European markets rise on strong oils - European commentary

19:08 GMT

May 2008

(RTTNews) - The European markets rose on Friday, as heavily weighted energy stocks rallied after crude oil prices climbed above $127 a barrel for the first time.

The benchmarks pared some of their gains after a report showed that U.S. consumer confidence fell in May to the lowest level in almost 28 years. The Reuters/University of Michigan Survey of Consumers said its preliminary index of confidence fell to 59.5 in May from 62.6 in April. This was well below economists’ median expectation of a reading of 62.5.

In other economic news, the U.S. Commerce Department said in its report that housing starts jumped 8.2% to an annual rate of 1.032 million units in April from the revised March rate of 954,000 units. Economists had expected starts to edge down to 940,000 units from the 947,000 unit rate originally reported for the previous months.

Crude for June delivery traded up $1.70 at $125.82 on the New York Mercantile Exchange, by the time the European markets closed. Crude futures rose as high as $127.82 a barrel, a new record, earlier in the session after Goldman Sachs raised its forecast on speculation that Chinese diesel purchases will strain supplies.

The FTSEurofirst 300 index of pan-European blue chips closed 0.4% higher at 1,365.2 points, while the narrower DJ Stoxx 50 index rose 0.3% to 3,280.49 points.

Around Europe, the U.K.’s FTSE 100 index surged up 0.84% to 6,304.30. BP, Royal/Dutch Shell, British Energy, British Airways and LSE Group were among the top gainers, while Tate & Lyle, Royal Bank of Scotland, Barclays and Sainsbury were among the major losers.

France’s CAC 40 index rose 0.41% to 5,078.04. Total, Air France-KLM, Cap Gemini, Bouygues, Lafarge and Michelin were among the notable gainers, while Dexia, Sanofi-Aventis and Peugeot were among the notable losers.

Germany’s DAX index climbed 1.07% to 7,156.55. Continental, TUI, Metro, Lufthansa, Siemens and Volkswagen were among the major gainers, while Deutsche Telekom and Commerzbank were the losers.

Oil stocks rose after crude oil prices hit new record highs. BP, Europe’s biggest oil company, gained 1.5%, while Royal/Dutch Shell, the second biggest, surged up 2.8% and Total, the third biggest, climbed 2.5%.

British Energy, the U.K.’s biggest electricity producer, surged up 5.2% after the company said it has received a range of proposals from parties considering bids for the company.
Subsea oil-services provider DeepOcean jumped 29% after Trico Marine Services Inc. made a 3.5 billion-kroner bid for the company.

Shares of London Stock Exchange rose 5.1% on market talk of bid interest after Sanford Bernstein said a fall in the exchange’s share price had made the British bourse an affordable target for rivals Nasdaq and NYSE Euronext.

British Airways, Europe’s third largest airline, surged up 4% after the company reported full-year profit that more than doubled as business travel across the Atlantic spurred sales. Air France-KLM, Europe’s largest airline, rose 1.6% and Lufthansa, the second largest, added 2%.

Metro, Germany’s largest retailer, gained 3% after UBS AG upgraded European food retailers to ”overweight” from ”underweight.”

On the other hand, Royal Bank of Scotland, Britain’s second largest bank, fell 3.4% after billionaire Warren Buffett’s Berkshire Hathaway Inc. said it would not bid for the bank’s insurance unit.

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