Europe chems shares rebound, FTSE 100 recovers

19 September 2008 09:36  [Source: ICIS news]

LONDON (ICIS news)--Shares in European chemicals and oil companies recovered on Friday as the FTSE 100 index of UK companies rose above the 5,000 mark on the back of a government ban on short-selling.

The FTSE 100, which plummeted below 5,000 points for the first time in three years earlier this week, was up 5.85% at 07:31 GMT on Friday at 5,165.30.

Shares in UK chemicals company Johnson Matthey, which slumped earlier in the week, surged by 12.7% to 1,500 pence at 07:32 GMT.

At the same time, BP shares rose by 2.53% to 476.25 pence, while the price of shares in oil and petrochemical major Shell were up 1.56% at 1,565 pence.

The Dow Jones Eurostoxx 50 index was at 3,078.65, 2.59% higher than the previous day’s close at 07:33 GMT.

Shares in German chemicals major BASF were up 2.8% at €33.73, while the stock of German firm Bayer was valued at €46.32, up 3% from the previous close.

Industrial gases firm Air Liquide’s shares recovered by 2.85% to €85.23, while shares in oil major Total were 3.84% higher at €42.57.

The markets reacted positively after UK regulator, the Financial Services Authorities (FSA), placed a ban on short-selling in financial stocks, which involves traders profiting from falling share prices.

It was introduced by the FSA due to concerns that short-selling had been a contributory factor in the sharp falls in UK’s largest mortgage lenders HBOS’s shares before it was rescued by a merger with Lloyds TSB.

Asian petrochemical stocks also rebounded as investors cheered the US government’s plan to step in more decisively to contain the financial crisis and stabilise the markets.

The massive share falls were sparked earlier this week by the fall of investment bank Lehman Brothers, followed by the takeover of Merrill Lynch by Bank of America and insurance giant American International Group (AIG) crumbling under the weight of massive subprime losses.

Banks across Europe have also suffered from losses, and global central banks are now pumping $180bn of extra money into the markets in a co-ordinated move to lift the amount of funds available.

The money has been released by the US Federal Reserve to five other main central banks, who in turn are issuing the funds in their own countries.

($1 = €0.70)

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By: Hilde Ovrebekk
+44 20 8652 3214

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