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July 13, 2010    

BP again in focus on gains after capping well

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by Elaine Frei
BP again in focus on gains after capping well

European equities markets were higher Tuesday, helped by results from US aluminium producer Alcoa (NYSE: AA), which reported that profits exceeded expectations in the first quarter and on a forecast from BMW that profits will be up this year, with gains coming even though a German survey of investor and analyst expectations fell more than expected and Portugal’s credit rating was reduced.

The FTSE 100 added 2.01 percent to 5,271.02 in London, while the FTSE 250 gained 1.68 percent to 9,938.4.

Once again, BP (LSE: BP) was the focus of headlines as it added 2.58 percent after it installed a new cap on its leaking oil well in the Gulf of Mexico, Abu Dhabi said it is still considering an investment in the troubled oil company, and unnamed sources were quoted in media reports as saying that BP expects to be able to write off its expenses related to clean-up of its oil spill, now at around $3.5 billion, on its taxes.

Most other components of London’s energy sector were also higher on the session, led by wind turbine gearbox manufacturer Hansen Transmissions International (LSE: HSN), which added 5.13 percent while the biggest decliner in the sector was JKX Oil & Gas (LSE: JKX), which dropped 3.01 percent on the 250.

The only decliner on the 100 also came from the energy sector, where Essar Energy (LSE: ESSR), which has interests both in oil exploration and power generation, dropped 0.87 percent.

Barclays Bank (LSE: BARC) led gains on the 100, adding 4.22 percent in an all-higher banking secctor, while kitchen cabinet specialists Galiform (LSE: GFRM) added 9.18 percent to lead the 250, while the biggest decliner on the 250 was industrial property investor Hansteen Holdings (LSE: HSTN), which fell 3.23 percent.

Foods and personal care products manufacturer Unilever (LSE: ULVR) and tobacco company British American Tobacco (LSE: BATS) were both higher, adding 2.93 percent and 2.61 percent respectively after Goldman Sachs upgraded both companies from “neutral” to “buy.”

The FTSE Eurofirst 300 was up 1.74 percent to 1,043.62 while the Dax added 1.87 percent to 6,191.13, the CAC-40 was 1.96 percent higher to 3,637.76 and the IBEX gained 2 percent to 10,259.5.

Even though Moody’s Investors Service cut Portugal’s credit rating two levels, from Aa2 to A1, citing weak prospects for growth and growing debt, Portugal’s equities markets were still slightly higher on the session.

Carmakers were higher in Europe after BMW (FWB: BMW) added 8.29 percent on its forecast that profits will be up on sales volumes that are expected to be up this year.

Asia-Pacific markets were mixed, with declines for some coming after China denied published reports that it will relax controls on mortgage lending in some cities, with officials repeating their determination to rein in property speculation.

The Nikkei 225 was 0.11 percent lower to 9,537.23 in Tokyo, while the Topix index fell 0.39 percent to 854.39 but the Mothers market managed a gain of 0.08 percent to 396.58.

Shippers were down on profit-taking with Nippon Yusen (TYO: 9101) falling 0.6 percent while Mitsui OSK Lines (TYO: 9104) was down 1.1 percent.

Nissan Motor (TYO: 7201) dropped 1.5 percent after it said a delay in the delivery of some engine parts will force it to close four plants in Japan for three days, beginning Wednesday.

Some in the electronics sector were higher, with camera maker Canon (TYO: 7751) adding 0.3 percent while chipmaker Tokyo Electron (TYO: 8035) was 1.7 percent higher.

Other regional markets seeing declines included the Hang Seng, which was down 0.18 percent to 20,431.06 in Hong Kong, while the Taiex fell 0.55 percent to 7,597.42 in Taiwan.

In Australia, the S&P/ASX200 and the Sydney Ordinaries each dropped 0.67 percent, to 4,380.3 and 4,400 respectively.

The Shanghai Composite was down 1.62 percent on the reiteration of China’s policy on lending, hurting property companies there.

China Vanke (SZSE: 000002) dropped 2.4 percent in the Shenzhen exchange, while Poly Real Estate Group (SSE: 600048) fell 4.3 percent in Shanghai.

On the other hand, South Korea’s Kospi added 0.06 percent to 1,735.08, the Straits Times Index was up 0.12 percent to 2,928.7 and India’s Sensex gained 0.27 percent to 17,985.9.

New York markets were up in midday trade on better-than-expected corporate earnings reports and optimistic outlooks, with the Dow Jones Industrial Average up 1.57 percent to 10,377.09, while the S&P 500 had added 1.52 percent to 1,095.17 and the Nasdaq Composite was 1.62 percent higher to 2,234.08.

Crude oil prices were up at midday in New York, with West Texas Intermediate crude adding nearly $2 to trade at well above $76 per barrel, while metals prices also saw gains as gold added $17 to $1,215.70 per troy ounce.

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