UpdateEurope chem shares continue recovery

19 September 2008 17:57  [Source: ICIS news]

(Releads and updates throughout)

By Mark Watts and Hilde Ovrebekk

LONDON (ICIS news)--Shares in European chemicals and oil companies continued to recover on Friday as the FTSE 100 index closed just 2% down week-on-week 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 in the week, closed up 8.84% at 5,311.30.

The Dow Jones Eurostoxx 50 index closed at 3248.65, 8.4% higher than the previous day’s close, while Germany’s DAX index closed up 5.56% at 6,189.53.

Shares in UK chemicals company Johnson Matthey, which slumped earlier in the week, surged by 6.3% to 1,415 pence as the London Stock Exchange was closing.

At the same time, BP shares were up 4.95% to 487.50 pence, while the price of shares in oil and petrochemical major Shell were up 4.89% at 1,673.00 pence.

Shares in German chemicals major BASF were up 5.09% at €34.48, while the stock of German firm Bayer was valued at €56.10, up 2.60% from the previous close.

Industrial gases firm Air Liquide’s shares recovered by 5.93% to €87.79, while shares in oil major Total were 9.76% higher at €45.00.

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. A huge mortgage bailout plan is currently being looked at by the US government.

($1 = €0.70)

By: Mark Watts
+44 20 8652 3214

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