Europe midday: Shares edge lower; Oil prices above $78 on MEast tensions

7th Oct 2024 11:37

(Sharecast News) - European shares were lower on Monday as investors eyed the impact of the latest round of tit-for-tat attacks in the Middle East between Israel and most of its neighbours.

The pan-regional Stoxx 600 index was down 0.05% at 518.28 in early deals with most major bourses lower. US stock futures indicated a weaker start despite a rally on Friday after a stronger-than-expected jobs report last Friday.

Israel continued its relentless assault on Lebanon and Gaza, bombing the southern suburbs of Beirut while rockets fired by the Hezbollah militia hit Haifa, Israel's third-largest city, causing damage to buildings, police said.

Israeli media also reported five people were wounded in rocket attacks in Haifa and the city of Tiberias.

In economic news, retail sales across the eurozone inched higher in August, according to figures released by Eurostat on Monday.

Seasonally adjusted retail trade volumes rose by just 0.2% during the month following a flat reading for July and a 0.4% decline in June.

The reading was in line with economists' predictions and the highest rate of growth - albeit only marginal - since March when sales were up 0.6% over the month.

In Germany, factory orders fell more sharply than expected in August, dropping by their steepest level in seven months, amid an ongoing industrial downturn in Europe's largest economy.

New orders in manufacturing were down 5.8% during the month, following an upwardly revised 3.9% gain in July (original estimate: +2.9%), according to data released on Monday by the Deutsche Bundesbank.

This was the first decline in three months and the steepest monthly decrease since January, when orders plunged by 10.9%.

Compared with last year August, orders were down 3.9% after a 4.6% annual increase the month before.

The price of Brent crude rose 0.46% to $78.41 a barrel as tensions in the Middle East stoked fears over supply constraints on the anniversary of the Hamas militant attack on Israelis that saw more than 1,000 people murdered and a retaliation that has resulted in more than 42,000 Palestinian deaths.

"War in the Middle East is understandably playing on minds. The threat of a further escalation is keeping upwards pressure on oil prices. On the first anniversary of Hamas attacks, which sparked the war in Gaza, there still appears no end in sight for the conflict, which still risks spreading further across the region," said Hargreaves Lansdown analyst Susannah Streeter.

"Supply worries continue to swirl, even though OPEC+ nations have signalled they will go ahead with planned production increases. The perceived strength of the US economy is leading to expectations that there will be greater demand for energy across the US, helping offset continued weakness across sectors in China."

In corporate news, BP reportedly abandoned a target to cut oil and gas output by 2030 as its scales back its energy transition strategy. Share in the firm were higher.

Meanwhile sector rival Shell said third quarter refining margins had dropped sharply, although the shares held gains on a stronger oil price.

Cartier owner Richemont rose as it agreed to sell its Yoox Net-A-Porter online fashion and accessories business.

Reporting by Frank Prenesti for Sharecast.com