European equities and the euro currency rose yesterday, some buoyed by soaring oil prices, as gold hit new highs and EU finance chiefs agreed the need for a multi-billion euro bailout for Portugal.
London’s FTSE 100 index of leading shares gained 0.81 per cent to finish at 6,055.75 points.
In Paris, the CAC 40 put on 0.83 per cent to end at 4,061.91 points, and in Frankfurt the DAX gained 0.53 per cent at 7,217.02 points.
With the dollar falling, gold’s safe-haven status grew stronger and the precious metal hit a new all-time high of $1,470 an ounce, with silver following with a 31-year high.
However Michael Hewson, market analyst at CMC Markets, said share price “gains have been tempered to some extent as the oil price continues to push ever higher and there is a concern that if it continues to go higher it could start to act as a drag on equities.”
World oil prices jumped yesterday to their highest levels in more than two years as the market was driven by simmering political tensions in the Arab world and concerns over elections in Nigeria.
Brent North Sea crude for delivery in May rose as high as $125.79 a barrel in London trading, up $2.66 from Thursday’s close, before falling back slightly.
“Investors remain unconcerned with what is going on in the periphery of the eurozone – and the fact that the (European Central Bank) has taken the exceptionally bold move of raising rates at a time of crisis shows that even central bankers do not seem too worried about the knock-on effect of such a move,” said Simon Denham, head of financial spread-betting firm Capital Spreads.
Elsewhere in Europe the bourses were also mainly up, with Milan the biggest gainer putting on 0.65 per cent.
Madrid and Brussels gained 0.37 per cent while Lisbon added a mere 0.03 per cent.In the red were the Swiss market and Amsterdam, both down 0.12 per cent.
Meanwhile the euro jumped to $1.4438, the highest level since January 2010, from $1.4306 on Thursday and touched a peak of 123.08 yen, a level not seen since last May.
In later trading the common currency was changing hands at 122.70 yen, well up on Thursday’s 121.63.
All that upward movement came the day after the European Central Bank hiked interest rates for the first time in nearly three years to combat inflation.
“The euro has had another big move higher helped by the confirmation from European Central Bank (ECB) President Trichet ... that the current degree of monetary tightening priced in over the coming twelve months is accurate,” said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London.
European finance ministers meeting in Hungary agreed that indebted Portugal should be given a bailout of some 80 billion ($115 billion), which would be linked to strict austerity measures.
Portugal is the third eurozone country after Greece and Ireland to request a bailout and its plight has increased speculation that Spain – the fourth largest economy of the 17 countries which use the euro – will seek help.