Sun, Jul 16, 2006 - Page 10 News List

NYSE, Middle East and oil prices drag down shares in EU

AP , LONDON

European shares closed on a weak note on Friday as oil prices hovered near record highs tied to unrest in the Middle East and as Wall Street racked up sizable losses.

Germany's DAX Xetra 30 declined 1.9 percent to 5,422. France's CAC-40 dropped 1.5 percent to 4,780 and the UK's FTSE 100 index slid 1 percent to 5,707.

For the week, the benchmark German stock index dropped nearly 5 percent, with a profit warning from SAP and higher oil prices turning investor sentiment sour. What looked like it would be the third consecutive triple-digit decline in the Dow Jones Industrial Average placed additional pressure on European stocks.

The Bank of Japan added to worldwide rate-hike concerns with its expected quarter-point increase in its key interest rate, ending the nation's five-year-old policy of keeping interest rates near zero.

Declining European stocks came amid higher oil prices, which hovered around US$78 a barrel.

"With Israel indicating that it is preparing for a prolonged assault, investors should be prepared to see oil prices climbing even higher," Standard & Poor's European equity strategists said, referring to Israel's military moves against Lebanon following the abduction of two of its soldiers.

LVMH Moet Hennessy Louis Vuitton, the luxury-goods maker, and truck maker Man AG were among Friday's worst performers, with each stock losing 3 percent.

Man's CEO Hakan Samuelsson said the company is on track to meet its sales growth target amid speculation the company wants to buy a stake in Navistar International. Samuelsson denied that speculation.

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