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Oil keeps Europe's markets up
LONDON, England (CNN) -- European stocks snapped a four-day run of losses and pushed higher on Tuesday as gains in heavyweight oil stocks such as BP
Volatile insurance stocks were among the top blue-chip gainers as Munich Re But volumes remained weak and market experts were at best guarded about the outlook for shares due to uncertainty over the war's duration and its economic impact -- even the market strategists who expect looming first-quarter results to show a clear improvement in company profits. "There's more upside because valuations look good in Europe and earnings really are improving, but we do need to see a major breakthrough in the war in Iraq," said Teun Draaisma, European equities strategist at Morgan Stanley. By 1540 GMT, with only Frankfurt still trading officially, the FTSE Eurotop 300 index <.FTEU3> was up 1.2 percent at 753 points -- near its highs for the day. Advancing issues outpaced decliners by more than two to one and the euro zone DJ Euro Stoxx 50 <.STOXX50E> rose 1.2 percent to 2,062 points. The FTSE 100 ended up 2 percent at 3684, while France's CAC-40 rose 0.6 percent to 2635. Frankfurt's electronically-traded DAX was up 1 percent at 2450 shortly before it closed for the day. The U.S. Institute of Supply Management said its March index of manufacturing activity fell to 46.2 from 50.5 in February, compared with expectations for a fall to 48.6, and said the war appeared to have slowed demand in a number of industries. The manufacturing ISM is a key barometer of activity in the world's biggest economy and is closely watched by investors for clues on the likely future direction of U.S. interest rates. But markets took the data in their stride after a weak survey covering the Chicago region on Monday gave investors a taste of what was to come, although expectations that it could presage a U.S. interest rate cut before the next formal meeting of the Federal Reserve was played down by some economists. "The Fed will probably feel the data is distorted by the Iraq war and that there's enough underlying strength in the U.S. economy for it to pickup after the war," said Kevin Grice, a senior economist at American Express Bank. "The data nonetheless shows the U.S. manufacturing sector is in recession and that the ISM could fall further if the war is prolonged beyond April."
Elsewhere, French industrial group Alstom Luxury goods bucked the overall higher trend, hit by worries about economic fallout not just from the Iraq war but also the impact on consumer demand of a killer virus sweeping Hong Kong. "People have cottoned on to the fact that this Asian flu is not great for any of the luxury goods purveyors," said one London-based equity trader. The sector was also hit by a downgrade to "cautious" from "neutral" by Goldman Sachs, which also cited concerns about the virus known as Severe Acute Respiratory Syndrome (SARS).
French luxury goods group LVMH In New York, the Dow Jones industrial average <.DJI> rose 0.5 percent and the tech-laden Nasdaq Composite <.IXIC> added 0.4 percent. (War, ISM grip stocks)
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