Europe Sinks on Weak Banks

Ivaylo
27 Feb, 2007
New York City

European strocks declined tracking weaker global stock markets on Tuesday, fueled by comments about a possible US recession from former Federal Reserve chairman Alan Greenspan. Banks contributed the most weight to the losses, especially those connected to emerging markets. By mid morning, Frankfurt Xetra Dax shed 1.5%, the CAC 40 in Paris lost 1.6% and London FTSE 100 fell 1.5%.

[R]6:30AM Europe is lower on Tuesday on weakness in banking sector.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax shed 1.5% to 6,927.34, the CAC 40 in Paris lost 1.6% to 5,669.2 and London FTSE 100 fell 1.5% to 6,339.6.

Advancers

GKN, U.K. maker of car and airplane parts, rallied 8.7%, as the company said full-year profit more than tripled to 177 million pounds or $347 million after it sold more plane components and reduced spending on reorganization.

Reuters Group advanced 1.4% as Credit Suisse Group raised its recommendation on the world largest publicly traded provider of financial data to outperform from neutral.

Decliners

Austrian Raiffeisen International, which has substantial operations in Russia and Ukraine, fell 6.3%. Erste Bank, which also has businesses across central and eastern Europe, shed 3.4%. National Bank of Greece, which owns Finansbank of Turkey, fell 3.3%. Bank of Piraeus lost 3.1%.

BHP, the world largest mining company, lost 3.9% and Rio Tinto, the third biggest, declined 3.5%. Xstrata, the world fourth-biggest nickel producer, dropped 4.8%.

ABB, the Swiss engineering group, fell 4.6% after Deutsche Bank downgraded the stock from hold to buy. Shipping and port operator Möller Maersk was also hit by its exposure to emerging markets. The company, which owns shares in shipyards in Russia and China, also said that proposed tax changes in Denmark would have severe negative consequenses. The shares fell 4.2%.

Oil and gold

Crude oil traded little changed, near a nine-week high in New York, on speculation rising fuel demand and refinery shutdowns cut U.S. gasoline supplies. Crude oil for April delivery was at $61.48 a barrel, up 9 cents, on the New York Mercantile Exchange in early trade in London. Brent crude traded at $61.47 a barrel, up 14 cents, on the London-based ICE Futures exchange.

Gold fell in London after two days of gains to a nine-month high prompted some sales by investment funds. Gold for immediate delivery declined $1.40, or 0.2%, to $685.15 an ounce in early trade in London.

Currencies

The euro advanced against the U.S. dollar Tuesday, hitting two-month highs, after Alan Greenspan warned that the United States could be in a recession later this year. His remarks Monday night supported the euro to $1.3211 in morning European trading, hitting two-month highs, and above the $1.3185 it bought in New York late Monday. The British pound was barely changed, moving to $1.9652 from $1.9644. The dollar dropped to 119.58 Japanese yen from 121.04 yen.

[R]5:00AM Gold and silver advanced Monday on technical buying and stronger oil.[/R]
April gold advanced $3.10 to end at $689.80 a troy ounce on the New York Mercantile Exchange, while May silver settled up 9.6 cents at $14.832. April platinum overnight peaked at $1,252, its strongest level since November and settled up $4.40 at $1,242 an ounce. June palladium dipped $2.20 at $361.50 an ounce. The March copper contract gained1.55 cents to finish at $2.8555 per pound.

April crude oil on the New York Mercantile Exchange advanced 25 cents to end at $61.39 a barrel. Front month March gasoline gained 1.46 cents to end at $1.7777 a gallon. March heating oil settled up 0.57 cent at $1.7562 a gallon while March natural gas declined 20.8 cents to close at $7.547 a million British thermal units.

On the New York Board of Trade, Arabica coffee futures slid to two-day lows. The March contract settled down 1.40 cents at $1.1785 a pound, with May off 1.25 cents at $1.1890. Futures on raw sugar in foreign ports for March gained 0.05 cent at 11.02 cents a pound, with May up 0.05 cent at 10.69 cents.