Europe Awaits UK Rate Decision, Blair Leaves

Ivaylo
10 May, 2007
New York City

European markets were little changed on Thursday morning, with investors waiting for interest rate decisions by the Bank of England and by ECB. The Bank of England is expected to hike rates, while ECB to keep them unchanged. Britain''s Blair will step down as prime minister on June 27, after a decade in office. The U.K. FTSE 100 index edged down 0.1%, the German DAX Xetra 30 index was up 0.1% and the French CAC-40 index traded 0.1% lower.

[R]6:30AM European markets were little changed Thursday ahead of important rate decisions.[/R]

The U.K. FTSE 100 index edged down 0.1% at 6,545.80, the German DAX Xetra 30 index was up 0.1% at 7,483.90 and the French CAC-40 index traded 0.1% lower at 6,045.08. National benchmarks decreased in all of the 17 western European markets that were open except Denmark, Greece and Luxembourg.

Economic news

The Bank of England is expected to hile rates by a quarter point to 5.5% in an attempt to curb inflation, while the European Central Bank is expected to keep rates on hold at 3.75% while at the same time hinting at a June rate increase.

Tony Blair will step down as prime minister of the United Kingdom on June 27, after a decade in office. He will leave office as soon as a new leader is elected for the Labour Party, the most likely candidate being Gordon Brown, current finance minister.

Advancers

Hammerson shares rallied 8.6% after reports that New York-based buyout firm Kohlberg Kravis Roberts & Co. and Vornado Realty Trust may bid for the U.K. owner of malls and offices.

Premiere shares advanced 2.6% after it reversed to a profit of 4.5 million euros in the first quarter of the year. Last year, it posted a loss of 18.3 million euros.

BMW climbed 2.6% after Goldman, Sachs & Co. added the shares of the world biggest luxury carmaker to its conviction buy list and lifted its price estimate.

Decliners

French bank Societe Generale plunged 2.5% after its first-quarter profit dropped 2% to 1.43 billion euros on a decline in retail and corporate and investment banking performance, a drop in equity portfolio income and the negative impact from marking-to-market interest rate swaps.

Rio Tinto, mining company, lost 2.4%. BHP Billiton, the world biggest mining company, declined 2.6%. E.ON dropped 1.1% and RWE declined 1.3 %.

Commodities

Crude oil was little changed on concern that supplies will be further disrupted in Nigeria. Crude oil for June delivery slipped to $61.45 a barrel in after-hours trading on the New York Mercantile Exchange. Brent crude oil for June settlement gained 42 cents, or 0.6%, to $65.62 a barrel in electronic trading on the ICE Futures exchange.

Gold and silver were virtually unchanged as the reopening of Newmont Mining Corp. Yanacocha gold mine in Peru reduced concern over supply. Gold for immediate delivery fell $1.10, or 0.2%, to $679.45 an ounce and silver for immediate delivery declined as much as 2 cents, or 0.2%, to $13.34 an ounce.

Currencies

The euro advanced slightly against the U.S. dollar on Thursday ahead of a meeting by the European Central Bank that is expected to see interest rates left unchanged at 3.75%. The euro bought $1.3541 in morning European trading, compared with the $1.3529 it bought in New York late Wednesday. The British pound slipped to $1.9904 from $1.9941 and traded at $1.9962 during Thursday session. The dollar rose to 120.27 Japanese yen from 120.02 yen the night before.

[R]5:00AM Cocoa advances Wednesday, while gold and silver decline.[/R]
On the New York Board of Trade, the most-active July cocoa surged $39 to settle at $1,929 a metric ton. July Arabica coffee futures advanced 1 cent at $1.0625 a pound. Futures on raw sugar in foreign ports for July ended 0.09 cent higher at 9.31 cents a pound.

June gold declined $4.90 at $682.50 a troy ounce on the New York Mercantile Exchange. July silver declined 13 cents at $13.47. July platinum dipped $3.70 to end at $1,339.50 an ounce, while June palladium lost $5.55 to finish at $370.40 an ounce. The most-active July copper contract lost 4.35 cents to settle at $3.6790 per pound.

The June crude oil contract declined 71 cents to close at $61.55 a barrel after trading as low as $60.68, the lowest intraday price for a front-month contract since March 22. June gasoline advanced 2.64 cents to $2.2309 a gallon, while June heating oil settled down 1.41 cents to $1.8158 a gallon. June natural gas added 8.3 cents to end at $7.720 per million British thermal units.

May corn ended 3.50 cents higher at $3.5725 per bushel, July gained 2.75 cents $3.6625, and December slipped 0.50 cent to $3.66. July soybeans finished up 8 cents at $7.4750 per bushel, and November soybeans rose 8.50 cents to $7.7725. July wheat advanced 1 cent to $4.82 per bushel.