Top > Business > 2006 > November > 2006-11-28

European Finance and Energy Stocks Fall

European markets lost height Thursday, pulled down mostly by energy and banking stocks, as well as, slipping Air France stocks. Major European indexes, FTSE 100 ? London and CAC 40 ? Paris, both lost 0.6%, the FTSEurofirst 300, composed of top European shares, lost 0.4% while DAX ? Frankfurt only lost 0.1%. The trade volume was light as bank holidays were observed both in the United State and Japan and European investors were reluctant to trade due expectations that the European Central Bank will raise interest rates by 3.5% next month, in effort to fight inflation.

Air France lost more then 6% of its market value as investors booked profits on the air liner`s stocks that gained 90% in the past 4 months, after Societe Generale downgraded the tock to "hold". Air France is currently in talks to buy failing Alitalia, another reason investors chose to sell. In London, BP and other energy stocks fell together with oil prices. Credit Agricole lost more then 2% after CitiGroup downgraded the stock to "hold due to unimpressive revenue trends.

On the upside, talks of takeover raised Imperial Chemical Industries and the French liquor manufacturer Remy Cointreau stocks. Inditex, the Spanish clothing retailer, also saw rising stock prices after receiving a positive broker note. A ruling in the top European Union court that persons purchasing tobacco products from other EU states must pay duty in their own country raised Imperial Tobacco`s stocks by 1.7%. The research institute, IFO, based in Munich, reported that its business climate index 1.5 points to a 15-year high indicating that business expectations in Europe are becoming increasingly positive despite Thursday`s losses.