Bonds Push European Stocks Lower

Ivaylo
21 Jun, 2007
New York City

Bond yields worries weighed heavily on European markets in morning trade pulling banking stocks, retailers and insurers lower. Tesco and Marks & Spencer led retailers lower, while Societe Generale and Brit Insurance led the decliners in the insurance sector, with mobile giant Nokia also plunging on a negative broker comment from Golden, Sachs & Co. The German DAX index shed 0.6%, the French CAC-40 index lost 0.7% and the U.K. FTSE 100 index retreated 0.4%.

[R]6:30AM European stocks retreat in early trade on poor banks, insurers, retailers.[/R]

European markets lost ground in early trading Thursday. The German DAX index shed 0.6% at 8,039.46, the French CAC-40 index lost 0.7% at 6,053.22 and the U.K. FTSE 100 index retreated 0.4% at 6,624.00.

Advancers

Sunglasses maker Luxottica surged 6.9% as it announced that it was about to buy Oakley at a price of $2.03 billion to gain access to special brands of sunglasses, promoted by cyclist Lance Armstrong and golfer Annika Sorenstam.

Electricite de France SA rose 4.7% as UBS AG updated the stock and upped its share-price estimate for the biggest power producer in Europe.

Weir Group, maker of pumps for the mining industry, rallied 10% as the company struck a deal to buy U.S. rival SPM Flow Control Inc. for $653 million.

Decliners

As higher bond yields weigh on the value of debt owned by banks and insurers, Societe Generale lost this morning 1.3% and another insurer, Brit Insurance, declined 2.5%.

Retailers were also affected by the bond issue. Tesco lost 1.2% and Marks & Spencer Group the largest clothing retailer in the UK, dipped 0.8%.

Recommendation on Nokia was lowered to neutral from buy by Goldman, Sachs & Co and the Finish company dropped 2.2%.

Gold and oil

Oil surged on Thursday as the labor strike in Nigeria continues to worry the market. Oil advanced beyond $69 dollars a barrel. The strike may stop 2 million barrels a day of oil produce. Crude oil for August delivery gained 60 cents to $69.46 a barrel in mid-day trading in Europe. Gold traded at $654.50 per troy ounce in London, lower than 656.10 at close yesterday.

Currencies

The dollar advanced against the major currencies on Thursday morning. Against the U.S. dollar, the euro stood at $1.3380, lower than $1.3400 yesterday in late trading in the U.S. The British pound fetched $1.9896, down from $1.9929, while the dollar bought 123.62 Japanese yen, higher than 123.61.

[R]5:30AM Wheat surges, while gold and silver fall sharply.[/R]

Most metals declined as investors showed more interest in areas such as grains and energy. Gold for August delivery shed $7.40 to $657.30 an ounce on the New York Mercantile Exchange. July silver lost 13.5 cents to $13.190 an ounce, while July platinum dived $2.40 to $1,296.10 an ounce. Copper prices advanced on concerns that labor strikes could disrupt production. Copper traded on Nymex gained 2.05 cents to $3.42 a pound.

Crude oil futures for July delivery lost 91 cents to $68.19 a barrel. July gasoline futures fell 1.01 cents to $2.2245 a gallon. Wheat resumed its advance from last week following two days of profit-taking on concerns about the health of the harvest. July wheat futures advanced 24 cents to settle at $6.05 a bushel on the Chicago Board of Trade. Corn for July delivery fell 1.75 cents to $3.9425 a bushel. Also on the CBOT, July soybeans rose 10 cents to $8.39 a bushel.