Corporates boost euro

Thu, 15 May 2008

European stock exchanges closed higher on Wednesday on positive corporate news and in line with Wall Street gains, which were sparked by a tame report on April US inflation.

The London FTSE 100 index edged up 0.07 percent to close at 6216 points, while in Paris the Cac 40 jumped 1.13 percent to 5055.24. The Frankfurt Dax added 0.33 percent to finish at 7083.24 points.

The Euro Stoxx 50 index of leading eurozone shares rose 1.06 percent to end the session at 3857.46.

US share prices sprinted ahead in mid-day deals after a report showing consumer prices largely in check eased fears of runaway inflation.

The blue-chip Dow Jones Industrial Average was up 1.06 percent at 12 968.32 while the Nasdaq composite had gained 1.11 percent to reach 2522.46.

The Labor Department said US consumer prices rose a moderate 0.2 percent in April, as energy costs appeared to stabilize after sharp gains earlier this year. After stripping out volatile food and energy costs, the "core" Consumer Price Index rose a mild 0.1 percent last month.

"This is a positive inflation report," said Patrick O'Hare at Briefing.com, who added that it supported predictions from the Federal Reserve of an easing of inflation pressures.

"The report fits with the Fed's view that there should be a moderation in inflation in coming months."

Frederic Dickson, market strategist at DA Davidson & Company, said the report "should give the Fed some wiggle room to lower interest rates if they feel it is necessary to do so in June due to either continued tightness in the credit markets or to combat further deterioration in the economy."

In London mining issues were the day's main winners on reports that the Chinese group Chinalco could be interested in taking a stake in BHP Billiton.

BHP rose 4.85 percent to 2118 pence while rival Rio Tinto added 3.55 percent to close at 6881 pence.

Banks were under pressure on persistent fears for their financial health in a global credit squeeze.

Royak Bank of Scotland, whose shareholders approved a planned £12-billion capital increase, fell 5.48 percent to 319.25 pence while HBOS lost 3.04 percent to finish at 470.25.

In Paris, sentiment was boosted by the bank BNP Paribas, which shot up 4.86 percent to 70.78 euros.

The bank reported better-than-expected first quarter earnings as it escaped the worst of the credit crunch that has led to heavy losses at many of its peers. BNP, the biggest bank in France by market value, said first quarter net profit fell 21 percent from a year earlier to €1.98-billion ($3.06-billion), well above analyst forecasts for around €1.77-billion and twice its fourth quarter result.

Another big gainer on the day was the European Aeronautic Defence and Space Company (EADS), which added 5.85 percent to close at 16.64 euros after announcing a return to profit in the first quarter and plans to save €750-million this year.

In Frankfurt steelmaker ThyssenKrupp closed with a gain of 1.79 percent at 45.39 euros after announcing a more than doubling in net profit in the second quarter of its fiscal year.

Deutsche Telekom added 1.46 percent to finish at 11.83 euros on news it had reached agreement with the Greek government on the joint management of Greek telecom operator OTE.

Elsewhere in Europe there were gains of 0.21 percent to 7594.61 on the Swiss Market Index, 1.38 percent to 34 270 on the SP/Mib in Milan, 0.11 percent to 3831.66 on the Bel-20 in Brussels, 1.22 percent to 14 187.2 on the Ibex-35 in Madrid and 1.65 percent to 488.39 on the AEX in Amsterdam.

Japanese share prices earlier Wednesday closed up 1.18 percent at a four-month high as the Shanghai market rebounded despite worries about the massive earthquake in southwest China, dealers said.

They said stocks rose for a third day running as investors set aside jitters about the outlook for the US economy and domestic corporate profits.