Oil stocks nudge Europe markets up
March 27, 2002 Posted: 12:48 PM EST
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| Traders at the Frankfurt Stock Exchange |
LONDON, England (Reuters) -
European bourses were slightly higher in late trade on Wednesday as firmer oil stocks helped counter a disappointing outlook from Telecom Italia.
Market activity was thin as investors readied themselves for the long Easter holiday weekend, although strategists predicted livelier trading conditions on their return.
"European shares have clawed back their losses from January and February when U.S. companies last reported their earnings. But it's going to be a bumpier ride from about the second week of April, once the next U.S. reporting season kicks in," said Theodore Varelas, European equities strategist at ABN AMRO.
At 1640 GMT, with most European markets closed, the FTSE Eurotop 300 index was up 0.21 percent, while the narrower Euro Stoxx 50 index was flat.
European shares have been stuck in a trading range since November, unable to break out on the upside because of worries that despite economic recovery, profits will continue to lag.
The fragile state of mind of many investors was epitomised by British technology and telecoms fund manager Steve Martin of Royal Sun & Alliance, who advised investors to avoid putting new cash into the fund for the time being, despite the imminent end
to the UK financial year.
In New York, the Dow Jones industrial average rose 0.75 percent while the tech-laden Nasdaq Composite added 0.16 percent after a shaky start.
Telecom Italia fell almost three percent and was the biggest blue-chip faller after saying it expected operating profit growth to be at least in line with 2001, clarifying comments made on Tuesday.
WestLB bank cut its recommendation on the stock, saying the outlook was "quite cautious."
Meanwhile, Swedish telecoms equipment maker Ericsson, which recovered to breakeven after initially falling, said it has not seen a significant increase in orders and saw no signs of a turnaround in the weak market.
Ericsson rival Alcatel fell 1.27 percent.
But strong oil stocks, underpinned by crude prices at six-month highs of well above $25 a barrel, kept bourses from clocking up deeper losses.
Italian oil and gas group Eni, Anglo-Dutch Shell Trading & Transport, and France's TotalFinaElf rose between 1.2 percent and 3.2 percent each.
Also on a brighter note, Dutch giant Philips Electronics gained 1.81 percent after forming a $5 billion preferred supplier deal to build components for Dell, the world's top
personal computer maker.
But autos sank as investors grabbed profits after the sector's strong run-up on Tuesday, which reinforced the sector's chart-topping performance so far this year based on expectations that recovery will mean more people buying more cars.
DaimlerChrysler fell 2.19 percent, while French rival Renault slid 2.49 percent and was also weighed down by rumours the French government was planning to sell its stake in the company.
The media sector was firmer, bolstered by gains in two UK groups, Granada and Carlton, who said their cash-draining British pay TV operator ITV Digital has been put into administration.
"It's the best thing for Granada and Carlton, they will be happy to be shot of the problem but whether they get litigation and how badly it affects their share price still has to be seen," said Martin Dobson, head dealer at NatWest Stockbrokers.
Granada shares jumped 2.89 percent and Carlton added 2.16 percent. Shares in rival pay TV group BSkyB, which will benefit from the loss of competition, rose 3.49 percent.
Elsewhere, UK retailer Woolworths surged 21 percent to record highs as the group forecast a recovery this year after reporting a massive slump in profits.
France Telecom weakned by 2.25 percent after Moody's rating agency said it may cut the credit rating of the company -- currently saddled with 61 billion euros of debt -- and that of its mobile phone unit Orange.
But British mobile phone company mmO2 gained 4.51 percent after it said it had applied for a licence to operate third-generation mobile technology in Ireland.
Mm02 has already secured licences in each of the other markets in which it operates -- the UK, Germany and the Netherlands, as well as the Isle of Man.
