Europe Lower, Awaits ECB Decision

Ivaylo
06 Jun, 2007
New York City

European markets declined on Wednesday on worries about interest rate direction in both Europe and the U.S. and poor performance in the telecommunications sector, which countered advances from health care companies like GlaxoSmithKline. E.ON and Iberdrola led a drop by utilities, among companies most sensitive to shifts in borrowing costs. The German DAX Xetra 30 index lost 0.5%, the U.K. FTSE 100 index slipped 0.5% and the French CAC-40 index traded 0.4% lower.

[R]6:30AM European markets decline on Wednesday on rate concerns.[/R]

European markets declined on Wednesday. The German DAX Xetra 30 index lost 0.5% at 7,881.48, the U.K. FTSE 100 index slipped 0.5% at 6,601.50 and the French CAC-40 index traded 0.4% lower at 6,053.99. National benchmarks declined in all of the 15 western European markets that were open.

Economic news

ECB policy makers will raise the benchmark rate by a quarter-point to 4% today, the highest since August 2001.

Advancers

U.K. drug company GlaxoSmithKline rose 1.6% after it said that late Tuesday that the overall cardiovascular safety profile of its diabetes drug Avandia is sound. Another pharma company, Merck KgaA, also increased 0.2%, building on strong gains made Tuesday when speculation emerged that it would join the DAX 30 index. Anglo-Swedish drug company AstraZeneca rose 0.2% after an early decline.

Decliners

E.ON, the biggest utility in Germany, shed 0.8%, while Iberdrola SA, the second-biggest power company in Spain, slipped 1.6 %. Thales retreated 2.6%, as Societe Generale reduced its recommendation on the stock to sell from hold. Retailers were also weak with Marks & Spencer dropping 1.8%.

Commodities

Crude oil for July delivery rose 3 cents to $65.64 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for July settlement gained 8 cents to $70.53 a barrel on the ICE Futures exchange in London.

Gold for immediate delivery rose $1.30, or 0.2%, to $671.35 an ounce in London. Silver fell 2.5 cents to $13.74.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Wednesday morning. The euro traded at $1.3521, down from $1.3522 late Tuesday. The British pound traded at $1.9908, down from $1.9920. The dollar bought 121.30 Japanese yen, down from 121.33.

[R]5:30AM NY-4:30PM Mumbai Sensex plunges in mid-afternoon trade on a sell-off in large-caps.[/R]

The Sensex on BSE is down 244 points at 14,291 in mid-afternoon trading.

The market-breadth is strongly negative as 1,694 have declined, 797 have advanced and 77 are unchanged.

Advancers

Hindalco up nearly 2% at Rs 149. Hindalco was cheered after Alcan Inc of Canada bought 76% of Alukbond India, an aluminium composite panel-maker, for less than $50 million., causing speculation that the Canadian company may put up an offer together with Sterlite Industries for Hindalco.

Decliners

Tata Motors and SBI have declined 3.7% each to Rs 684 and Rs 1,384, respectively. Tata Motors intends to reduceproduction of some trucks at its plant in Pune as higher interest rates, caused by soaring inflation, make transport companies and tour operators delay or drop purchase plans. Index heavy Reliance Industries and BHEL have dropped 3.5% each to Rs 1,685 and Rs 1,335, respectively. ICICI Bank, ONGC and Maruti have shed 3% each to Rs 910, Rs 867 and Rs 776, respectively.