European stocks advance

European stocks and US index futures rose as a two-day drop in oil prices improved the profit outlook for airlines and retailers. Shares in Asia fell.

Deutsche Lufthansa AG, Europe's second-biggest carrier, advanced for a third day, and supermarket chain J Sainsbury Plc climbed the most in a month as concerns eased rising fuel costs will curb earnings and damp consumer spending. General Motors Corp gained in Germany. Salzgitter AG increased after UBS AG lifted its forecast for steel prices.

"Oil has been the big concern for the market in terms of inflation and impact on growth," said Ed Wallace, who helps oversee $4 billion in global equities at Gartmore Investment Management in London.

"As a result you will expect to see a slight recovery in broader market sentiment as the price of crude comes off."

Europe's Dow Jones Stoxx 600 Index added 0.8 percent to 319.78 at 12:25 pm in London as all 18 industry groups advanced except for oil shares.

Futures on the Standard & Poor's 500 Index gained 0.2 percent, and the MSCI Asia Pacific Index declined 1.3 percent.

Speculation that record oil prices, higher inflation and $383 billion in credit losses and writedowns will curb economic growth has pushed the Stoxx 600 down 20 percent from a six-year high in June last year.

National indexes advanced in all 18 markets in Western European apart from those in Ireland, Luxembourg and Norway.

France's CAC 40 climbed 1.4 percent, and the UK's FTSE 100 increased 0.4 percent. Germany's DAX added 1 percent.

Agencies

(China Daily 05/29/2008 page16)