Plung­ing oil prices hit Euro­pean stock mar­kets

The Financial Daily - - INTERNATIONAL -

LON­DON: Euro­pean eq­uity mar­kets sank Fri­day, with the en­ergy sec­tor reel­ing as world oil prices plum­meted to fouryear lows fol­low­ing OPEC's de­ci­sion to hold out­put.

With US fi­nan­cial mar­kets shut on Thurs­day for Thanks­giv­ing, traders con­tin­ued to fo­cus on the out­come of this week's OPEC oil car­tel meet­ing.

In mid­day deals, Lon­don's bench­mark FTSE 100 in­dex fell 0.63 per­cent to 6,681.56 points, the Paris CAC 40 shed 0.48 per­cent to 4,361.59 and Frank­furt's DAX 30 lost 0.34 per­cent to 9,941.27 points com­pared with Thurs­day's close.

The 12-na­tion Or­ga­ni­za­tion of Pe­tro­leum Ex­port­ing Coun­tries (OPEC) de­cided Thurs­day to main­tain its out­put ceil­ing at 30 mil­lion bar­rels per day, where it has stood for three years, send­ing prices plung­ing in an over­sup­plied mar­ket.

Lon­don Brent oil for Jan­uary de­liv­ery sank early on Fri­day to $71.12 per bar­rel -- hit­ting the low­est level since July 7, 2010.

US bench­mark West Texas In­ter­me­di­ate for Jan­uary mean­while had slumped to a fouryear trough at $67.75.

"The ef­fects of yes­ter­day's OPEC de­ci­sion to main­tain its oil out­put is still work­ing its way through the mar­kets to­day," said an­a­lyst Alas­tair McCaig at trad­ing firm IG.

"The tem­plate for eq­uity mar­kets to­day has been clear from the be­gin­ning. Oil and en­ergy man­u­fac­tur­ers are down, while those com­pa­nies that are oil con­sumers are up."

In Lon­don, shares in Bri­tish oil ma­jor BP slid 3.39 per­cent to 411.75 pence, and ri­val Royal Dutch Shell saw its 'B' share price drop 3.22 per­cent to 2,192.5 pence.

In Paris, French oil and gas gi­ant To­tal shed 3.57 per­cent to 44.24 eu­ros.

Slump­ing oil prices weigh on the en­ergy sec­tor be­cause they eat into com­pany profits.

At the same time, they also boost air­line earn­ings be­cause they slash the cost of jet fuel or kerosene, which is re­fined from crude.

Air France-KLM shares in Paris had ral­lied sharply by more than six per­cent in early Fri­day deals, but fell back into the red on profit-tak­ing.

Near­ing mid­day, Air FranceKLM was 3.98 per­cent lower at 12.78 eu­ros.

Bri­tish no-frills air­line EasyJet mean­while saw its shares climb 0.55 per­cent to 1,642 pence in Lon­don.

ETX Cap­i­tal an­a­lyst Daniel Su­gar­man noted that "the drop in oil price means cheaper run­ning costs" for air­lines.

How­ever, shares in In­ter­na­tional Air­lines Group, par­ent of Bri­tish Air­ways, were 0.11 per­cent lower at 457.3 pence.-Agen­cies

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