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Euro forges ahead
Posted Thu, 29 May 2008
European stock markets forged ahead on Wednesday, with investor sentiment boosted by weaker oil prices early in the day and a better-than-expected reading on US durable goods orders.
In London the FTSE 100 index added 0.18 percent to close at 6069.60 while in Paris the Cac 40 rose 1.32 percent to 4971.11. The Frankfurt Dax climbed 1.08 percent to end the day at 7033.84.
The Euro Stoxx 50 index if leading eurozone companies gained 0.87 percent to reach 3743.18.
US shares gave up early gains linked to lower crude oil prices and the report on durable goods orders.
The Dow Jones Industrial Average was down 0.35 percent at 12504.14 in mid-afternoon trade while the tech-heavy Nasdaq fell 0.34 percent to 2472.68.
The market had opened on an upbeat noted as crude oil fell below 127 dollars in New York, extending Tuesday's losses after touching record highs last week at 135 dollars a barrel.
The decline boosted hopes that the extraordinary jump in energy costs may be near an end as speculators pull out of oil.
"It certainly looks as though the crowd heading for the exits is growing," said oil analyst Mike Fitzpatrick at MF Global.
But stocks reversed course as crude swung back to approach 130 dollars a barrel.
Al Goldman at Wachovia Securities said it was premature to bet on lower energy costs and a rebound in the stock market.
"It is too soon to say that the correction for stocks is over after one good day of market action into a sharp sell-off in crude oil. There is a tug-of-war going on in oil prices," he said.
Meanwhile the government said April durable goods orders fell 0.5 percent, although most of the decline was in the transport sector. Excluding that segment, orders were up 2.5 percent.
"This was a decent report and seems to indicate that the economy has far from collapsed," said Joel Naroff of Naroff Economic Advisors.
In London, aircraft engine maker Rolls Royce jumped 2.81 percent to 411.25 pence after announcing the creation of a joint enterprise with GKN Aerospace to investigate the use of composite materials in aircraft engines.
Reacting to an initial softening in crude prices, oil companies lost ground. BP fell 1.78 percent to 605.50 pence while Cairn shed 1.66 percent to close at 3315 pence.
British Energy fell 1.63 percent to 725 pence on lacklustre annual results.
In Paris, where investors also took heart at the fall in oil prices, the automobile sector found support. Renault rose 1.87 percent to 63.70 euros, Peugeot gained 0.15 percent to finish at 41.37 euros and the Faurecia autoparts group added 0.92 percent to close at 31.72 euros.
Aerospace group EADS climbed 1.43 percent to 14.88 euros after Airbus head Thomas Enders said two potential candidates had come forward to bid for an EADS production site in Laupheim, Germany.
Gaz de France added 1.93 percent to finish at 42.31 euros on reports that gas prices could rise in July.
In Frankfurt lower oil rates helped power Lufthansa shares to a 2.40 percent gain to 16.23 euros.
Among the day's big losers was Deutsche Post, which gave up 5.42 percent to finish at 20.42 euros after announcing plans to restructure its loss-making US operations and get airlift capacity there through a deal with US rival UPS.
Deutsche Post said the agreement with UPS would also reduce ground infrastructure costs in North America in a move designed to provide annual savings of about one-billion dollars.
One trader noted that what was presented as a measure to turn around the US operation was in fact a profit-warning in disguise.
"The 'solution' included a €100-million downward revision in 2008 forecast Ebit (earnings before interest and tax) to €4.1-billion from €4.2-billion," he said.
Elsewhere in Europe there were gains of 1.5 percent to 3710.92 on the Bel-20 in Brussels, 0.36 percent to 1499.2 on the Ibex-35 in Madrid, 0.05 percent to 32 758 on the SP/Mib in Milan, 0.76 percent to 7474.5 on the Swiss Market Index and 1.65 percent to 481.66 on the AEX in Amsterdam.
In Asia earlier on Wednesday, Tokyo's benchmark Nikkei-225 index fell 1.32 percent to 13 709.44 points. Hong Kong's key Hang Seng index closed down 0.13 percent at 24 249.51.
