Europe Buoyed by Earnings

Ivaylo
19 Jul, 2007
New York City

European markets gained for the first time in four days as strong earnings from SAP boosted the indexes, while Vodafone advanced as it announced that it added more subscribers than expected. Miners were also upbeat on higher copper prices. The market in Finland was the only decliner, while all the other were in positive territory. Of the three major markets, U.K. FTSE 100 index gained 0.8%, while the German DAX 30 index rallied 1% and the French CAC-40 index advanced 0.8%.

[R]6:30AM European markets gain Thursday on strong corporate results in tech stocks.[/R]

European stocks advanced Thursday. All 17 markets gained in Europe, except the market in Finland. Of the three major markets, U.K. FTSE 100 index rose 0.8% at 6,618.60, while the German DAX 30 index was up 1% at 7,970.95 and the French CAC-40 index advanced 0.8% at 6,046.29.

In London, stocks gained for the first time in four days, led by Vodafone after the largest mobile-phone company in the world announced the number of subscribers surged by 4.1% in the fiscal first quarter. Vodafone climbed 1.4%.

Miners also advanced as copper prices rose for a second day in Shanghai on concern of lower output from Chile. BHP jumped 2.4% and Rio increased 2.3%. Segro, the owner of five of the U.K. largest business parks, climbed 1.9% as UBS hiked its recommendation on the shares to buy from neutral.

In Frankfurt, German benchmark DAX Index climbed for the first time in three days, led by SAP after the largest maker of business-management software in the world reported earnings that topped analysts'' estimates. SAP rallied 4.7%. The company announced second-quarter profit increased 8.2% to 449 million euros or $619 million, spurred by a jump in license sales in Europe. MAN also advanced 1.4% and Siemens climbed 1.9%.

In Paris, French stocks advanced, as gains were paced by Groupe Danone. Eramet surged after a report that Areva may buy a 37% stake. Danone, the world largest yogurt maker, rose 2.6%. European food and beverage shares advanced after a report that Pepsico and Nestle considered a merger this year. Eramet, which operates the world largest ferronickel plant, soared 13%.

Currencies

The dollar traded near record lows against the euro and the pound Thursday, as the U.S. currency was hit by concerns over the U.S. housing market. The euro rallied to $1.3813 in late morning trading on Thursday, up from $1.3795 overnight in New York, but below the record high of $1.3833 reached in early Wednesday trading.

The British pound also traded near its highest point in more than a quarter-century, trading at $2.0500 Thursday, but down from $2.0533 overnight in New York.

The dollar also slipped against the Japanese yen, falling to 121.87 yen from 121.89 yen in New York late Wednesday.

[R]5:30AM Gold gains Wednesday on inflation worries, oil rallies above $75 a barrel.[/R]

Gold movement depends on four factors including inflation concerns, the movement of the dollar against the euro, bond yields and oil prices. In his comments to Congress Wednesday, Bernanke stated that growth this year will be slightly slower than the Fed had projected in February on weakness in the housing industry with inflation remaining the main concern of the Federal Reserve.

August gold gained $7.80 to settle at $673.70 an ounce on the New York Mercantile Exchange after the Fed’s Chairman speech. September silver settled at $13.29, up 27.2 cents an ounce, while September copper finished at $3.563, up 1.05 cents a pound.

The yield on the benchmark 10-year Treasury note, which rivals gold as a safe-haven investment, declined to 5.01% from 5.07% late Tuesday.

Oil prices settled above $75 a barrel for the first time since August 2006 and gasoline futures rose after the Energy Information Administration reported an unexpected drop in the nation''s gasoline stockpiles.

Crude oil for August delivery surged $1.03 to settle at $75.05 a barrel on the Nymex. Gasoline futures rallied 9.46 cents to close at $2.1953 a gallon.

In Chicago, agriculture futures made a recovery from the sharp decline of the prior two days. November soybeans rebounded 16 cents to settle at $8.765 a bushel on the Chicago Board of Trade. September wheat added 22.25 cents to close at $6.235 a bushel.

December corn rose 5.75 cents to close at $3.425 a bushel. A break of that price could have sparked a fall to the low point of $2.81 a bushel in September, according to investors.