Europe Lower on Rate Worries

Ivaylo
20 Mar, 2007
New York City

European markets traded in a tight range on Tuesday with gains from ABN Amro and from car-makers canceled out by worries ahead of the U.S. Federal Reserve next interest-rate decision and ill-received earnings from companies such as Deutsche Post. Investors took a breather after the previous session strong gains. By mid morning, Frankfurt Xetra Dax fell 0.2%, the CAC 40 in Paris was off 0.4 % and London FTSE 100 edged 0.1 % higher.

[R]8:00AM European shares were lower Tuesday despite gains in banking stocks.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax fell 0.2% to 6,659.09, the CAC 40 in Paris was off 0.4% at 5,437.67 and London FTSE 100 edged 0.1% higher to 6,196.2.

Advancers

Dutch bank ABN Amro gained 3.5% after confirmation of the merger talks with Barclays. The two companies said they were in exclusive primary discussions over a merger that could value the combined bank at 80 billion or 117 billion euros. Shares in Barclays rose 4.4%.

German sports car maker Porsche gained 3.1% after upgrades from both Morgan Stanley and Lehman Brothers. Morgan Stanley raised its price target on Volkswagen after the company strong results, particularly from its Audi division. Shares in VW gained 1%. Among mining stocks, BHP Billiton was also generally stronger, up 1.4%, supporting the UK benchmark index.

Decliners

The energy sector pushed market lower, after crude fell below $57 a barrel. Royal Dutch Shell fell 1%, while France Total shed 0.9% and Italy’s Eni lost 1 %. Chemicals group Lanxess lost 1.4% after its sales dropped 2.9% to 6.94 billion euros in 2006. The company posted a profit in 2006 of 197 million euros.

Deutsche Post, the German mail and logistics group, fell 5.8% after forecasting a 7 % fall in operating profit for 2007. Friends Provident the U.K. provider of life insurance, pension products, and asset-management services, declined 5% after it reported that 2006 pretax profit fell 34% and underlying pretax profit fell 3%.

Oil and gold

Oil prices rose but were hovering just under $57 a barrel Tuesday as traders responded to a drop the day before and looked for market drivers. Crude oil for April delivery rose 37 cents to $56.96 a barrel in electronic trading on the New York Mercantile Exchange. The April contract, which expires Tuesday, fell 52 cents the day before amid expectations of rising crude stocks. On London ICE Futures exchange, May Brent crude gained 32 cents to $60.84 a barrel.

Gold prices rose. Gold traded in London at $654.40 per troy ounce, up from $653.50 late Monday. In Zurich, gold rose to $652.85, up from $651.80. Silver opened in London at $13.13 per troy ounce, down from $13.15.

Currencies

The U.S. dollar was mixed Tuesday against other major currencies in European trading. The euro traded at $1.3284, down from $1.3301 late Monday in New York. Other dollar rates compared with late rates Monday in New York included: 117.77 Japanese yen, up from 117.59; 1.2151 Swiss francs, up from 1.2124. The British pound traded at $1.9556, up from $1.9443.

[R]6:00AM Platinum rallied Monday while gold and silver gained modestly.[/R]
April platinum surged $13.50 to end at $1,234.70 an ounce on the New York Mercantile Exchange while June palladium gained $1.70 to $354.10 an ounce. April gold finished up 40 cents at $654.30 a troy ounce and May silver added 1.8 cents to close at $13.233. The most-active May copper contract rose 1.05 cents to settle at $3.0215 per pound.

The front-month April crude oil contract declined 52 cents to close at $56.59 a barrel. April gasoline bucked the broad trend and added 5.10 cents to end at $1.9581 a gallon, the highest close for a front-month contract since Aug. 22. Front-month April heating oil lost 0.04 cent to finish at $1.6884 a gallon. April natural gas shed 7.7 cents to finish at $6.847 per million British thermal units.

The May Arabica coffee contract closed down 0.10 cent at $1.1025 a pound, with July off 0.05 cent at $1.1315. Futures on raw sugar in foreign ports for May dipped 0.04 cent to 10.22 cents a pound, and July lost 0.02 cent to end at 10.15 cents.