European exchanges wilt on oil price fall

Saturday July 11, 2009

LONDON: European stock exchanges wilted on Friday, dragged down by a disappointing report on US consumer confidence and a fall in oil prices. The London FTSE 100 index shed 0.76 percent to close at 4,127.17 while in Paris the CAC 40 fell 1.41 percent to finish at 2,983.1. The Frankfurt Dax slipped 1.16 percent to 4,576.31. Elsewhere in Europe there were declines of 1.27 percent on the Swiss Market Index, 1.04 percent in Madrid, 1.58 percent in Amsterdam and 0.23 percent in Brussels. US stocks sputtered in early trade Friday with investors fretting over fears that recovery from the global recession remains distant. The blue-chip Dow Jones Industrial Average had fallen 1.08 percent to 8,094.90 by mid-day while the tech-heavy Nasdaq was down 0.56 percent at 1,742.82. Ahead of the opening, the government said the US trade deficit narrowed sharply in May to its lowest level in nearly a decade, led by a plunge in imported oil. The deficit fell nearly 10 percent in May to a seasonally adjusted 26.0 billion dollars, the lowest level since November 1999. The news appeared moderately positive for the US economy but also reflected weakness in overall global trade. Patrick O'Hare at Briefing.com said that "the impetus for the weak tone this morning was the weak finish yesterday, along with a report that China's exports declined for the eighth straight month." He said this "is diluting some of the hope that China's domestic red shoots will germinate the green shoots of a global recovery." The economic outlook "has most folks confused," said Al Goldman at Wells Fargo Advisors. "We believe the data suggests that the end of the recession is near that's the good news for investors. However, the data also appears to indicate, as we have been saying for a month, that a strong economy is not just around the corner." In Europe market analysts said sentiment was also depressed by the University of Michigan US consumer confidence index, which plunged to 64.6 points this month from 70.8 in June, a far sharper fall than had been expected. In London weaker commodity prices sent mining issues lower. Rio Tinto lost 3.33 percent to finish at 1,901.50 pence while Xstrata gave up 2.10 percent and closed at 597 pence. With crude prices sliding, oil-related stocks came under selling pressure in Paris. Total fell 1.68 percent to 35.98 euros, Technip lost 6.35 percent to close at 32.76 euros and CGG Veritas shed 4.39 percent to end the week at 10.87. Telecom equipment maker Alcatel-Lucent gave up 3.49 percent to close at 1.49 euros after announcing a new plan to cut 1,000 jobs in France by next year. In Frankfurt, Lufthansa gave up 1.66 percent to reach 8.58 euros on news that its bid for Austrian Airlines had stalled after the EU's anti-trust watchdog ruled that the German flag carrier had failed to address competition concerns raised by the acquisition. Energy giant EON fell 1.63 percent to 22.88 euros. One of the day's leading gainers, steel maker Salzgitter, added 1.23 percent to reach 59.37 euros after Citigroup raised its recommendation on the share. Asian dealers remained cautious Friday, with markets finishing the week mixed and looking for clues to an economic recovery ahead of the second-quarter earnings season. Toyko edged 0.04 percent lower, the eighth consecutive trading day of losses for the Nikkei, while Hong Kong lost 0.46 percent and Shanghai 0.29 percent. However, there were gains in Sydney, which added 0.82 percent, as Taipei dipped 0.32 percent. (AFP)