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Europe begins 2003 with a bang
LONDON, England (CNN) -- European markets surged ahead on Thursday, the first trading day of 2003, as investors bought up tech and auto stocks that had beated down last year and welcomed better-than-expected U.S. manufacturing data. Those upbeat numbers also sparked a rally on Wall Street, drawing attention away from mounting military attention around the world. London's FTSE 100 rose 1.8 percent to 4,009.5 and the CAC 40 blue chip index in Paris gained 4.3 percent to 3,195.02, while Frankfurt's electronically traded Xetra Dax was up 6 percent to 3,066.11 in late trading (the German market was set to close at 1900 GMT). The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 3.1 percent, led by the information technology, computer and auto sub-sectors. Trading activity was low as many investors stayed out of the market following a mid-week break for the New Year's holiday -- although upbeat U.S. economic data provided some reason to buy into the markets on Thursday. The Institute for Supply Management said its index of manufacturing activity rose to 54.7 from 49.2 in November -- the first expansion in four months. (Full story) That report overshadowed a government survey that showed state unemployment benefits grew in late December, pushing up new jobless claims by a surprisingly steep 13,000. (Full story) Technology stocks, which had been badly battered last year, rebounded in the first trading day of 2003 as investors scooped up big name companies and greatly reduced prices. Among them were Nokia, the world's biggest mobile phone maker, which jumped 6 percent to 16.05 euros, and rival Ericsson, which soared 10.7 percent to 6.75 crowns. The UKs' Vodafone (VOD), Europe's largest mobile phone operator, rose 3.5 percent to 115.61 pence, while rival mm02 (OOM) gained 5.7 percent to 46.76 pence. France Telecom (FTE) added 9.1 percent to 18.20 euros and Deutsche Telekom (FDTE) was up 5.1 percent to 12.88 euros in late Frankfurt trading. Leading the auto sector higher was Fiat -- the loss-making Italian industrial giant -- jumped 9.6 percent to 8.50 euros in Milan after reports said entrepreneur Roberto Colaninno had an eight billion-euro plan to rescue the group. (Full story) U.S.-German carmaker DaimlerChrysler (FDCX) was up 5.7 percent to 31.03 euros, while Volkswagen (FVOW) was 7.3 percent higher at 37.28 euros in late Frankfurt trading. France's Peugeot (PEUP) gained 3.6 percent to 40.26 euros and Renault (RENA) added 3.8 percent to 46.50 euros. An industry group reported that French new car sales dipped by 0.5 percent in December -- bringing the total decline for 2003 to 4.9 percent, which analysts said was still a good performance during a tough year for the sector. "This is just a technical reaction to the losses we saw in the run-up to the new year. It was old economy stocks [like autos]... that lost most in recent days and now we're seeing a bounce back," a trader at a major German bank told Reuters. Meanwhile, EADS (PEAD) surged 11.8 percent to 11.01 euros in Paris on news that Airbus, of which it owns 80 percent, had snared market share in the past year from Boeing and had positioned itself to sell more planes than its U.S. arch-rival next year for the first time ever. (Full story) Shares in oil and gas companies were bolstered on Thursday by a rise in oil prices amid signs that a month-long strike in Venezuela was starting to cut into supplies to the United States, the world's biggest oil customer. The American Petroleum Institute said U.S. crude inventories fell more than 3 percent last week to near 26-year lows with the Venezuelan strike -- called by opponents of embattled President Hugo Chavez -- reducing oil production to a trickle. (Full story) Fears of war with Iraq could further disrupt oil shipments from the Gulf, where most of the world's oil is produced, also added upward pressure on oil prices. (Full story) Brent crude for February delivery, the benchmark futures contract on the International Petroleum Exchange in London, was up 50 cents to $29.16 in afternoon trading on Thursday. Royal Dutch, which owns 60 percent of the world's second-biggest oil company Royal Dutch Shell, rose 3.6 percent to 43.47 euros in Amsterdam and Shell Transport & Trading (SHEL), which own the other 40 percent, gained 1.7 percent to 410.36 pence in London. The AEX index in Amsterdam added 4.5 percent and Milan's MIB30 index gained 3.9 percent, while the SMI in Zurich was closed for a public holiday. In the U.S. on Thursday, stocks began the first trading day of 2003 with a rally following a much stronger-than-expected manufacturing report. At 1520 GMT, the Nasdaq composite was up 23.96 points to 1359.47, while the Dow Jones industrial average gained 187.59 points to 8529.22 and Standard & Poor's 500 index rose 18.26 points to 898.08. The Institute for Supply Management index, a reading on manufacturing, showed a surprisingly large jump to 54.7 in December from 49.2 in November, when economists were expecting a rise to only 50.1. It marked the first time the sector has shown growth since August. A reading above 50 is considered a sign of expansion in the sector. (Full story)
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