Sun, Sep 30, 2007 - Page 10 News List

Surges in euro, oil prices weigh down European markets


European stock exchanges closed weaker on Friday, with sentiment in several capitals weighed down by record surges in the euro and the price of oil.

The London FTSE 100 index shed 0.3 percent to close at 6,466.80, while in Paris the CAC 40 fell 0.31 percent to close at 5,715.69. But the DAX in Frankfurt managed to edge up 0.10 percent to reach 7,861.51.

The Euro STOXX 50 index of leading eurozone shares fell 0.17 percent to close at 4381.71.

On the currency market the euro shot to a another record against the struggling greenback, hitting US$1.4234 on reports of tame inflation in the US, which boosted prospects for further cuts in US interest rates.

Oil prices too were on the rise, with a barrel of North Sea Brent crude for November delivery surging to US$81.05, breaking through the US$81 level for the first time in its history.

US share prices edged lower in mid-day trade as investors made end-of-quarter portfolio adjustments and mulled better-than-expected consumer spending and inflation data.

The Dow Jones Industrial Average dipped 0.06 percent to 13,904.24 while the tech-heavy NASDAQ shed 0.22 percent to reach 2,703.55.

Ahead of the market opening, the government said US consumer spending rose 0.6 percent last month as Americans shrugged off credit and housing market turmoil. Personal income, however, rose a more modest 0.3 percent, slightly below expectations of a 0.4 percent gain.

"So far, the housing and credit problems have not dented the consumer's armor," Joel Naroff of Naroff Economic Advisors said. "This was a good report as household spending stayed up while inflation came down. The markets should love this number and even some of the Fed members may crack a smile."

In London, sugar producer Tate and Lyle plunged 27.08 percent to close at ?4.025 after warning in a statement that its earnings would likely suffer from higher production costs and the weakness in the dollar.

Troubled mortgage lender Northern Rock, after positive performances over the past two days, fell 7.39 percent to ?1.792 after the Financial Times reported that it had to borrow another ?5 billion (US$10.1 billion) from the Bank of England, bringing to 8.0 billion the amount borrowed since last week.

In Frankfurt Deutsche Telekom, which announced the purchase of the Dutch subsidiary of French mobile phone operator Orange for 1.33 billion euros (US$1.9 billion), gained 0.36 percent to close at 13.78 euros.

Automaker BMW fell 1.63 percent to 45.23 euros on investor disappointment with its new growth strategy.

Elsewhere there were declines of 0.2 percent to 4,325.29 in Brussels, 0.03 percent to 14,576.5 in Madrid and 0.42 percent to 39,889 in Milan. The Swiss Market Index rose 0.53 percent to 8,933.48.

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