Europe Rallies on Oil Strength

Ivaylo
11 Apr, 2007
New York City

European equity markets recaptured six-year highs on Wednesday, with oil companies picking up from recent weakness after Royal Dutch Shell settled claims from investors over its reserves restatement. Oil companies rallied following recent weakness related to a sharp fall in crude prices. Frankfurt was up 0.3%, while the CAC 40 in Paris gained 0.2% and London FTSE 100 was 0.2% higher.

[R]6:30AM European markets were higher on Wednesday with oil stocks leading the advancers[/R]
European markets advanced in mid-morning trade on Wednesday. Frankfurt was up 0.3% at 7,184.42, while the CAC 40 in Paris gained 0.2% to 5,778.51 and London FTSE 100 was 0.2% higher at 6,427.6.

Advancers

Royal Dutch Shell was an important advancer as announced it was to pay $352.6 million, including administrative costs, to settle claims lodged by European and other non-US investors related to the shock reserves downgrade of the company in 2004. Relief that the company had now put the episode behind it supported the shares rally of 0.9%.

Other companies jumped on Royal Dutch Shell’s bandwagon and also advanced. Total of France gained 0.9%, Austrian OMV added 1.3% and Norwegian Statoil climbed 0.9%.

The fashion retailer Hennes & Mauritz climbed 1.4% after the company announced it could increase efficiency and maintain the gross profit margin of nearly 59%.

Decliners

Another french fashion group, PPR, shed 2.1%, though, following Tuesday announcement it was bidding $7.1 billion for German sportswear maker Puma. JPMorgan cut its rating on PPR from overweight to neutral and lowered its price target.

Oil and precious metals

Crude oil traded near $62 a barrel in New York on speculation U.S. stockpiles of gasoline dropped for a ninth week. Crude oil for May delivery was up 5 cents at $61.94 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London. Brent crude for May settlement gained 29 cents, or 0.4%, to $67.71 a barrel in electronic trading on the ICE Futures exchange in London.

Silver rose for a third consecutive day on increased demand for industrial metals. Gold was little changed after surging 1.1% yesterday. Silver for immediate delivery climbed 4.5 cents, or 0.3%, to $13.92 an ounce in early trade in London. Gold gained 43 cents to $678.32 an ounce after adding $7.15 yesterday. Palladium dropped $1.50 to $359.50 and platinum fell 50 cents to $1,263.

Currencies

The dollar was mixed against other major currencies in European trading Wednesday morning. The euro traded at $1.3426, up from 1.3424. The British pound was at $1.9779, up from $1.9716. The dollar bought 119.25 Japanese yen, up from 119.12

[R]5:30AM Gold and silver surged on Tuesday on dollar weakness and geopolitical concerns.[/R]
June gold advanced $4.60 to settle at $681.50 a troy ounce on the New York Mercantile Exchange, while May silver rose 12 cents finish at $13.93 an ounce. July platinum rose $9.30 to close at $1,273.60 an ounce, and June palladium also gained $5.45 to finish at $363.45 an ounce. The most-active May copper contract rose 2 cents to settle at $3.5260 a pound.

In energy trading on the Nymex, crude oil futures advanced for the first time in the past five sessions. The front-month May crude oil contract ended 38 cents, or 0.6%, higher at $61.89 a barrel. May gasoline added 2.84 cents, or 1.4%, to finish at $2.123 a gallon. May heating oil gained 4.04 cents, or 2.2%, to close at $1.8561 a gallon. Natural gas for May delivery settled 32.3 cents higher at $7.869 a million British thermal units, supported by continued unseasonable cold weather.

May Arabica coffee futures ended 0.40 cents lower at $1.0925 a pound, while July coffee finished 0.40 cents weaker at $1.1215 a pound. May corn settled 5.5 cents higher at $3.69 a bushel, July corn ended 5 cents stronger at $3.8125 a bushel, and December corn finished 8 cents higher at $3.9450 a bushel.