Oil surge hits European shares, earnings cap losses
European shares ended lower yesterday as a two-dollar spike in oil prices stoked worries of inflation, but upbeat results updates by Alcatel and L'Oreal helped limit falls. BP also weighed on the market, off 2.3 per cent as investors fretted about...
European shares ended lower yesterday as a two-dollar spike in oil prices stoked worries of inflation, but upbeat results updates by Alcatel and L'Oreal helped limit falls.
BP also weighed on the market, off 2.3 per cent as investors fretted about possible output losses denting the energy giant's profits after Hurricane Dennis left its key Thunder Horse platform listing in the Gulf of Mexico.
Signs of a new Atlantic storm raised concerns about further possible damage to oil facilities in the region, keeping many energy stocks in the red and offsetting support from oil prices back above $60 a barrel.
The FTSEurofirst 300 ended 0.4 per cent lower at 1,152.8 points, half a percentage point away from the three-year high the pan-European blue-chip index hit the day before Thursday's bomb attacks in London. The narrower DJ Euro STOXX 50 index shed 0.3 per cent to 3,236.3 points.
A number of small explosions in Spain's northern Basque country and one at the Italian Culture Institute in Barcelona had little market impact, with Madrid's IBEX blue-chip index closing 0.03 per cent weaker at 9,873.4 points.
The second-quarter earnings season was starting well in Europe as Alcatel, the world's third biggest telecom equipment supplier, said its preliminary results would beat expectations due to strong growth in the mobile phone sector.
Alcatel rallied 6.5 per cent, heading gainers in a technology sector also buoyed by TietoEnator. The Nordic IT services firm posted forecast-beating sales growth and profitability, lifting its stock three per cent.
L'Oreal was another strong spot, rising 3.6 per cent after the cosmetics giant reported higher interim sales and said it was recovering from a weak first quarter. Rival Beiersdorf gained three per cent on the back of L'Oreal's outlook.
High hopes for the quality of earnings in the new reporting season and resilient job creation in the United States have helped European equity markets recapture three-year highs, despite the deadly attacks in London.