Europe Declines on Northern Rock

Ivaylo
27 Jun, 2007
New York City

The UK lender Northern Rock and Spanish builder Sacyr Vallehermoso led decliners on Wednesday in the fifth straight session of losses in Europe. Northern Rock added that higher interest rates are denting profit and paving the way for a new interest hike by the European Central Bank, while Sacyr Vallehermoso tumbled on a negative court decision. By mid-day, Frankfurt Xetra Dax fell 0.8%, the CAC 40 in Paris lost 0.6% and London FTSE 100 slid 0.7%.

[R]7:30AM European markets decline Wednesday on weak Northern Rock, Sacyr Vallehermoso.[/R]

European markets declined on Wednesday. By mid-day, Frankfurt Xetra Dax fell 0.8% to 7,796.86, the CAC 40 in Paris lost 0.6% to 5,915.36 and London FTSE 100 slid 0.7% to 6,512.1. National benchmarks fell today in all of the 17 western European markets that were open.

Advancers

Banca Popolare di Milano Scrl surged 4.5%. The northern Italian lender failed to approve changes to its company rules that would have allowed the planned takeover of Banca Popolare dell'Emilia Romagna Scrl to take place

Gaz de France, the operator of biggest natural-gas network in Europe, rallied 1.8%. The French government could approve in coming days a long-planned merger between Gaz de France and Suez.

Decliners

Northern Rock plummeted more than 10%. Deutsche Bank AG, the biggest bank in Germany, and Axa SA, the second-largest insurer in Europe, also tracked the decline. Deutsche Bank lost 1.6%. UBS AG, the biggest bank by assets in Europe, declined 1.4%. Axa fell 1.3%, and Allianz, the largest insurer in Europe, dropped 1.6%.

Sacyr Vallehermoso fell 7.4%. The Spanish builder seeking to acquire French competitor Eiffage SA broke stock-market rules in an attempt to take control of the company and must make a fresh takeover bid.

Commodities

Gold for immediate delivery climbed $1.60, or 0.3%, to $642.50 an ounce after earlier trading at $639.50, the lowest since March 14. Silver increased 0.5 cent to $12.255 an ounce.

Platinum declined for a third consecutive day in London on speculation wage talks will avert a strike in South Africa. Platinum for immediate delivery dropped $1, or 0.1%, to $1,266.50 an ounce and palladium rose $1.50, or 0.4%, to $367.50 an ounce.

Crude oil declined, trading below $68 a barrel in New York, on expectations that U.S. gasoline supplies rose for an eighth straight week. Crude oil for August delivery fell to $67.35 a barrel, a decline of 42 cents, in after-hours electronic trading on the New York Mercantile Exchange. Brent crude oil for August settlement fell as low as $70.01 a barrel, a decline of 16 cents on the ICE Futures exchange in London.

Currencies

The euro slipped Wednesday against the U.S. dollar. The euro declined slightly to $1.3433 in morning trading in Europe, from $1.3456 Tuesday evening. The dollar also rose against the pound, which fell to $1.9942 from US$1.9987. Meanwhile, the dollar fell against the Japanese yen, to 122.58 yen from 123.24 the previous evening.

[R]5:30AM Gold and silver decline Tuesday, wheat rallies, oil and gasoline fall.[/R]

Gold for August delivery shed $7.40 to settle at $647.30 an ounce on the New York Mercantile Exchange, after plunging to $643.20, the lowest level since mid-January. August silver lost 59.7 cents to $12.280 an ounce, and July platinum dropped $23.40 to $1,268.30 an ounce. On the Nymex, July copper futures declined 8.4 cents to $3.3180 a pound. Other industrial metals also declined. Lead dipped 4% from record highs on the LME. Aluminum lost 0.8% and nickel fell more than 4%.

Energy prices retreated after advancing a day earlier. Crude oil futures for August delivery shed $1.41 to close at $67.77 a barrel on the Nymex, as the Energy Department's weekly inventory report Wednesday is expected to show increases in crude and gasoline stockpiles. July gasoline futures sank 5.56 cents to finish at $2.2469 a gallon.

Wheat prices rallied back toward 10-year highs on the Chicago Board of Trade on concern about this year's crop failing to meet demand. July wheat futures rallied 19 cents to close at $6.0850 a bushel on the CBOT. July corn slid 1.25 cent to finish at $3.6150 a bushel, while July soybeans added 2.75 cents to $8.0700 a bushel.