THE shock resignation of the German Finance Minister Oskar Lafontaine came too late yesterday to affect European markets. Oils stocks were the flavour of a day that saw Brent blend, the international marker price, ease slightly but hopes for a significant reduction in OPEC production rise steeply.
Royal Dutch, the European leader, ended €2.80, or 6.5 per cent, higher at €45.70. There were strong gains for the French giants Total and Elf-Aquitaine, which surged €7 to €111 and €7 to €118.9 respectively as analysts turned increasingly positive about an oil price that is now 25 per cent above last year's lows.
In Belgium, PetroFina gained €22.40 to €474, while the Italian duo of Eni and Saipem gained 23 cents to €5.83 and 14 cents to €3.50. In Frankfurt, the main focus was RWE, which powered ahead almost 11 per cent to help push the Xetra DAX index up 55.32 at 4,785.37. RWE, a weak market lately amid a deepening row between the power utilities and the government over corporate tax reform, jumped €4.10 to €42. The driving force was an announcement that the company had achieved a technical breakthrough in power-line communications.
In marked contrast, Deutsche Telekom tumbled €1.20 to €38.30 as investors appeared to conclude that the telecommunications giant was lagging in the technology race.
Banks remained firm as the three groups in the latest alliance plan to emerge from France - BNP, Societe Generale and Paribas - shot higher on the restart of trading. The focus was on Dresdner Bank and HypoVereinsbank, which jumped €1.55 to €34.65 and €4.60 to €58.60 respectively amid merger talk. Deutsche Bank added €1.72 at €49.24.
Paris settled 0.5 per cent higher as a soft start on Wall Street took the shine off its early rise. The CAC-40 gained 22.07 to 4,184.38, lifted by oils and financial stocks. Banks led the pack for a second day following BNP's ambitious double bid. Target banks Societe Generale, up €19.40, or 13.3 per cent, to €164.90, and Paribas, up €15.60, or 18.1 per cent, to €101.50, sky-rocketed after a one-day suspension. BNP followed closely, rising €5.60, or 7.2 per cent, to €83.
Amsterdam rallied, ending three days of decline with a gain on the AEX index of 6.92 to 527.58. Ahold rose €1.75 to €34.15 following a swathe of broker upgrades for the retailer.
