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May 26, 2010    

Oil explorer Afren adds over 13 percent to lead London markets

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by Elaine Frei
Oil explorer Afren adds over 13 percent to lead London markets

European equities markets saw gains Wednesday on hopes that the European debt crisis will not hurt economic recovery across the globe.

Some of that hope came in the form of new data from the United States, where the Commerce Department reported that new home sales were up 14.8 percent in April as buyers rushed to be eligible for a tax credit that required that they sign a contract for a new home by 30 April and close escrow by 30 June, and where durable goods orders were up 2.9 percent in April, with most of the gain on transportation orders.

The FTSE 100 added 1.97 percent to 5,038.08 in London, while the FTSE 250 was up 2.21 percent to 9,392.67.

The energy sector was higher as oil and gas explorer and producer Afren (LSE: AFR) led gains in London, adding 13.46 percent after Renaissance Capital began coverage with a “buy” rating, while Salamander Energy (LSE: SMDR) was up 10.59 percent, Petrofac Ltd (LSE: PFC) was 6.99 percent higher and Cairn Energy (LSE: CNE) gained 6.82 percent.

Luxury clothing manufacturer Burberry Group (LSE: BRBY) was up 7.59 percent to lead gains on the 100 after saying that annual profits were up by 23 percent and that it will speed up new store openings, but clothing retailer Next (LSE: NXT) turned in the worst performance on the 100 as it fell 1.59 percent.

Most miners were higher, led by Hochschild Mining (LSE: HOC) with a gain of 9.17 percent, while Ferrexpo (LSE: FXPO) was up 7.95 percent, Rio Tinto (LSE: RIO) added 7.3 percent and Kazakhmys (LSE: KAZ) was 7.18 percent higher, while the only decliner in the sector was Gem Diamonds (LSE: GEMD), which dropped 0.62 percent.

Banks were also mostly higher, led by Lloyds Banking Group (LSE: LLOY) with a gain of 6.71 percent, but HSBC Holdings (LSE: HSBA) dropped 0.27 percent.

Lloyds and Royal Bank of Scotland (LSE: RBS), which added 5.62 percent, were both upgraded from “neutral” to “outperform” by Credit Suisse.

Banks elsewhere in the region were higher, including a 9.3 percent gain for Allied Irish Banks (ISEQ: ALBK), although Banco Bilbao Vizcaya Argentaria (BMAD: BBVA) fell from earlier gains and only ended 0.3 percent higher after a report that it was not able to renew $1 billion in short-term funding.

The FTSE Eurofirst 300 added 2.54 percent to 973.98 whiel the IBEX was up 0.42 percent to 9,042.6, the Dax was 1.55 percent higher to 5,758.02 and the CAC-40 gained 2.32 percent to 3,408.59.

There were no decliners on the CAC-40, where luxury retailer PPR (Euronext: PP) added 4.77 percent to lead gains, while there was only one decliner on the Dax, where chipmaker Infineon (FWB: IFX) added 4.89 for the best performance on the session on the Frankfurt exchange.

Markets in the Asia-Pacific region were higher, but most of the gains seemed to be due to bargain hunting after yesterday’s declines rather than on improved sentiment, with North Korea and South Korea still at odds over the sinking of a South Korean naval ship and as worries continued about the debt crisis in Europe.

The Nikkei 225 was up 0.66 percent to 9.522.66 in Tokyo, and the Mothers market added 1.95 percent to 378.9, but the Topix index fell 0.1 percent to 859.

Traders and shipper were higher after commodities prices rose and on gains in cargo rates.

Among traders, Mitsubishi Corp (TYO: 8058) was up 3.1 percent while Mitsui & Co (TYO: 8031) gained 3.7 percent, while Shipper Nippon Yusen KK (TYO: 9101) added 3.2 percent, Kawasaki Kisen Kaisha (TYO: 9107) was 4.3 percent higher and Mitsui OSK (TYO: 9104) was up 5 percent on the session.

Carmakers, which get much of their sales outside Japan saw shares lose value as Honda Motor (TYO: 7267) fell 1.1 percent and Toyota Motor (TYO: 7203) dropped 2 percent.

East Japan Railway Company (TYO: 9020) was 2.9 percent lower after a downgrade from Citigroup, from “buy” to “hold”.

The Shanghai Composite added 0.12 percent to 2,625.79, while in Australia the S&P/ASX200 was up 0.98 percent to 4,307.2 and the Sydney Ordinaries gained 1.03 percent to 4,330.4.

In Hong Kong, the Hang Seng was 1.11 percent higher to 19,196.45, Taiwan’s Taiex added 1.14 percent to 7,167.35, the Kospi was up 1.36 percent to 1,582.12 in South Korea, the Straits Times Index gained 1.71 percent to 2,696.02 in Singapore and India’s Sensex was 2.28 percent higher to 15,387.84.

US markets were higher as the Dow Jones Industrial Average was up 0.8 percent to 10,124.46 percent at just past 1 p.m. in New York, while the S&P 500 had added 1 percent to 1,084.79 and the Nasdaq Composite was 1.27 percent higher to 2,238.97.

West Texas Intermediate crude oil was up a bit more than $2.50 per barrel in early afternoon trade, while metals prices also advanced.

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