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MarketWatch: OIL MAJORS HIT BY DECLINE IN ENERGY PRICES

9/8/2006 3:19:00 PM
By Ciara Linnane
3:19 PM ET Sep 8, 2006 

NEW YORK (MarketWatch) — European shares traded in the U.S. were slightly lower Friday as lower crude prices weighed on the oil majors after BP said lost production at its Prudhoe Bay facility may be restored sooner than expected.

The Bank of New York Europe ADR Index was last up 0.2% at 148.72. The Bank of New York Composite ADR Index was up 0.2% at 147.88.

European markets closed higher earlier, with the German DAX 30 index  ended up 0.4% at 5,795, the French CAC 40 index  advanced 0.3% at 5,073 and the U.K.’s FTSE 100 index  closed 0.4% higher at 5,879.

Oil stocks were lower across the board as crude prices fell below $67 a barrel, their lowest level since late March.

On Thursday, Steve Marshall, president of BP Alaska, told a subcommittee of the House of Representatives that BP could pump out the usual 400,000 barrels a day by the end of October from the Prudhoe Bay oil field, if the U.S. Department of Transportation gives its approval to a series of alternative piping plans.

The oil field has been producing about half its usual output following the discovery of a pipeline leak and corrosion early last month. See related story.

The news comes after Royal Dutch Shell said a platform badly damaged by Hurricane Katrina last year is producing about 20% more oil than before the storm. Chevron Corp. this week announced a major oil discovery that could make it the biggest U.S.
source.

“All of a sudden, oil seems to be plentiful,” said Edward Meir, analyst at Man Financial in London.

BP  ADRs were last trading down 0.2$ at $65.60. Royal Dutch  was down 1.3% at $66.65, France’s Total  fell 1.3% to $64.16 and Italy’s Eni  was down 0.6% at $58.78.
Norway’s Statoil  lost 2.8% to $25.32.

In the telecoms equipment sector, Alcatel  was up 1.2% at $11.91, a day after shareholders approved its $11 billion takeover of U.S. rival Lucent. Volume leader Nokia  was .

Ericsson  was up 0.8% at $32.58 and Vodafone  rose 0.4% to $21.20.

In the drug sector, AstraZeneca  fell 1.2% to $61.40 after Citigroup cut the stock to hold from buy on valuation grounds.

The shares are up 29% in the last 12 months, reflecting steps taken to prevent R&D mistakes and an aggressive external product sourcing and acquisition program; the positive impact of the new CEO David Brennan; the return to robust growth of key driver the cholesterol drug Crestor; continued operational leverage and efficiency, and the commitment to returning cash to shareholders through aggressive dividend increases and share buybacks, said analyst Kevin Wilson.
 

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