Oil Stocks Pressure Europe

Ivaylo
17 Jul, 2007
New York City

European markets declined modestly on Tuesday morning as a wave of earnings releases is eagerly awaited by investors, and as broker advice to sell four leading oil producers weighed on the sector. The subprime mortgage problem is also hurting banks. Deutsche Bank AG and Allianz led banks lower, while of dollar-sensitive stocks, Siemens slipped. All three major markets were lower with the U.K. FTSE 100 index off 0.4%, the German DAX index slipping 0.6% and the French CAC-40 index losing 0.3%.

[R]6:30AM European markets fall led lower by oil stocks, banks.[/R]

European markets were lower on Tuesday morning. National benchmarks declined in all of the 17 western European markets that were open except for Portugal. The U.K. FTSE 100 index was off 0.4% at 6,671.70, the German DAX index dipped 0.6% at 8,054.32 and the French CAC-40 index shed 0.3% at 6,106.19.

Commodity downgrades

Repsol and Statoil led a retreat in energy stocks after ING recommended selling the shares. Repsol, the biggest oil company in Spain, fell 1.1 %. Statoil, the biggest oil company in Norway, lost 1.3 % and Total the largest refiner in Europe, decreased 0.8 %. ING downgraded Total to hold from buy.

Anglo American and Antofagasta followed copper prices lower and BHP Billiton slipped after Deutsche Bank downgraded shares of the world biggest mining company on gains this year. Anglo American fell 0.7 % and Antofagasta dropped 0.6 %. BHP Billiton declined 1.2 % after Deutsche Bank cut its recommendation on the shares to hold from buy.

In London, U.K. stocks fell for a second day, paced by BHP Billiton and the other metal stocks. Other companies also lost on downgrades. Rolls-Royce dropped 2.4 % after Credit Suisse Group cut its recommendation for aircraft-engine maker to neutral from outperform. Kelda Group, which supplies water to about 4.7 million people in northeastern England, retreated 2.1 % after UBS AG downgraded the shares to reduce from neutral.

In Frankfurt, Germany''s main stock index fell for the first time in four days, led by TUI AG, the largest travel company in Europe. Deutsche Postbank and Siemens also declined. TUI dropped 2.1 %. Deutsche Postbank, Germany biggest consumer bank by clients, decreased 1.5 %. Siemens, the largest engineering company in Europe, lost 1.8 %.

In Paris, French stocks fell for the first time in four days, led by Total SA. Renault and Suez also retreated. Renault, the second-largest carmaker in France, declined 1.2 % and Suez, Europe fifth-largest electricity producer, lost 1.6 %.

Currencies

The dollar kept declining Tuesday, slipping against the euro ahead of a key German investor confidence report. The euro bought $1.3793 in early European trading, up from $1.3784 in New York the previous day. The British pound continued to trade around 26-year highs against the dollar Tuesday, buying $2.0375, slightly above the $2.0371 it bought late Monday in New York. The dollar slipped only marginally to 121.80 Japanese yen from 121.82 yen.

[R]5:30AM Gold dips slightly, oil futures climb sharply, agricultural prices tumble.[/R]

August gold dipped $1 to end at $666.30 an ounce on the Nymex.

September silver tracked gold lower, edging down 4.5 cents to $13.065 an ounce.

Nymex copper declined 3.1 cents to end at $3.562 a pound.

Crude oil for August delivery advanced 22 cents to close at $74.15, which is the highest settlement since Aug. 11 last year.

Gasoline futures shed 9.86 cents to $2.1262 a gallon.

Wheat for September delivery lost 19 cents to settle at $6.0175 a bushel.

December corn declined 20 cents to end at $3.485 a bushel;

December oats closed down 18.5 cents at $2.5525 a bushel while November soybeans slipped 50 cents to settle at $8.9875 a bushel.