Reuters: European shares at 6-1/2 yr highs on oils, Cadbury
Fri May 18, 2007 5:05 AM ET
By Anshuman Daga
LONDON (Reuters) – European stocks jumped to their highest levels in about 6-1/2 years on Friday and extended early gains, with index heavyweights BP
Cadbury
By 0830 GMT, the pan-European FTSEurofirst 300 index < .FTEU3> was 0.7 percent stronger at 1,596.0. The index rose to an intra-day high of 1,597.7, its highest since December 2000. It is up 8 percent so far this year on a cocktail of takeovers and robust results.
London’s FTSE 100 < .FTSE> was up 0.7 percent and Paris’s CAC-40 < .FCHI> and Frankfurt’s DAX < .GDAXI> gained 0.8 percent each.
U.S. stock index futures
“It appears that there’s still a lot of liquidity in the global economy which has been propping up equity markets. It’s been coming through in the form of M&A primarily,” said Peter Dixon, an economist at Commerzbank. “But there’s a sense that this is the last knockings of the bull run which has been ongoing for the last four years.”
Spreadbetters had expected European shares to open lower on Friday after a dip on Wall Street and Asian markets.
OIL SECTOR LEADS
The DJ Stoxx European oil and gas sector < .SXEP> jumped 1.6 percent to head sector gainers, with BP and Royal Dutch Shell up 2.5 percent each. Both stocks had jumped late on Thursday on strong volume on market talk of a tie-up.
But analysts were skeptical on the potential mergers and said the rise might be due to a growing feeling that oil prices might remain high for longer.
“What we actually think is going on here is a spot of sector rotation. Simply put: for the first time in 12 months, there is an implicit upgrade to oil sector earnings with consensus oil prices likely to have to move up from around $60,” analysts at Citigroup said in a research note.
Brent oil prices dipped below $70 a barrel after Thursday’s sharp gains.
On the economic calendar, Reuters/University of Michigan sentiment data due at 1400 GMT. Markets are also watching a meeting of Group of Eight finance ministers in Germany.
Among gainers, ABN AMRO
“People are believing that it is a very obvious solution,” said Mark Sartori, head of sales and trading at Fox-Pitt, Kelton. “It is positive for ABN and we are seeing a relief rally in Barclays and if it is left out in the cold, it will be back in play.”
British Airways
(Additional reporting by Rebekah Curtis and Tom Bergin)
© Reuters 2007. All rights reserved.
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