NEWS / Fiscal Policy, Budget

US growth figures lift Euro markets

LONDON: European stock exchanges advanced yesterday, powered by improved second quarter US growth figures and a positive start to the day on Wall Street.

The London FTSE 100 index added 0.70% to close at 5,929.30 points, while in Paris the CAC 40 rose 0.44% to 5,182.79. In Frankfurt the DAX gained 0.35% to finish at 5,867.53.

The Euro Stoxx 50 index of leading eurozone shares rose 0.29% to 3,817.86.

On the currency market the dollar dipped, as the US second quarter growth figure, although revised upward, was below expectations on Wall Street.

The single European currency in late-day trade was at $1.2824 against $1.2823 late Tuesday in New York.

The major US stock indexes were mixed but showed scant momentum Wednesday morning after the government revised its estimate for second quarter US economic growth a shade higher.

At 1608 GMT, the Dow Jones Industrial Average was up 0.03% at 11,373.30 while the Nasdaq composite 0.33% higher at 2,179.40.

The broad-market Standard & Poor's 500 index was down 0.10% at 1,303.03.

The Commerce Department said the gross domestic product (GDP) of the world's largest economy grew at an annualised rate of 2.9% in the three months ended June, up from an initial estimate of 2.5%.

Wall Street analysts, however, had expected growth to be revised up to 3%. GDP growth fell sharply from 5.6% in the first quarter and was the weakest pace since the final quarter of 2005.

The department reiterated that compared to the first quarter's booming pace, American consumers had cut back their spending on durable goods while companies had trimmed their investment in equipment and software.

However, some traders viewed the latest revision in a positive light.

In London banks were among the gainers, with Prudential adding 2.59% to close at 593.50 pence on reports that its rival Aviva might be interested in a tie-up.

Old Mutual rose 2.50% to 164 pence while Standard Chartered gained 0.92% to 1,321 pence.

Steelmaker Corus fell 1.81% to 393.25 pence after announcing a 32% decline in first-half net income.

The oil sector was under pressure in response to weak crude prices. BP lost 0.17% to end the day at 592 pence while Royal Dutch Shell shed 0.32% to reach 1,898 pence.

In Paris telecom equipment maker Alcatel added 3.55% to close at 49.89 euros on news that shareholders from Lucent, a US group scheduled to merge with Alcatel, had sought a postponement of a September 7 shareholders' assembly on the question.

Engineering giant Alstom added 4.20% to finish at 75.75 euros after winning an order worth more than 300mn euros from gas monopoly GDF to build two power plants in the south of France.

Stock market operator Euronext gained 3.18% to 69.80 euros after reporting a 63% rise in second quarter net earnings.

Elsewhere there were gains of 0.22% to 8,183.43 on the Swiss Market Index, 0.51% to 37,993 on the SP/Mib in Milan, 0.21% to 12,171.9 on the Ibex-35 in Madrid, 0.51% to 470.14 on the AEX in Amsterdam and 0.40% to 3,945.42 on the Bel-20 in Brussels. - AFP