Europe shares advance in thin trading
Tuesday, 30 December 2008
LONDON, Dec 29 (Reuters): European shares rose 1.0 per cent in thin trading Monday, with stronger crude and metals prices boosting commodity stocks, but analysts said the market remained cautious due to gloomy outlook in the near term.
At 0928 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 7.74 points at 811.52 after closing 0.50 per cent lower in the previous trading session. The index is down more than 5.0 per cent this month, hurt by a credit crisis.
The crisis has wiped nearly half the value off European stock markets so far in 2008 as recession infects a host of major economies worldwide, compared to annual gains of 1.60 per cent in 2007, 16 per cent in 2006 and 22 per cent in 2005.
"The trading over the Christmas period has been somewhat disappointing and therefore, in the short term, the reality is that markets are going to remain volatile and continue to be under pressure," said Henk Potts, equity strategist at Barclays Stockbrokers.
"There is also an expectation that corporate profitability is going to be under pressure. We think it's going to drop by 20 per cent during the course of 2009," he added.
But energy shares got support from rising crude prices, which rose 5.0 per cent to nearly $40 a barrel as analysts said the conflict between Israel and Hamas had reminded traders of the geopolitical risk to crude supplies from the Middle East.
BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil added between 3.30 per cent and 4.60 per cent.
Miners also gained on the back of firmer metals prices. BHP Billiton, Anglo American, Vedanta Resources, Lonmin, Kazakhmys, Xstrata, Antofagasta and Rio Tinto rising between 2.80 per cent and 7.40 per cent.
Across Europe, the FTSE 100 index was 2.30 per cent up, Germany's DAX rose 1.70 per cent and France's CAC 40 was 1.20 per cent higher.
Banks were mixed, with Commerzbank rising 6.7 per cent and Societe Generale increasing 2.70 per cent. But Fortis fell 1.0 per cent and HBOS was down 0.40 per cent.
At 0928 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 7.74 points at 811.52 after closing 0.50 per cent lower in the previous trading session. The index is down more than 5.0 per cent this month, hurt by a credit crisis.
The crisis has wiped nearly half the value off European stock markets so far in 2008 as recession infects a host of major economies worldwide, compared to annual gains of 1.60 per cent in 2007, 16 per cent in 2006 and 22 per cent in 2005.
"The trading over the Christmas period has been somewhat disappointing and therefore, in the short term, the reality is that markets are going to remain volatile and continue to be under pressure," said Henk Potts, equity strategist at Barclays Stockbrokers.
"There is also an expectation that corporate profitability is going to be under pressure. We think it's going to drop by 20 per cent during the course of 2009," he added.
But energy shares got support from rising crude prices, which rose 5.0 per cent to nearly $40 a barrel as analysts said the conflict between Israel and Hamas had reminded traders of the geopolitical risk to crude supplies from the Middle East.
BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil added between 3.30 per cent and 4.60 per cent.
Miners also gained on the back of firmer metals prices. BHP Billiton, Anglo American, Vedanta Resources, Lonmin, Kazakhmys, Xstrata, Antofagasta and Rio Tinto rising between 2.80 per cent and 7.40 per cent.
Across Europe, the FTSE 100 index was 2.30 per cent up, Germany's DAX rose 1.70 per cent and France's CAC 40 was 1.20 per cent higher.
Banks were mixed, with Commerzbank rising 6.7 per cent and Societe Generale increasing 2.70 per cent. But Fortis fell 1.0 per cent and HBOS was down 0.40 per cent.