Europe Declines on Political Tensions

Ivaylo
26 Mar, 2007
New York City

European markets slid by mid-morning on Monday, erasing some of the gains from last week. Heightened geopolitical tensions between Tehran and the west over the nuclear programme of Iran weighed on sentiment. Crude oil prices surged to a new high for the year as Iran refused to release fifteen captured British servicemen. German Xetra Dax lost 15.2 points, or 0.2%, the French CAC 40 eased 0.2%, and the U.K. FTSE 100 index declined 0.1%.

[R]8:00AM European equities declined Monday on weak utilities, Iran tensions.[/R]
European stocks were lower on Monday morning. German Xetra Dax lost 15.2 points, or 0.2%, at 6,884.09 and in Paris, the French CAC 40 eased 16 points, or 0.2%, at 5,619.16, the U.K. FTSE 100 index declined 0.1% to 6,331.50.

Advancers

Porsche announced it planned a buyout offer fo VW. Porsche rose 3.1%. Porsche was forced to launch an offer after exercising an option to take its stake above 30%, to 31% from 27.3%.

OMV gained 2% after Citigroup boosted its price target for the refiner and reiterated a buy recommendation. UK homebuilders surged. Taylor Woodrow shares rose 15.6% while Wimpey shares increased 10.4%.

French information technology services company Atos Origin shares rose 3.3% as it said that its supervisory board has decided to explore strategic options following recent expressions of interest in the company.

Decliners

Volkswagen shed 3.4% after rival carmaker Porsche said it planned a buyout offer for VW shares. Eiffage lost 5.1% as some of the bid speculation which pushed the French construction company up by 40.3% last week faded.

E.On shares declined 0.8% as it raised its offer for Endesa of Spain. E.On said that it will exercise all legal options against Enel and Acciona, which on Friday said they were considering making a bid for Endesa.

Oil and gold

Crude oil surged to its highest in three months after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening worries supplies from the Middle East will be disrupted. Crude oil for May delivery climbed 61 cents, or 1%, to $62.89 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Dec. 26. It was at $62.77 in early trade in London. Brent crude oil for May settlement rose 73 cents, or 1.2%, to $63.91 a barrel in electronic trading on the ICE Futures exchange.

Gold gained in London, powered higher by investors buying the metal as a haven and hedge against inflation. Gold for immediate delivery in London rose $2.60, or 0.4%, to $660.00 an ounce today.

Currencies

The dollar traded at a one-week high against the euro on speculation a U.S. government report will show a rebound in new home sales in February. The dollar traded at $1.3263 per euro in early trade in London from $1.3283 in New York March 23. Against the euro, the pound was at 67.67 pence in London, from 67.72 on March 23. It also traded at $1.9598, from $1.9614. Against the Japanese currency, the dollar traded at 118.23 Japanese yen, up from 118.05.

[R]6:00AM Cocoa rallies Mondy, while precious metals lose the upside momentum.[/R]
Most-active May cocoa on the New York Board of Trade surged $19 to end at $1,920 a metric ton, after setting a new contract high of $1,924 a ton. The May Arabica coffee contract finished up 1.60 cent at $1.1335 a pound, while futures on raw sugar in foreign ports for May declined 0.02 cent to 10.20 cents a pound.

April gold shed $6.90 to $657.30 a troy ounce on the New York Mercantile Exchange with May silver also down 25.3 cents to $13.227 an ounce. April platinum shed $7.60 to $1,233.40 an ounce, while June palladium added $1.75 to settle at $359.50. The most-active May copper contract lost 0.40 cent to close at $3.0690 per pound.

Crude oil for May delivery settled up 59 cents at $62.28 a barrel, the highest for a front-month contract since Dec. 22. April gasoline also added 4.08 cents to end at $1.9983 a gallon, after trading as high as $2.02, the highest for a front-month contract since Aug. 21. April heating oil dipped 0.69 cent to $1.7102 a gallon and April natural gas also settled down 5.1 cents at $7.269 per million British thermal units.

On the Chicago Board of Trade, May corn ended 6.25 cents lower at $4.0325 per bushel, while May soybeans closed 2.25 cents down at $7.6950. May wheat closed 5.50 cents lower at $4.6150 per bushel.