Production rumours boost oil stocks

Overnight strength for leading US shares linked to speculation about Opec production cuts in Kuwait, Iran and Libya sent oils to the top end of the FTSE 300 index performance charts yesterday.

Royal Dutch jumped 4.5 per cent to €65.78 in 13 million shares traded. Total Fina Elf gained 2.2 per cent to €154.

Motor stocks gained ground, partly at the expense of DaimlerChrysler, which ran foul of sector switching in the wake of another round of negative broker comment.

Renault ended 6.7 per cent better at €54. Volkswagen added 3.8 per cent at €53.89 and BMW drove up 5.5 per cent at €36.08.

Financials were surprisingly mixed as hopes grew for lower interest rates. The German banks were hit by an early round of profit-taking, but by the close Deutsche Bank had recovered to trade 1.9 per cent higher at €87.88. Dresdner edged up 0.1 per cent to €45.41, Commerzbank was barely changed at €29.65 and Hypovereinsbank was 3.2 per cent lower at €56.95. UBS managed a 1 per cent gain to SFr264 and CS Group put on 1.8 per cent to €309.

In Paris, BNP Paribas jumped 1.8 per cent to €94.60, Credit Lyonnais slipped 0.5 per cent to €38.14 and Societe Generale was 1.1 per cent lower at €64.65.

Telecommunications companies were generally stronger, led by a rise of more than 4 per cent for Deutsche Telekom to €37.

France Telecom gained about 2 per cent to €100.60 after announcing it was selling its 1.8 per cent stake in Deutsche Telekom. In the internet world, France's Wanadoo looked set to continue its spending spree, with reports that it was to snap up the Dutch internet service provider Freeler.nl from financial group ING. Wanadoo's share price fell 3.3 per cent to €8.89 and its rival Liberty Surf fell to a year low of €8.90, down almost 6 per cent amid renewed worries over its development costs.

EADS, the pan-European aerospace company, rose 3.6 per cent to €21.96 as Airbus Industrie, of which it owns 80 per cent, launched production of its 555-seater superjumbo.