News

Oil at three-month high on Iraq anxiety

Oil at three-month high on Iraq anxiety

PRICE IS RISING:A pedestrian looks at an electronic board showing the stock market indices of various countries outside a brokerage in Tokyo June 2. Photo: Reuters/Yuya Shino

By Emelia Sithole-Matarise

LONDON (Reuters) – European shares held steady near 6-1/2-month highs on Thursday, with gains limited by concerns over the pace of global growth, while oil prices hit a three-month peak on escalating violence in Iraq.

A cut in the World Bank’s global growth forecast prompted investors to book profits from recent gains which propelled European, U.S. and Asian shares to multi-year and record peaks.

The FTSEurofirst 300 .FTEU3 index of top European shares was flat at 1,392.07 points, hamstrung by a dip in miners Rio Tinto RIO.L and BHP Billiton BLT.L. The index was still within sight of the 1,398.65 peak hit earlier this week.

“After such a good rally, it’s not the time to buy right now, it’s better just to sit on your gains. The market is quite vulnerable to negative news at the moment,” said Philippe de Vandiere, analyst at Altedia Investment Consulting, in Paris.

“On the longer-term however, earnings in Europe will start to recover in the next few months, which should lift stocks going forward.”

Some analysts said anxiety about the violence in Iraq was also undermining investors’ appetite for riskier assets.

SURGING OIL

Fighting in Iraq also prompted concerns about the oil supply outlook, lifting U.S. crude futures CLc1 0.8 percent to $105.19 a barrel, their highest since early March.

Militants from an al-Qaeda splinter group captured Mosul, the country’s second largest city, and closed in on the biggest oil refinery in Iraq.

The insurgency has also hurt financial markets in neighbouring Turkey, where stocks .XU100 fell 3.3 percent and the lira TRY= tumbled 1.7 percent on Wednesday as the militants took 80 Turkish nationals hostage.

Among major currencies, the New Zealand dollar jumped 1.3 percent after the country’s central bank raised interest rates and retained a hawkish bias, surprising some investors who had bet on a slower pace of rate hikes.

The kiwi surged more than one percent to $0.8670 NZD=D4.

Other major currencies were little changed with the euro still stuck near the four-month low hit after the European Central Bank cut rates last week.

The euro traded at $1.3530 EUR=, compared with a low of $1.3503 hit on Thursday. The euro has fallen almost 1 percent this week as the effects of the ECB’s easing policies spread through markets but the jury remains firmly out on whether the bank has managed to turn the tide.

A stronger dollar on the basis of improvement in the U.S. economy and a resulting rise in Treasury yields was many banks’ base scenario for 2014 at the start of the year.

“It does feel like lower yields are starting to weigh on the euro,” said Paul Robson, a currency strategist at RBS in London.

“I don’t quite want to jump on the bandwagon yet – the reasons for the euro’s strength this year have not quite gone away. Yes it may go through $1.35, but I don’t think it will go much beyond that.”

In fixed income, peripheral euro zone bond yields retreated further from record lows as investors made way in their portfolios to take down bond sales from Italy and Spain.

Spanish 10-year bond yields ES10YT=TWEB were up 4 basis points at 2.67 percent as Madrid also prepared to ease its hefty upcoming debt repayments by switching expensive debt issued at the height of the crisis for a new 10-year bond.

Equivalent Italian yields IT10YT=TWEB were up a similar amount at 2.83 percent before an auction of up to 8.5 billion euros of three-, seven-, and 30-year bonds.

(Additional reporting by Blaise Robinson in Paris and Patrick Graham; Editing by Catherine Evans)

Recent Headlines

in National, World

Israel warns of long Gaza war as Palestinian fighters cross border

Israeli soldiers patrol outside the northern Gaza Strip on July 28, 2014.

Israeli Prime Minister Benjamin Netanyahu dashes any hopes of a swift end to the three-week conflict as Palestinian fighters launched an audacious cross-border raid.

in Sports

Only arguing remains in Sterling trail

FILE - In this Nov. 12, 2010, file photo, Shelly Sterling sits with her husband, Donald Sterling, right, during the Los Angeles Clippers' NBA basketball game against the Detroit Pistons in Los Angeles. With a $2 billion sale of the Clippers hanging in the balance, a judge is set to determine Monday, June 30, 2014, if the terms of a family trust alone are enough to confirm Donald Sterling was properly removed as trustee and allow his estranged wife to sell the team without his consent.

Only final arguments and a ruling remain in the trial to determine whether Donald Sterling's estranged wife can sell the Los Angeles Clippers for $2 billion.

in Sports

Paul McGinley pulls out of PGA Championship with injury

Paul McGinley of Ireland laughs during a news conference after being named the European Ryder Cup captain at the St. REgis in Saadiyat Islands in Abu Dhabi on January 15, 2013.

European Ryder Cup captain Paul McGinley has pulled out of the PGA Championship with a shoulder injury.

in National

Dollar Tree to buy Family Dollar for $8.5 billion

FILE - In this Tuesday, Nov. 29, 2005, file photo, customers walk past a Family Dollar store at Hickory Grove Market in Charlotte, N.C. Dollar Tree is buying rival discount store Family Dollar in a cash-and-stock deal valued at about $8.5 billion, the companies announced Monday, July 28, 2014.

Discount store chain Dollar Tree Inc offered to buy rival Family Dollar Stores Inc for about $8.5 billion.

in Sports

South African Tim Clark wins Canadian Open

Tim Clark tees off the 12th hole during the third round of the RBC Canadian Open at Royal Montreal GC - Blue Course on July 26, 2014.

South African Tim Clark sank a six-foot par putt to beat American Jim Furyk by one stroke at the Canadian Open.