Europe Higher Despite Weak Banks

Ivaylo
04 Apr, 2007
New York City

European stocks crept forward on Wednesday, with slight advances for autos and travel stocks countering a decline for Barclays and Northern Rock after a downgrade and a downturn for Alliance Boots. Energy stocks dipped as oil prices declined, giving rise to concern that earnings at BP and Total will drop. By mid morning, Frankfurt Xetra Dax added 0.2%, the CAC 40 in Paris was flat, while London FTSE 100 fell 0.1%.

[R]6:30AM European stocks advanced Wednesday on autos and travel stocks.[/R]
European markets were slightly higher on Wednesday. By mid morning, Frankfurt Xetra Dax added 0.2% to 7,061.71, the CAC 40 in Paris was flat at 5,710.52, while London FTSE 100 fell 0.1% to 6,358.4. National benchmarks rose in 14 of 18 markets in western Europe

Advancers

DaimlerChrysler gained 0.5% after the company chief executive, Dieter Zetsche, for the first time revealed that there are talks with interested parties regarding future options for Chrysler. Sodexho, the French contract catering group, advanced 0.3% after reporting revenue growth matching forecasts, and raising its fiscal 2007 sales forecasts thanks to new business contracts.

Utilities continued their upward trend. Italian Enel, which along with Spanish construction group Acciona will bid for Endesa, was up 0.6%. Acciona added 0.1%. Other perceived takeover targets in the sector added to their recent gains. Union Fenosa climbed 0.4 %, Iberdrola rose 1% and Gas Natural gained 1.1%. The prospect of a takeover battle for Telecom Italia drove its shares up 3.7%. Miner Xstrata increased 1.4%.

Decliners

Oil stocks declined as crude prices dropped on expectations of a diplomatic solution to the Iran hostage affair. Total shed 0.6% after US authorities stated they intended to interview Christophe de Margerie, chief executive, as part of an inquiry into the activities in Iran and Iraq of the company. BP, the second-largest energy company in Europe, dropped 0.7%.

Shares in U.K. pharmacy chain Alliance Boots lost 0.1% after the U.K. competition watchdog, the Office of Fair Trading, announced Wednesday that it has initiated a market study into the distribution of medicines in the U.K.

Banking hogged the limelight after Bear Stearns reassessed their ratings in the U.K. banking sector. Bear Stearns downgraded Barclays to peer perform from outperfom, on the company proposed combination with ABN Amro and also downgraded mortgage bank Northern Rock to peer perform from outperform.

Oil and gold

Crude oil dipped because some traders expected Iran and the U.K. to reach a compromise over 15 captive British sailors and marines. Crude oil for May delivery shed 76 cents, or 1.2%, to $63.88 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for May settlement fell 69 cents, or 1%, to $67.12 a barrel in electronic trading on the ICE Futures exchange.

Gold rose as declines in the dollar may increase investor demand for the precious metal. Gold for immediate delivery advanced $1.95, or 0.3%, to $665.90 an ouncein early trade in London. Silver climbed 6 cents to $13.46 an ounce, platinum gained $2.50 to $1,243.50 and palladium advanced 50 cents to $352.50.

Currencies

The dollar was lower against most other major currencies in European trading Wednesday. The euro traded at $1.3351, up from $1.3331 late Tuesday. The British pound traded at $1.9748, up from $1.9746. The dollar fetched 118.83 Japanese yen, down from 118.88.

[R]5:00AM Copper hit highest level since November Tuesday, silver climbs.[/R]
The most-active May copper contract gained 13.55 cents to end at $3.3145 per pound on the New York Mercantile Exchange. It reached $3.3240 a pound in after-hours electronic trading, its highest level since Nov. 8. May silver advanced 8 cents to settle at $13.43 a troy ounce. July platinum added $3.30 to finish at $1,252.30 an ounce, while June palladium was up $2.05 to finish at $355.75 an ounce. June gold fell $1.80, however, to settle at $669.70 an ounce.

In Nymex energy trading, crude oil futures dipped on moderate optimism that the stand-off between Iran and Britain will be resolved diplomatically. May crude closed $1.30 lower at $64.64 a barrel. Meanwhile, May gasoline futures shed 2.51 cents to end at $2.0177 a gallon, and May heating oil was off 2.38 cents to close at $1.8387 a gallon. May natural gas futures settled 24.5 cents lower at $7.426 a million British thermal units

Arabica coffee futures rebounded from five-month lows, as funds and small speculators covered shorts and bought. May coffee closed 2.15 cents stronger at $1.1075 a pound.