European shares fall as oil prices rise

Europe’s main stock markets dipped yesterday as rising oil prices trumped regional company activity, including a takeover and annual earnings.

London’s FTSE 100 index of leading shares shed 0.63 per cent to 5,937.3 points, while in Paris the CAC 40 fell 0.55 per cent to 3,993.81 points and in Frankfurt the DAX lost 0.46 per cent to 7,131.80 points.

“The theme has been traders maintaining an eye on the price of crude oil and the Portuguese bond auction,” said Joshua Raymond, an analyst at London trading group City Index.

“Traders continue to trade sensitively to any increase in the price of crude oil whilst the Portuguese bond auction is another opportunity for the market to gauge investor confidence in the indebted country.”

The CAC 40 and DAX had stayed in positive territory during the morning, but once the price of oil began rising and the US market opened down, they quickly followed suit.

London Brent oil prices surged by more than two dollars yesterday as global supply concerns deepened amid worsening violence in Libya, traders said.

Brent North Sea crude for delivery in April rallied $2.25 to $115.31 per barrel in late afternoon trade.

However, New York crude sank after news of a larger-than-expected jump in American crude oil inventories.

New York’s main contract, light sweet crude for April, fell 40 cents to $104.62. Amsterdam ended off 0.04 per cent, Lisbon dipped 0.08 per cent, Madrid shed 0.09 per cent, Brussels slipped 0.28 per cent, Milan dropped 0.39 per cent and Swiss stocks fell 0.99 per cent.

Portugal meanwhile sold the maximum intended €1.0 billion of a two-and-a-half-year government bond at an auction yesterday but had to pay much higher rates to get its money.

In company news, German automaker Daimler and Britain’s Rolls-Royce announced plans to take over Tognum, a German manufacturer of motors and turbines they want to make into a world leader.

They will create a “50:50 joint venture company” to make the bid, offering €24 ($33.36) for each Tognum share, and work to make the new entity “a world leading engine systems company”.