A quiet morning for the markets as oil firms provide support
Fiona Cincotta September 25, 2012 4:42 PM
<p>European markets had a very quiet start to the day, with a lack of economic data and news to drive direction. By mid morning the […]</p>
European markets had a very quiet start to the day, with a lack of economic data and news to drive direction. By mid morning the FTSE was trading flat, the DAX had lost 0.2% and the CAC was down 0.3%.
Diageo is the top gainer on the UK index, up 1.9% after it confirmed that it was in talks to buy a stake in India’s United Spirits Ltd. However, there is no certainty that the discussions will result in a transaction, nor has there been any indication as to how much Diageo is looking to buy, regardless the market likes what it sees so far. The drinks provider has had a spectacular three years, up over 140% since its low in 2009, and is currently trading just shy of its all time-high of 1770 reached earlier this month.
Oil firms also added support to the FTSE 100 as they tracked gains of oil prices. Crude oil for November delivery increased by 0.7% in early trading, helping to pick the commodity up after a 3.5% drop last week following larger than expected increase in supply. BP gained 0.6% by mid morning whilst BG Group also added 0.5% to its share value.
With the eurozone debt crisis never far from investors minds, bond auctions for both Italy and Spain provided some point of interest. Italy sold 3.94 million euros, the top end of its target range, of its new 24-month zero coupon bonds. However, the yield on the bench mark 10-year government bonds rose seven basis points to 5.11%.
Spain sold 3.9 billion euros of three-month and six-month Treasury bills, again in the upper range of the target which shows that there is still confidence in the struggling country; however its borrowing costs moved higher indicating a level of nervousness.
Looking towards the afternoon, Europe will be in focus as German Chancellor Angela Merkel and President of the ECB Mario Draghi meet to discuss Monetary Union. US Consumer confidence data later today will also provide key information for traders.
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