Europe Declines on Rate Fears

Ivaylo
19 Apr, 2007
New York City

European markets declined significantly on Thursday, as global interest rates were the main focus of worries after strong Chinese growth prompted slowing demand if the country decides to cool its economy. Oil and mining stocks slumped the most after Chinese premier Wen Jaibao announced the country was in need of taking timely measures to prevent economic overheating. By mid morning, Frankfurt Xetra Dax shed 1.3%, the CAC 40 in Paris lost 1.1% and London FTSE 100 slid 0.8%.

[R]6:30AM European markets were lower Thursday on interest rate fears.[/R]
European markets declined Thursday. By mid morning, Frankfurt Xetra Dax shed 1.3% to 7,186.14, the CAC 40 in Paris lost 1.1% to 5,774.27 and London FTSE 100 slid 0.8% to 6,396.4. National benchmarks slid in all 17 western European markets that were open.

Advancers

Nokia, the biggest mobile phone maker in the world, gained 1.5% ahead of the Finnish company first-quarter results. Nokia market share is seen increasing to its highest level in 13 quarters, but slipping sales prices were expected to dent profits.

Schneider Electric SA advanced 1.5% after the maker of circuit breakers said first-quarter sales increased 22% to 3.89 billion euros, fueled by acquisitions and increased sales of electrical products. The company said Europe had an excellent start to the year.

Decliners

Among the London-listed miners, Antofagasta fell 2%, while Spanish oil group Repsol shed 1.9%.

German utility RWE dipped 4.6%, while Lufthansa fell 3.2%. Both stocks were trading without the rights to the latest dividend payment.

Logitech International SA dropped 8.2%. Fourth-quarter profit and revenue trailed analysts estimates after the maker of computer mice said sales of Web cameras fell.

Oil and precious metals

Crude oil recovered from early losses to trade for more than $63 a barrel in New York. Crude oil for May delivery rose 2 cents to $63.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange in early trade in London.

Gold fell in London on speculation a rally that took the metal to the highest in eleven months was overdone. Silver also dropped. Gold for immediate delivery dropped $3, or 0.4%, to $687.05 an ounce. Silver for immediate delivery declined 6 cents, or 0.6%, to $13.895 an ounce. Among other precious metals for immediate delivery in London, platinum gained $7.50 to $1,302.50 an ounce, while palladium dropped $2 to $380.50 an ounce.

Currencies

The euro traded at around two-year highs Thursday, less than one U.S. cent off its record, after the European Central Bank reiterated that another interest rate increase for the euro zone by June was likely. The euro rose to $1.3616, a level not seen since December 2004, before falling back to $1.3576 in morning European trading.

The pound rose as high as $2.0092, then settled back to $2.0029, down slightly from the $2.0057 it fetched late Wednesday in New York. The dollar also fell against Japanese yen, dropping to 117.93 yen from 118.61 yen late Tuesday.

[R]5:00AM Platinum advances sharply Wednesday, gold and palladium edge higher.[/R]
July platinum rallied $26 to settle at $1,306.90 an ounce on the New York Mercantile Exchange. June gold gained 80 cents to close at $693.30 an ounce, while May silver shed 4.5 cents to $13.975 an ounce, and June palladium advanced $2.45 to $382.80 an ounce. May copper declined 5.8 cents on profit-taking to settle at $3.6190 per pound. July copper slipped 5.55 cents to finish at $3.6235 a pound.

In energy trading on the Nymex, crude oil futures finished little changed near $63 a barrel as a government report showing U.S. oil refineries are accelerating gasoline production. The front-month May light, sweet crude oil contract ended 3 cents higher at $63.13 a barrel. Front-month May gasoline gained 2.75 cents, or 1.3%, to finish at $2.0833 a gallon, while May heating oil rose 0.88 cents, or 0.5%, to finish at $1.8066 a gallon. Natural gas for May delivery finished 7.9 cents higher at $7.497 a million British thermal units.

May Arabica coffee futures dipped 0.25 cents on profit-taking and closed at $1.0935 a pound. July coffee finished 0.15 cents weaker at $1.1210 a pound. Most-active July cocoa slid $33 on speculative profit-taking and origin selling to end at $1,956 a metric ton. May soybeans finished 8.5 cents lower at $7.1550 per bushel. May corn advanced 10.25 cents to close at $3.6350 per bushel, July corn rose 10 cents to $3.7525 a bushel.