While you were sleeping: European shares mostly higher

Tuesday 19th January 2010

Shares were mostly higher across Europe, paced by gains in base metals. U.S. markets were closed for the Martin Luther King Jr holiday.

The Dow Jones Stoxx 600 edged 0.7% higher to 258.32, paced by mining shares as commodity prices rose.

Copper rose as an unexpected drop in inventories in London bolstered optimism ahead of China’s industrial production and trade reports on Thursday. Oil gained in light trading, bolstered by a decline in the U.S. dollar.

The U.K.’s FTSE 100 Index rose 0.7%, Germany’s DAX Index also gained 0.7% and France’s CAC 40 Index was 0.58% higher.

Russia’s Micex index increased 1.9% and Brazil’s Bovespa was up 0.7%. The Athens Stock Exchange General Index slid 2.5% amid lingering concerns about Greece’s budget deficit.

France raised its economic growth forecast for 2010 on Monday to 1.4%, up from 0.75%, citing the improved global recovery. In Germany, the Bundesbank said the German economy expanded in the fourth quarter though it was “at a significantly” slower pace.

The latest economic comments followed concerns from the International Monetary Fund that the global recovery was at risk if countries moved too fast to rein in stimulus efforts.

"We have to be cautious because the recovery has been fragile," IMF chief Dominique Strauss-Kahn said during a visit to Japan, Reuters reported. He said pickups in employment and private demand should precede removal of such life support.

The euro fell to near its lowest level in a week against the dollar, losing as much as 0.4% to US$1.4335, almost matching its weakest level since January 8. It recently traded at US$1.4375.

The euro fell 0.6% to 87.82 pence, its lowest since mid-September. Sterling also hit a one-month high against the dollar at US$1.6380. Sterling’s recent appreciation is expected to be supported by UK inflation, jobs and retail sales data due this week.

The dollar index, a gauge of the greenback's performance against six other major currencies, was at 77.150, versus Friday's US close of 77.323. The dollar was little changed at 90.70 yen.

The yield premium, or spread, investors demand to hold Greek 10-year bonds rather than those of Germany, Europe’s benchmark borrower, narrowed 4 basis points to 269 basis points, after earlier jumping to 278 basis points, within 1 basis point of the widest level since March, according to Bloomberg.

Oil prices, which began last week above US$80 before sliding for five sessions, edged higher. US crude for February delivery was up 47 cents at US$78.47 a barrel by 1532 GMT on Monday, after earlier touching a three-week intraday low of US$77.07. London Brent crude rose 24 cents to US$77.35.

Spot platinum rose as high as US$1626.00 per ounce, its highest since August 2008. Spot palladium rose as high as US$457.50 an ounce, its highest since early July 2008.

Gold prices were up slightly but rises were limited. Spot gold inched up to US$1135.85 per ounce compared with US$1129.90 an ounce late in New York on Friday. U.S. gold futures for February delivery were at US$1135.90 per ounce, up 0.5%.

The focus for Wall Street investors this week is earnings. IBM is to report on Tuesday, Google on Thursday. Bank of America and Morgan Stanley are poised to report on Wednesday with Goldman Sachs on Thursday.

Businesswire.co.nz

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