Oil majors boost European shares

Renewed strength in oil majors after Hurricane Katrina sent crude prices soaring helped European shares close higher yesterday, with Total leading the field.

Food and beverage shares also stalked oil stocks at the top of the sector leaderboard, with Nestle gaining two per cent after a broker upgrade to its US eyecare unit Alcon and a price target increase for Danone.

Europe's FTSEurofirst 300 index closed 0.88 per cent higher at 1,177.19, despite Wall Street volatility as Katrina's toll became clearer and data showed Midwest economic activity was slower than expected last month. European insurers had a mixed day as firms calculated their exposure to the hurricane, with Allianz adding 1.6 per cent and Hannover Re dipping 2.6 per cent after warning on profit in the wake of Katrina. "Aside from the human loss, the hurricane looks on course to be the most expensive in history, with losses of up to $26 billion being estimated so far," said Rupert Della-Porta, manager of F&C Asset Management's North American Fund.

"The market appears to have reacted relatively rationally, with little panic selling, even as the storm loomed large."

Around Europe, Paris's CAC-40 climbed almost one per cent, Frankfurt's DAX rose 0.8 per cent, Britain's FTSE 100 added 0.8 per cent, and Zurich's SMI was up 0.7 per cent.

The hurricane, one of the most powerful in US history, forced the closure of more than a 10th of US refining capacity and a quarter of its oil output, raising concerns world supplies could be squeezed.

US weekly oil inventory data showing another gasoline and crude stocks draw also kept oil prices hovering below $70 a barrel, having pushed record highs on Tuesday.