16 Jul 2008

Lower oil drives US market upwards

6:37 am on 16 July 2008

Stocks in the United States rose on Tuesday, with the Nasdaq gaining more than 1%.

Oil prices dropped in price by more than $US9 per barrel and financial shares rebounded after Federal Reserve Chairman Ben Bernanke said the banking system is well-capitalized.

The S&P financials index started the day at its lowest level since 1998, but was up 2% by early afternoon trading.

The Dow Jones industrial average was up 42.75 points, or 0.39%, at 11,097.94.

Standard & Poor's 500 Index was up 2.56 points, or 0.21%, at 1,230.86. The Nasdaq Composite Index was up 22.94 points, or 1.04%, at 2,235.81.

Other markets down

European stocks fell 2.1% to a three-year closing low on Tuesday, but the steep fall in oil prices helped the market trim its losses.

The FTSEurofirst 300 index of top European shares ended 2.1% lower at 1,110.09 points - its lowest close since May 2005. The index is down 26% for the year to date.

Banks took another beating. The DJ Stoxx banking index fell 3.8% on Tuesday. It has lost about 40% to date this year.

Mining shares also fell as metal prices retreated . Rio Tinto lost 4.3%, BHP Billiton fell 4.8% and Xstrata dropped 4.1%.

Around Europe: Germany's DAX index ended down 1.9% and France's CAC 40 shed 2%.

Britain's top share index had its lowest close since October 2005.

The FTSE 100 fell 128.5 points, or 2.4% at 5,171.9, and is now down almost 20% for the year to date.

BT Group lost 4.8% after announcing it plans to invest £1.5 billion to roll out super-fast broadband to up to 10 million homes in Britain by 2012 and would suspend a share buyback programme.

NZ & Australia

The New Zealand share market continued to fall on Tuesday, with the NZX 50 index closing down 39 points to 3040.

Telecom finished up 2 cents to $3.34, Contact Energy was down 25c to $7.15 and Fletcher Building was down 14c to $6.11.

Sky City Entertainment was down 67c to $2.96 after confirming on Monday that it would make a profit of between $108 million and $110 million. Goodman Feilder was down 6c to $1.67.

The dollar was buying 76.56 US cents, 78.57 Australian cents, 38.31 pence, 81.05 yen and 0.4805 euro. The Trade Weighted Index was 67.64.

The Australian share market plunged 2% on Tuesday.

The S&P/ASX200 index was down 105.3 points, or 2.14%, to 4815.7, while the All Ordinaries dropped 97.8 points, or 1.95%, to 4910.1.

At 1615 AEST on the Sydney Futures Exchange, the September share price index contract was 126 points lower at 4,811, on a volume of 28,216 contracts.