Commods drag European shares lower

By Joanne Frearson

LONDON (BestGrowthStock) – European shares slipped on Wednesday to close under a key resistance level, with oils weak as crude fell on U.S. demand concerns, while BHP Billiton dropped after a hostile bid for Potash.

Oil stocks were among the worst performers as oil prices fell after a report showed a sharp increase in petroleum inventories in the United States, with BP, Royal Dutch Shell

and Total down 0.8 to 2.6 percent.

The pan-European FTSEurofirst 300 index closed 0.4 percent lower at 1,052.45 points. The Euro STOXX 50 was down 0.3 percent at 2,728.66 points, retreating from the 50 percent Fibonacci retracement of a drop from an April high to a May low tested on Tuesday.

“Investors are just range trading until the heavy volumes come back in September,” said Joshua Raymond, market strategist at City Index.

Volumes on the FTSEurofirst 300 were slim due to the holiday period, at just 54 percent of the average 90-day trading volume.

“But there is some reaction to the individual corporate news out there, like the BHP Billiton hostile bid for Potash and the ENRC result,” Raymond adds.

Miners were mostly lower. BHP Billiton slipped 3.4 percent, after it launched a hostile $39 billion bid for Potash Corp, while Kazakh miner ENRC fell 4.3 percent after the company said it was wary about commodity prices in the second half.

Xstrata bucked the trend and rose 1.1 percent after traders cited market talk of bid interest from Swiss-based commodity trader Glencore. Both Glencore and Xstrata declined to comment.

VESTAS WIND SLUMPS

Denmark’s Vestas, the world’s biggest wind turbine maker, slumped 23.1 percent after it posted a surprise second-quarter loss and unexpectedly cut its 2010 earnings outlook as customers delayed orders in the wake of the credit crisis.

“Investors don’t believe that the market is going to make a new high this year … because of the fear of a double dip in the United States and people are very cautious,” said Heino Ruland, strategist at Ruland Research in Frankfurt.

On the upside, insurer Legal & General rose 2.7 percent after traders cited market talk of bid interest from Zurich Financial. Legal & General declined to comment.

Swiss Life’s jumped 7.9 percent after its profit nearly doubled in the first half on the back of a strong performance by German subsidiary AWD, allaying fears the insurer could be forced into an embarrassing writedown of AWD’s value.

Danske Bank rose 4 percent, outperforming the STOXX Europe 600 banking index after BofA Merrill Lynch upgrades the Nordic bank to “buy” from “neutral.”

Across Europe, the FTSE 100 index was down 0.9 percent, Germany’s DAX was 0.3 percent lower and France’s CAC 40 was down 0.4 percent.

(Reporting by Joanne Frearson; Editing by Jon Loades-Carter)

Commods drag European shares lower