UPDATE 1-Cycling-Hushovd wins first stage in Tour of Catalonia

Reuters: [2008-05-19 19:24:00]

By Alasdair Fotheringham

LLORET DE MAR, Spain, May 19 - Heavy showers could not stop Norwegian Thor Hushovd from winning the first stage time trial on the Tour of Catalonia on Monday.

The 30-year-old Credit Agricole rider stopped the clock at four minutes and 37 seconds for the short, highly technical 3.7-km course in Lloret de Mar.

Second behind Hushovd was American George Hincapie, six seconds back. Spanish national time trial champion Jose Ivan Gutierrez took third, at seven seconds.

Hushovd said he had had no problems on the city centre road surfaces made greasy by intermittent heavy rainfall.

"I was lucky because when I started the rain had eased off." Hushovd told reporters.

"But I always seem to do well here. It's the third stage I've won in Catalonia in my career - and my fourth victory this year.

"My tactics were very simple - go all out from start to finish. On a course this short there weren't any other options."

Better known as a sprinter, the multi-talented Hushovd has also won the Tour de France's opening prologue in 2006 and the Paris-Nice prologue earlier this year.

"I'm not a time trial specialist, but short efforts like today's are winnable for me," the 30-year-old said.

"I'm very pleased with this win, but I don't think I can defend this lead for long. There are too many mountainous stages this week.

"But even so I'm glad I did so well here. Catalonia's a very prestigious race."

The Tour of Catalonia finishes on Sunday in Barcelona.

(Editing by Rex Gowar) ((rex.gowar@thomsonreuters.com; +442075423321; Reuters Messaging: rex.gowar.reuters.com@reuters.net. For the latest Reuters Premier League and international football news see: http://football.uk.reuters.com))

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Keywords: CYCLING TOUR/

Oil helps Europe stocks to 4-month closing high

Reuters: [2008-05-19 19:06:00]

By Eva Kuehnen

FRANKFURT, May 19 (Reuters) - European shares rose to a four-month closing high on Monday as buoyant oil and commodity stocks offset weaker financials, while gains on Wall Street lent further support.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.96 percent higher at 1,378.29 points, its fourth positive day in a row and its highest close since Jan. 16. The index is up 2 percent so far this month, adding to a 6 percent rise in the index in April.

U.S. stocks rose during European stock market trading hours after a key economic forecasting gauge suggested that even though the economy is weak, it has averted recession, easing worries about the profit outlook.

But Markus Steinbeis, head of European equities at Pioneer Investments in Munich, said: "The market gains on shaky grounds. I don't see a change in the trend yet. The economic situation is still too critical for that."

"Many market participants are preparing for rising inflation. They are looking for companies with strong pricing power, which can easily pass on higher prices. Commodity companies in the oil and mining business can and that's one way of protecting your portfolio from higher inflation," said Steinbeis.

Energy stocks featured prominently among the top weighted gainers, with Total <TOTF.PA> rising 3.1 percent, Royal Dutch Shell <RDSa.AS> up 3.2 percent and BP <BP.L> adding 1.3 percent, as crude traded above $126 a barrel.

Mining stocks also rose, Vedanta <VED.L> added 8.5 percent, Anglo American <AAL.L> gained 4 percent and Rio Tinto <RIO.L> advanced 1.6 percent.

Gains in oil and mining shares led the UK's FTSE 100 index <.FTSE> up 1.2 percent, which was topped by a 1.3 percent in France's CAC 40 <.FCHI>, while Germany's DAX index <.GDAXI> added 1 percent, benefiting from gains in E.ON <EONG.DE>.

GOLDEN YEARS ARE OVER

Royal Bank of Scotland <RBS.L> fell 3.9 percent, leading banks lower, with investors citing a technical sell-off related to its rights issues and gloom in the banking sector. Goldman cut its price target on the stock to reflect it going ex-rights.

U.S. investor Warren Buffett also said at a conference on Monday he was not interested in bidding for RBS's insurance arm and that he expects fallout from the credit crunch to keep roiling financial markets.

"There is still a lot of scepticism in the market, however less than there was in March. Many market participants are still underweight on equities and with rising markets the pressure mounts to close the gap," Steinbeis said.

"The financial crisis is one thing. Another thing is what strategy banks will go for in coming years. The golden years are over and we have to expect clearly lower margins. I don't expect much from banks in the coming months and years," Steinbeis said.

Other banks were also weaker, with Societe Generale <SOGN.PA> down 1.9 percent and HBOS <HBOS.L> down 1.4 percent.

British specialist mortgage lender Bradford & Bingley <BB.L> slid 15.8 percent on worries over its outlook and a 300 million pound cash call, with some analysts already valuing the firm as if it was no longer writing new business.

Banking stocks have been hit over the past year by fears about the impact of a meltdown in the risky U.S. subprime mortgage market that has forced many banks to unveil massive asset writedowns and emergency capital increases.

The DJ Stoxx banking index <.SX7P>, one of the worst performing sectors in Europe so far this year, has lost 15 percent year to date. (Additional reporting Sitaraman Shankar in London; editing by Sue Thomas)

((eva.kuehnen@reuters.com; +49 69 7565 1207; Reuters Messaging: eva.kuehnen.reuters.com@reuters.net))

Keywords: MARKETS EUROPE STOCKS

 
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    For rolling updates on what is moving European shares  
    please click on [STXNEWS/EU] 
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 European Equities speed guide...................<EUR/EQUITY> 
 FTSEurofirst 300 index..............................<.FTEU3> 
 DJ STOXX index......................................<.STOXX> 
 Top 10 STOXX sectors...........................<.PGL.STOXXS> 
 Top 10 EUROSTOXX sectors......................<.PGL.STOXXES> 
 Top 10 Eurofirst 300 sectors...................<.PGL.FTEU3S> 
 Top 25 European pct gainers.......................<.PG.PEUR> 
 Top 25 European pct losers........................<.PL.PEUR> 
    Main stock markets: 
 Dow Jones...............<.DJI>  Wall Street report .....[.N] 
 Nikkei 225.............<.N225>  Tokyo report............[.T] 
 FTSE 100...............<.FTSE>  London report...........[.L] 
 Xetra DAX.............<.GDAXI>  Frankfurt market stories[.F] 
 CAC-40.................<.FCHI>  Paris market stories...[.PA] 
 World Indices......................................<0#.INDEX> 
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 Western European IPO diary...........................[WEU/IPO] 
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  Keywords: MARKETS EUROPE STOCKS/ =2 
    

EURO GOVT-Bunds extend decline; inflation, stocks weigh

Reuters: [2008-05-19 17:47:00]

(Updates to late trade)

By Ian Chua

LONDON, May 19 (Reuters) - Euro zone government bonds fell on Monday, extending last week's sharp decline as persistent worries about inflation and gains in stocks dulled the allure of safe-haven government debt.

A key forecasting gauge suggesting the weak U.S. economy has avoided a recession helped send stocks higher. The private Conference Board's Leading Economic Indicators index rose a better-than-expected 0.1 percent in April, after a matching increase in March, which was unrevised. See [ID:nN19531921]

"The very short-term view for the bond market is not supportive because market participants are more and more focused on inflation concerns rather than growth concerns," said Nathalie Fillet, senior interest rate strategist at BNP Paribas.

"And with equities continuing to edge higher ... we think Bunds could continue to go lower this week."

At 1521 GMT, June Bund futures <FGBLc1> were at 113.19, down 44 ticks from Friday's settlement close. But turnover was paltry with less than 650,000 lots traded.

The two-year Schatz yield <EU2YT=RR> gained 2.5 basis points to 4.025 percent, while the 10-year Bund yield <EU10YT=RR> advanced 5.3 basis points to 4.231 percent, nearing the 4-1/2 month peak of 4.272 percent set last Thursday.

These moves saw the two-10 year yield curve steepen slightly to 21 basis points from around 19 basis points late Friday.

Still, the curve remained near its flattest this year, well off levels above 80 basis points set in February when markets were expecting interest rate cuts by the European Central Bank.

Constant tough talk on fighting inflation from ECB officials has convinced investors that the central bank will not lower interest rates soon.

ECB President Jean-Claude Trichet reiterated on Monday that policymakers needed to make containing inflation their top priority, saying price stability was the best way to have a high level of sustainable economic growth.

Underscoring those worries, the Bundesbank warned in its monthly report that German inflation will probably accelerate markedly in coming months and is unlikely to slow significantly before late autumn due to high oil prices.

Analysts said minutes of the latest policy meetings from the Federal Reserve and Bank of England's Monetary Policy Committee (MPC) due this week could shed light on how central banks will balance the opposing influences of inflation and slower growth on their policy stance.

"They look set to shore up the more hawkish leaning of market expectations in recent weeks, especially the MPC minutes," said ICAP Europe Research analysts.

"However, with consumer spending and sentiment, and the housing market being relentlessly ground lower by the ongoing credit crunch, we are still a long way away from a situation where central banks feel the need to actually tighten policy."

Euribor interest rate futures <0#FEI:> fell as much as 5.5 basis points, pushing their implied yield higher still as the market priced in the slim possibility of a ECB rate hike.

The euro zone 2/10 swap spread curve remained inverted -- with 2-year rates higher than 10-year rates -- by around 7 basis points, the most since the introduction of the euro in 1999.

Also in focus this week are the German investor sentiment and business surveys as well as producer prices <G7/MAY>.

European stocks <.FTEU3> were up nearly 1 percent in late trade while the U.S. S&P 500 index <.SPX> added 0.8 percent. (Editing by Gerrard Raven) ((ian.chua@reuters.com; +44 207 542 1028; Reuters Messaging: ian.chua.reuters.com@reuters.net))

Oil stocks push Europe shares to 4-mo closing high

Reuters: [2008-05-19 17:45:00]

FRANKFURT, May 19 (Reuters) - European shares rose to a four-month closing high on Monday as buoyant oil and commodity stocks offset weaker financials, while gains on Wall Street lent further support.

The FTSEurofirst 300 <.FTEU3> index of top European shares unofficially closed 0.9 percent higher at 1,377.45 points, extending a three-day winning run and hitting its highest close since Jan. 16.

U.S. stocks rose during European stock market trading hours after a key economic forecasting gauge suggested that even though the economy was weak, it has averted recession, easing worries about the profit outlook.

"Many market participants are preparing for rising inflation. They are looking for companies with strong pricing power, which can easily pass on higher prices. Commodity companies in the oil and mining business can and that's one way of protecting your portfolio from a higher inflation," said Markus Steinbeis, head of European equities at Pioneer Investments in Munich.

Energy stocks featured prominently among the top weighted gainers, with Total <TOTF.PA> rising 3.1 percent and BP <BP.L> up 1.3 percent, as crude traded above $126 a barrel, while mining stocks also rose, with Anglo American <AAL.L> gaining 4 percent and Rio Tinto <RIO.L> advancing 1.6 percent.

(Reporting by Eva Kuehnen) ((eva.kuehnen@reuters.com; +49 69 7565 1207; Reuters Messaging: eva.kuehnen.reuters.com@reuters.net))

Keywords: MARKETS EUROPE STOCKS/CLOSE

EURO GOVT-Bunds extend decline as stocks climb

Reuters: [2008-05-19 16:20:00]

LONDON, May 19 (Reuters) - Bund futures pushed deeper into negative territory in afternoon trade on Monday as European and U.S. stocks extended gains after a key economic forecasting gauge suggested the U.S. economy has sidestepped a recession.

The private Conference Board said its Leading Economic Indicators index rose 0.1 percent, after a matching increase in March, which was unrevised. See [ID:nN19531921]

At 1415 GMT, June Bund futures <FGBLc1> had fallen 33 ticks to 113.30 on the day. The 10-year yield <EU10YT=RR> climbed 3.6 basis points to 4.214 percent, while the two-year yield <EU2YT=RR> added nearly 1 basis point to 4.001 percent. ((ian.chua@reuters.com; +44 207 542 1028; Reuters Messaging: ian.chua.reuters.com@reuters.net))

Keywords: MARKETS BONDS EURO