Euro bourses post strong gains

LONDON: European stock exchanges posted strong gains yesterday on reports of possible mergers and despite the disclosure of another record US trade deficit.

The London FTSE 100 index added 0.76% to close at 5,895.50, while in Paris the CAC 40 rose 1.34% to reach 5,125.97. The Frankfurt DAX gained 1.30% to finish at 5,873.85.

The Euro Stoxx 50 index of leading eurozone shares rose 1.25% to 3,788.96.

On the currency market the dollar survived a knee-jerk sell-off, prompted by news that the US trade deficit in July expanded to record levels, and gained some ground against the euro.

The single European currency in late-day trade was at $1.2692 after $1.2700 late on Monday in New York.

The US trade deficit surged to a record $68bn in July as rising oil prices created a mammoth fuel bill for the world??™s largest economy, the US government said.

The new high reported by the Commerce Department compared to June??™s deficit of 64.8bn and eclipsed Wall Street??™s consensus forecast of $65.5bn.

US stocks pushed higher as drops in prices of oil and other commodities eased fears about an economic slowdown, and strong earnings from investment giant Goldman Sachs added further support.

At 1520 GMT, the Dow Jones Industrial Average traded up 0.52% at 11,455.91 while the tech-heavy Nasdaq added 0.83% to 2,191.24.

The market appeared to shrug off news of a record US trade deficit.

Analysts said the market was now focusing on the sharp declines in the past few weeks in oil and other commodity prices.

While this has hurt the outlook for companies in these sectors, it is positive for the overall economy, said Dick Green at Briefing.com.

"The decline in commodity prices is bullish for stocks. A decline in demand that reduces inflationary pressures is exactly what the Fed (Federal Reserve) is striving for through a soft landing."

In London the bank HBOS gained 0.84% to reach 1,014.50 pence on reports of a tie-up between two specialised real estate banks, Portman and Nationwide.

In Paris the European aerospace group EADS shot up 5.43% to close at 23.68 euros after an aide to Russian President Vladimir Putin said Russia might try to acquire a blocking minority in the group.

Gas utility GDF surged 3.33% to 29.83 euros after reporting a 44% jump in net income in the first half of the year to 1.7bn euros.

Elsewhere there were gains of 0.63% to 37,920 on the SP/Mib in Milan, 1.64% to 3,937.51 on the Bel-20 in Brussels, 0.91% to 12,164.9 on the Ibex-35 in Madrid, 1.25% to 8,195.14 on the Swiss Market Index and 1.39% to 468.98 on the AEX in Amsterdam.

On the London Bullion Market, the price of an ounce of gold climbed to $590.70 per ounce from $588 late on Monday. ??“ AFP