Oils lead European shares to two-week closing high

By Brian Gorman

LONDON (BestGrowthStock) – European shares rose to a two-week closing high on Thursday as oil companies bounced, helped by a surge in the crude price, and growth in the euro zone services sector boosted investor sentiment.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares rose 1.4 percent to 1,017.50 points, the highest close since May 18. The index is still down more than 8 percent from a mid-April peak on worries a debt crisis in the eurozone could derail economic recovery.

“It’s a relief rally, a snapback, after these horrifying days and weeks, with the Greek and European tragedy,” said Franz Wenzel, strategist at AXA Investment Managers in Paris.

“But we don’t see any improvement, economically or valuation-wise. We expect shares to trade in a range. For European equities to go back on the upward trend, we would need to see political coherence, which is currently not in sight.”

Energy companies were among the biggest gainers, bouncing from recent weakness, with the oil price rising immediately after a government oil inventory report showed crude oil stocks fell more than expected last week.

Prices later fell back, hurt by a stronger dollar, to about $73.

BG (BG.L: ), Royal Dutch Shell (RDSa.AS: ), Total (TOTF.PA: ) and ENI (ENI.MI: ) rose between 1.6 and 3.1 percent.

BP (BP.L: ) closed 0.6 percent higher, having been up by more than 4 percent in morning trade.

It is down more than a third from its mid-April peak as it struggles to contain an oil spill in the Gulf of Mexico. More than 40 billion pounds has been wiped off its value.

Banks were among the gainers in a broad market rally. Barclays (BARC.L: ), Credit Agricole (CAGR.PA: ) and Lloyds (LLOY.L: ) rose between 2.1 and 2.5 percent.

Wall Street was slightly higher around the time European bourses were closing. The Dow Jones (.DJI: ) was flat; the S&P 500 (.SPX: ) and Nasdaq Composite (.IXIC: ) were up 0.2 and 0.5 percent respectively.

A raft of U.S. data was mostly positive but factory orders disappointed. New orders received by U.S. factories rose 1.2 percent in April, U.S. Commerce Department data showed, marking a slowdown from March’s surprisingly robust gain.

U.S. private sector employers added jobs in May and the economy’s dominant services sector increased payrolls for the first time in more than two years. The data comes ahead of the all-important monthly non-farm payroll figures on Friday.


Among individual companies, Air France (AIRF.PA: ) ranked among Europe’s top gainers, up 6.1 percent after reporting a “marked” recovery in traffic.

In European indicators, the Markit Eurozone Services Purchasing Managers’ Index (PMI) grew in May at its fastest pace since August 2007, bringing to an end an almost two-year stretch of job losses among services companies.

Stock Investing

(Editing by David Cowell)

Oils lead European shares to two-week closing high