European stocks slip, oil prices fall further

European shares fell yesterday as investors digested a blockbuster deal that leaves British oil group BP with nearly a fifth of the Russian giant Rosneft, and also took stock of a souring outlook from the heavy equipment maker Caterpillar.

At the end of session, London’s FTSE 100 index of top companies was 0.22 per cent lower at 5,882.91 points, Frankfurt’s DAX 30 lost 0.71 per cent to 7,328.05 points, while in Paris the CAC 40 fell by 0.61 per cent to 3,483.25 points.

The euro firmed to $1.3069 from $1.3027 late in New York on Friday. Gold prices slid to $1,726.75 an ounce on the London Bullion Market from $1,737.

Meanwhile, oil prices fell further yesterday in the wake of sharp pre-weekend losses, as investors balanced poor Japanese export data against Middle East unrest.

Brent North Sea crude for delivery in December fell 34 cents to $109.80 a barrel in late London deals after rising earlier in the day. New York’s main contract, light sweet crude for November, dropped 60 cents to $89.45 a barrel.

Japan yesterday posted its worst September trade figures in more than 30 years.

The country has been struggling to turn around its fortunes following the March 2011 earthquake and tsunami disaster, while also suffering from Europe’s debt crisis, slowing Chinese demand and the strong yen.

Oil prices tumbled on Friday to close down more than two dollars a barrel in London and New York as traders worried about demand following a batch of poor earnings reports from US companies and an EU crisis summit that disappointed many.

In Europe yesterday, the energy sector shifted into focus after BP agreed multi-billion-dollar deals to take almost a fifth of Rosneft, which will itself be transformed into a top player in the globaloil sector.

BP said in a statement that it had agreed to sell its half of Russian venture TNK-BP to Rosneft for $17.1 billion (€13.1 billion) plus another 12.84 per cent share in the state firm.

BP added it would spend $4.8 billion of the proceeds to buy another 5.66 per cent of Rosneft from the Russian Government, bringing its total stake in the Russian company to 19.75 per cent. BP currently owns 1.25 per cent of Rosneft.

The shake-up has major implications for the exploration of oil and gas in the vast Arctic region, while helping to firm up BP’s plans to refocus its attention away from the United States after the 2010 oil spill disaster.

It also effectively ends the often tumultuous but highly profitable TNK-BP joint venture. In Moscow, Rosneft announced it had also bought the remaining 50 per cent of shares in TNK-BP from Russian investors. BP shares dipped 1.54 per cent to 443.4 pence in reaction.

Elsewhere in Europe, Madrid’s IBEX 35 benchmark index of top shares slid 0.31 per cent to 7,888.8 points as investors absorbed mixed election results for Spain’s Prime Minister Mariano Rajoy over the weekend.

Rajoy won a landslide in his home region of Galicia despite a deep recession and cut-backs. However, separatist forces gained ground in a regional election held the same day in the northern Basque country.

“Spanish Prime Minister Rajoy’s mixed outcome at regional elections raises hopes that the government there does not quite face the challenging and difficult opposition by the public that we expected,” said ETX Capital trader Ishaq Siddiqi.