buoy Europe

Ivaylo
06 Feb, 2007
New York City

Weaker Q4 results from British oil company BP could not influence negatively the market sentiment on Tuesday. Upbeat mining and metals sector and banking stocks sent shares higher with Capitalia leading the advancers. Renewable Energy Corp rebounded to erase some of the recent heavy losses. By mid morning, the FTSE 100 in London climbed 0.4%, Frankfurt Xetra Dax added 0.3% and the CAC 40 in Paris edged 0.2% higher.

[R]6:30AM European stocks advanced on Tuesday on strength in financial stocks[/R]
European markets gained on Tuesday morning. Of the main indexes, the FTSE 100 in London climbed 0.4% to 6,342, Frankfurt Xetra Dax added 0.3% to 6,896.19 and the CAC 40 in Paris edged 0.2% higher to 5,691.01.

Advancers

Capitalia, the Italian bank, advanced 1.9% after reports that Banco Santander Central Hispano of Spain was considering raising its stake, which is now 2%, to help the Italian bank in its struggle to defend itself from the bid approach by Dutch ABN Amro. Santander added 0.5%, while ABN Amro gained 0.8%. Allied Irish Banks was another stock in the sector that climbed 1.1% after S&P Equity Research lifted its target price on the stock. The mining and metals sector traded up by around 0.6%, with Anglo American shares up 2.1% and SSAB Svenskt Stal shares up 3% in Sweden. SSAB was lifted by an upgrade to outperform by Credit Suisse. Renewable Energy Corp, the Norwegian solar power systems company, bounced back from some of the previous session’s heavy losses and added 4.6%.

Decliners

In earnings news, BP, the British oil company, reported Q4 loss of 12% on output decline and costs increases. The stock declined 1.9%, while Dutch telecom group KPN also shed 0.4% as its Q4 profit plunged 32%. Another underperformer was Kemira which fell 7.2% after posting unexpectedly small gains in Q4 operating profit.

Oil and gold

Oil recovered and was trading above $59 on Tuesday on hopes that the coldest weather of the U.S. winter would increas the demand for heating oil. U.S. crude oil was up 69 cents at $59.43 a barrel in early trade in London, while Brent crude gained 65 cents to $58.75. Gold advanced in London for a second day in a row on speculation a rebound in some commodities will raise the appeal of the metal as a hedge against inflation. Gold for immediate delivery climbed $4.40, or 0.7%, to $652.85 an ounce in early trade in London.

Currencies

The euro traded lower against the U.S. dollar on Tuesday. The 13-nation currency bought $1.2928 in morning European trading, slightly up from $1.2927 in New York late Monday. The British pound advanced to $1.9629 from $1.9596 as there are expectations that the Bank of England may consider hiking the interest rates at its meeting on Thursday. The dollar was up to 120.46 Japanese yen from 120.35 yen on Monday.

[R]5:00AM Gold and other precious metals advance on oil, US position on Iran.[/R]
The top-traded April gold finished $4.60 up at $656.10 a troy ounce, while March silver futures gained 18.5 cents to end at $13.56 an ounce. April platinum closed $8.20 higher at $1,171.70 an ounce and March palladium also advanced $4.10 to finish at $342.35 an ounce. The front-month March copper contract edged 0.65 cent lower to end at $2.4165 per pound.

The front-month March crude oil contract gave up 28 cents to end at $58.74 a barrel after surging to $59.95 a barrel, its top level for a front-month contract since Jan. 3. March heating oil shed 0.80 cent to close at $1.6756 a gallon and March gasoline declined 1.30 cents to finish at $1.5599 a gallon. Natural gas for March delivery bucked the downtrend and gained 15.8 cents to $7.634 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures lost 1.75 cents to end at $1.1660 a pound and March futures of raw sugar in foreign ports declined 0.02 cent to 10.48 cents a pound.