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| CNN's Gerri Willis reports on falling gas prices and more business news in the midday business update (October 24) |
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LONDON (Reuters) -
European shares gained 1 percent Monday after three weeks of declines as relief that Hurricane Wilma had missed already storm-battered U.S. energy facilities boosted oil stocks and dragged crude prices lower.
Europe's benchmark FTSEurofirst 300 index closed 1.1 percent firmer at 1,185.17, extending gains late in the session as the Dow Jones industrial average rose 1 percent.
Britain's FTSE 100, Germany's DAX and France's CAC closed around 1.3 percent higher.
The FTSEurofirst had fallen 5 percent from a 41-month high of 1,242.2 in the previous three weeks as some quarterly results failed to beat expectations and investors fretted over rising U.S. interest rates with high oil seen stoking inflation.
However, some analysts believe the global economic picture remains generally bullish.
"It seems inevitable that the Fed will continue to tighten to 4.5 percent by mid 2006," JP Morgan strategist Christian Katz said.
"But against the recent backdrop of news and signs of slowing energy prices, we remain comforted that the global business cycle remains on the path of sustainable expansion."
A report that President Bush would announce top economic adviser Ben Bernanke as successor to Federal Reserve Chairman Alan Greenspan also helped global stocks as traders said it removed the uncertainty dogging markets.
Mining stocks were strong on hopes of bullish earnings while takeover rumors offered support with UK caterer Compass and Danish telecoms firm TDC jumping after being linked to private equity houses.
Oil in Focus
U.S. light crude for December delivery slipped briefly below $60 a barrel, lifting European equity markets early on and later buoying U.S. shares as fears over spiraling energy costs for companies eased.
Oil majors shrugged off the crude price decline with traders concentrating on the sector's expected upbeat quarterly earnings and Wilma bypassing oil installations shaken by Hurricanes Katrina and Rita in recent months.
BP (up $0.98 to $65.26, Research) added 1.6 percent and France's Total (up $2.61 to $123.51, Research) rose 2.5 percent as it also benefited from news workers at its Gonfreville oil refinery had voted to suspend a month-long strike that had shut down France's biggest refinery.
The prospect of meaty results on the back of high commodity prices boosted basic resources stocks while Anglo American (up $1.11 to $28.26, Research) jumped 4.65 percent after being given extra impetus by saying a plant in Chile would start up early.
Steel makers such as Arcelor were another bright spot after Goldman Sachs raised its investment recommendation on the sector to "neutral," citing improved pricing and attractive valuation.
TDC (up $0.97 to $27.30, Research) added 3.5 percent after the Wall Street Journal said a formal bid from a private equity fund was moving closer while Compass (down $0.06 to $22.23, Research) rose 2.7 percent after a weekend report that a U.S.-based private equity firm was mulling a bid.
On the downside, shares of recently listed Gaz de France fell 3 percent as news French power rival Electricite de France would be floated by Nov. 21 fueled more portfolio shifting.
Shares in German sports goods maker Adidas-Salomon also fell 3 percent after Reebok (down $0.18 to $57.24, Research), which it has agreed to buy, said third-quarter sales slipped.
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