Oil prices head back to within record highs

European stock markets began to turn around from early losses yesterday, as investors shrugged off a poor showing on Wall Street as earnings from Michelin and Barclays impressed. By midday, the FTSE Eurofirst 300 index was up 0.1 per cent at 1,172.29, while Frankfurt's Xetra Dax was 0.3 per cent lower at 4,858.15. In Paris, the CAC-40 was flat at 4,458.42, while London's FTSE 100 stood 0.3 per cent higher at 5,333.6.

Wall Street suffered sharp losses overnight as oil prices headed back to within a dollar of recent highs and as caution set in ahead of the employment number out later in the day. The Dow Jones Industrial Average fell 0.8 per cent to 10,610.1, while the Nasdaq Composite shed 1.2 per cent to 2,191.32.

The wait continues for the US non-farm payrolls report for July and, although forecasts predict around 180,000 new jobs were created in the month, some believe weakness is now evident.

Back in Europe, Michelin, the French tyre maker, was up 4.1 per cent to €54.15 after beating forecasts with its first-half operating margin. Tokyo shares fell yesterday, with investors concerned about a possible political crisis if the postal privatisation bill fails to be passed in the upper house next week. The benchmark Nikkei 225 Index fell 0.98 per cent to 11,766.48, and the broader Topix average was 1.24 per cent lower at 1,189.19. All the 33 sectors of the Tokyo Stock Exchange were lower, marking the secondstraight session of losses after Wednesday's 15-month high.