Leading European shares advance as oil prices drop
Major European stock markets wobbled yesterday but still closed higher for the fourth consecutive day on growing confidence in Europe as a key summit got underway in Brussels and investors anticipated an improvement in Spain’s financial situation.
London’s benchmark FTSE 100 index of top companies rose by a slight 0.10 per cent to 5,917.05 points, in part on news that British retail sales rose in September.
Frankfurt’s DAX 30 was up 0.58 per cent at 7,437.23 points, while the Paris CAC 40 reversed its intraday losses to close with a gain of 0.22 per cent at 3,535.18 points and Madrid’s IBEX 35 lost 0.34 per cent to 8,100.30 points.
In New York, US stocks were mixed in midday trade after a high number for weekly unemployment claims erased hopes from the previous week’s sharp fall that the job market was rebounding.
The Dow Jones Industrial Average of 30 blue chip stocks edged up by 0.08 per cent. The broad-based S&P 500 was up by an even slighter 0.05 per cent, while the tech-rich Nasdaq lost 0.19 per cent.
Meanwhile oil prices fell yesterday as economic data showed slowing growth in China, the world’s biggest energy consumer, which added to weak demand in the US, traders said.
Brent North Sea crude for delivery in December fell 82 cents to $112.40 a barrel in late London deals. New York’s main contract, light sweet crude for November slipped 23 cents to $91.89 a barrel.
Despite the positive US housing figures, world oil prices also fell on Wednesday as traders reacted to a far bigger-than-expected surge in crude inventories in top global consumer the US.
In Brussels, EU leaders gathered for a summit on strengthening the bloc’s foundations as Spain appeared set finally to ask for financial aid, which would ease a keenly-watched eurozone pressure point.
With Spain reportedly edging closer to asking for what diplomats describe as a precautionary credit line, the 27 EU states met for talks free from the worst fears of previous debt crisis summits.
The meeting is the first of three scheduled before Christmas, but the mood was dampened by divisions between France and Germany on how to shore up economic and monetary union in the face of the eurozone crisis.
French President Francois Hollande said upon arrival that his priority was “the setting up of a banking union by the end of the year, and notably the first stage, which is banking supervision”.
German Chancellor Angela Merkel replied: “This will not be a summit at which we will already take decisions but we will prepare the decisions for December so we have to set the right course.”
The European single currency eased to $1.3101 in foreign exchange trading, from $1.3120 late in New York on Wednesday.
Gold prices declined to $1,743.00 an ounce on the London Bullion Market from $1,749.00 an ounce.
In an upbeat development before the EU summit, Spanish borrowing costs eased markedly as bond markets banked on Madrid grabbing a eurozone financial lifeline within weeks.
The interest rate on 10-year bonds, the litmus test for market feelings about Spain’s long-term debt, fell to 5.458 per cent from 5.666 per cent at the last comparable sale on September 20.
But the Bank of Spain also released data which showed that bad loans at Spanish banks had surged to a record high in August.
The value of loans at risk of not being repaid surged to €178.6 billion in August or 10.51 per cent of the total, up from €169.3 billion, or 9.42 per cent of the total, the previous month.
In Asia, stock markets advanced after China said its economy grew by 7.4 per cent in the third quarter to the end of September.
The figure represented the Chinese economy’s weakest performance since the global financial crisis but was in line with market expectations, while other economic data pointed to a possible bottoming out of the economy.
Hong Kong stocks added 0.48 per cent, Shanghai rose 1.24 per cent and Sydney gained 0.69 per cent, while Tokyo soared two per cent higher as a weakening yen boosted exporters, dealers said.
In Britain, shares in Barclays fell by 1.51 per cent to 240.70 pence after the bank said it would take an additional £700 million (€862 million) to compensate clients who were mis-sold insurance, taking its total bill to two billion pounds. (AFP)