Resource Stocks Advance in Europe

Ivaylo
22 May, 2007
New York City

European markets were mixed on Tuesday, with investors putting in the limelight resource-sector stocks on valuation hopes while GlaxoSmithKline kept losing for a second-day after safety concerns were raised about a diabetes drug and Marks & Spencer announced the retail environment would get more challenging. The U.K. FTSE 100 index slipped less than 0.1%, the German DAX Xetra 30 index added 0.1% and the French CAC-40 index traded fractionally lower.

[R]6:30AM European markets trade mixed Tuesday with resource stocks advancing.[/R]

European markets were mixed in mid-day trade on Tuesday. The U.K. FTSE 100 index slipped less than 0.1% to 6,634.00, the German DAX Xetra 30 index added 0.1% at 7,629.28 and the French CAC-40 index traded fractionally lower at 6,089.34.

Advancers

Oil producer Cairn Energy rose 2.8%, while miner Lonmin gained 0.9%. Merrill Lynch said that it remains optimistic about the oil and gas sector in Europe as the sector is cheap and defensive.

Bid talk supported Spanish airline Iberia to add 1% after 10% stake holder British Airways announced it is going to team up with TPG Capital, Vista Capital, Inversiones Ibersuizas and Quercus Equity to investigate making a formal bid for Iberia.

Alliance & Leicester advanced 3.4% after UBS initiated coverage on the mortgage bank with a buy recommendation.

Decliners

GlaxoSmithKline kept falling tracking late weakness on Monday, following reports that increased safety concerns on the Avandia treatment of the company. Shares in the pharmaceutical company lost 3.3% on Tuesday morning after several brokers cut their ratings on the stock.

Marks & Spencer shed 2.6% after the firm announced that it anticipates the retail environment to become more challenging as competition remains intense and interest-rate increases are expected to hurt consumer spending.

Commodities

Oil prices were virtually unchanged Tuesday after surging above $66 a barrel in the previous session on concerns about gasoline supply. Crude oil for June delivery was flat at $66.27 a barrel in electronic trading on the New York Mercantile Exchange.

Gold for immediate delivery fell as much as $1.20, or 0.2%, to $662.05 an ounce. Silver for immediate delivery fell 3 cents, or 0.3%, to $13.03 an ounce.

Currencies

The euro slipped slightly against the dollar on Tuesday but investors expect the common currency to rise if a key report on German investment sentiment reports more gains. The euro bought $1.3464 in morning trading, down nominally from the $1.3467 it bought in New York trading late Monday. The British pound bought $1.9724 in morning trading, up from $1.9702 the night before in New York. The dollar bought 121.44 Japanese yen on Tuesday, down slightly from the 121.46 yen it bought the day before.

[R]5:30AM Corn rallies Monday, gold and oil also advance.[/R]

A bushel of corn for July delivery surged 9.75 cents to close at $3.81 on the Chicago Board of Trade, adding to modest gains last week. Soybean and wheat futures also gained. July soybeans picked up 8 cents higher to settle at $8.0050 a bushel and July wheat rose 8.25 cents to $4.7950 a bushel.

Crude oil for June delivery rallied $1.33 cents to settle at $66.27 a barrel on the Nymex. Overseas, Brent crude for July delivery climbed $1.07 to close at $70.49 on the ICE Futures exchange in London.

Gold for June delivery added $1.80 to end at $663.80 an ounce. July platinum settled down $6.50 at $1,319.70 an ounce, while June palladium settled up $9.05 at $374.30 an ounce. Copper gained 7.6 cents to settle at $3.4030 a pound on the Nymex. Aluminum, zinc and lead settled higher on the London Metal Exchange.