Europe powered by US

Tue, 13 May 2008

European stock markets advanced on Monday, powered by a strong showing in the oil sector and in line with a robust start to the week on Wall Street.

In London the FTSE 100 index gained 0.26 percent to close at 6220.60 points, while in Paris the Cac 40 rose 0.32 percent to 4976.21. The Frankfurt Dax added 0.47 percent to finish at 7035.95.

The Euro Stoxx 50 index of leading eurozone shares climbed 0.29 percent to 3812.69.

US stocks moved higher in mid-day trade as cable operator Cablevision announced it was buying the New York daily Newsday in a $650-million deal and as world oil prices eased slightly after soaring to a new record.

The Dow Jones Industrial Average was up 0.89 percent at 12 859.95 at mid-day. The tech-laden Nasdaq composite had gained 0.27 percent to reach 2452.21.

Crude oil prices, which soared to a record high 126.40 dollars a barrel earlier in the day, later fell back on profit-taking. New York's main oil futures contract, light sweet crude for June delivery, stood at 125.48 dollars per barrel, down 48 cents from Friday's close.

On Monday, London's Brent crude contract for June delivery dropped by 1.23 dollars to 124.17 dollars. It had set a historic peak of 125.90 dollars per barrel on Friday.

"The bullish tone in the oil market persists with geopolitical factors supporting," Bank of Ireland analyst Paul Harris said on Monday.

"Fresh air strikes by Turkey in northern Iraq and continued civil unrest in Lebanon helps to maintain the focus upon supply issues."

Oil prices have doubled since the same stage last year when they stood at just 62 dollars. They crashed through records every day last week and have rocketed by 25 percent since the start of the year, when they broke the $100 barrier.

Analysts cite a variety of factors for the price spikes, including rising energy demand from Asian powerhouse economies China and India, a weak dollar and Opec's refusal to pump more crude.

In London Cairn Energy jumped 4.03 percent to 3481 pence. Elsewhere in the energy sector, BP rose 1.06 percent to 619.50 pence while Tullow Oil added 1.10 percent to close at 917 pence.

Another winner on Monday was the bank HSBC, which rose 1.85 percent to 882 pence after reporting a first-quarter profit gain that came despite a $3.2-billion hit from exposure to the US subprime housing market slump.

In total, HSBC wrote off $5.8-billion in the three months to March as a result of losses linked both directly and indirectly to the subprime crisis which it said would very likely push the US economy into recession.

But investors welcomed news that HSBC's credit-crunch losses were less than expected in the first three months of 2008.

In Paris, however, banks were under pressure as they prepared to release their quarterly results amid some concern about the health of their retail business.

Credit Agricole fell 1.85 percent to 20.73 euros while BNP Paribas shed 0.20 percent to close at 67.31 euros.

Automaker Renault lost 0.95 percent to finish at 65.76 euros despite an announcement that it was joining the Indian group Bajaj to produce a $2500 car by early 2011.

In Frankfurt the airline Air Berlin fell 3.50 percent to 7.45 euros. The head of low-cost carrier Ryan Air, Michael O'Leary, in a press interview on Sunday predicted a spate of airline failures because of the high cost of fuel.

Elsewhere in Europe there were gains of 0.73 percent to 13 945.1 on the Ibex-35 in Madrid, 0.42 percent to 3842.92 on the Bel-20 in Brussels, 0.35 percent to 482.07 on the AEX in Amsterdam and 0.07 percent to 33 744 on the SP/Mib in Milan.

In Asia on Monday, Japanese share prices closed higher, reversing early losses as a weaker yen gave a boost to exporters, dealers said. Tokyo's benchmark Nikkei-225 index rose 0.64 percent to close at 13 743.36 points.

The Hong Kong market was shut for a public holiday.