Europe Advances on Oil Stocks, Bayer

Ivaylo
19 Jun, 2007
New York City

European stocks gained slightly on Tuesday morning supported by oil exploration companies on the strength of oil prices hovering above $69 a barrel and on Bayer as the pharmaceutical company upped its earnings outlook. The only disappointment came from Tesco, which missed market estimates. The U.K. FTSE 100 index rose 0.2%, the German DAX Xetra 30 index increased 0.4% and the French CAC-40 index advanced 0.3%.

[R]6:30 AM European markets edged higher on Bayer and oil companies.[/R]

European markets advanced on Tuesday morning. The U.K. FTSE 100 index rose 0.2% at 6,715.10, the German DAX Xetra 30 index increased 0.4% at 8,064.23 and the French CAC-40 index advanced 0.3% at 6,104.14.

Advancers

Oil and gas companies were strong as BP and Royal Dutch Shell gained more than 0.5% each while other commodity sector companies. Potential mining sector deals were back in the spotlight early Tuesday, with the resource sector in focus after reports that mining giant BHP Billiton planning a bid for Alcan of Canada. BHP Billiton added 0.7%.

Bayer also advanced with shares up 1.4% after the German pharmaceutical company, at its investor day presentation, upped its earnings forecast for 2007 and 2009. Bayer announced that the integration of Bayer Schering Pharma is proceeding more quickly than planned and its consumer health business has had a strong performance.

Vivendi rose 1.2% after Goldman Sachs upgraded the media and telecommunications conglomerate to buy from neutral.

Decliners

Retailers were weak. Tesco dropped 3%, the biggest decline since September 2005. The retailer announced first-quarter sales, excluding gasoline revenue, gained 4.7% in same-store sales. That is the slowest pace in a year and less than the median estimate of 5%.

Marks & Spencer also declined 1.3% in sympathy and Carrefour, the world second-largest retailer, dropped 2%. J Sainsbury, the U.K. third-largest supermarket chain, slid 0.7%.

Commodities

Crude oil declined from near a nine-month high in New York as investors speculated recent gains that followed unrest in Nigeria were unjustified. Crude oil for July delivery fell 35 cents, or 0.5%, to $68.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for August settlement fell 40 cents, or 0.6%, to $71.78 a barrel on the ICE Futures exchange.

Gold fell in London for the first time in five days as the dollar decline against the euro came to a stop, reducing demand for the metal as an alternative investment. Silver also declined. Gold for immediate delivery dropped $1.70, or 0.3%, to $654.65 an ounce. Silver fell 1 cent to $13.21 an ounce.

Currencies

The U.S. dollar was mixed against other major currencies in European trading Tuesday morning. The euro traded at $1.3389, down from $1.3411 late Monday in New York. The British pound traded at $1.9836, down from $1.9837. The dollar bought 123.66 Japanese yen, up from 123.61.

[R]5:30AM Gold and copper gain Monday on dollar weakness, Treasury yields.[/R]

Gold for August delivery advanced $1.40 to settle at $660.10 an ounce on the New York Mercantile Exchange. August silver, though, shed 2.4 cents to finish at $13.296 an ounce, declining after traders made profits from last week gains. Platinum for July advanced $12 to close at $1,299.50 an ounce after production was halted at a major mine in South Africa, a country where strike threats are also lifting prices.

On the Nymex, July copper futures gained 0.10 cent to end at $3.4220 a pound. Lead on the LME advanced 1% to a new record high, while zinc dipped 1.5%, nickel shed 4% and aluminum fell 1%.

Labor unions in Nigeria called for a general nationwide strike to protest a government price raise on automobile fuel. Mounting political tensions in the Middle East and tight gasoline supplies and refinery glitches in the United States also boosted energy prices. Crude oil futures for July delivery gained $1.09 to settle at $69.09 a barrel. July gasoline futures added 0.42 cent to settle at $2.2643.

Grain prices were mixed on the Chicago Board of Trade. July wheat futures slid 5.5 cents to close at $6.01 a bushel on the CBOT, still trading near levels unattained in over 10 years after heavy rains hurt the U.S. wheat crop. July corn shed 3 cents to close at $4.16 a bushel.