Europe: Data and oil prompt surge

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Date: Thursday 28 Aug 2008

LONDON (ShareCast) - European bourses charged ahead during the afternoon as US growth data got investors excited and oil prices fell.

US gross domestic product grew a faster than expected 3.3% in the second quarter thanks to buoyant exports and the benefits of the government’s tax stimulus package.

Meanwhile, October crude dropped more than $4 a barrel at one stage today following a US government report showing a big increase in natural gas supplies. The price is currently down $3 at $115.07.

Financials reversed earlier losses on talk that the US government will not have to rescue mortgage finance firms Freddie Mac and Fannie Mae. BNP Paribas and Societe Generale were in demand.

France's third largest bank Credit Agricole also surged ahead despite a 94% slump in second second-quarter profit to €76m from €1.29bn previously on write-downs linked with US bond insurers. But its Tier 1 capital ratio held steady at 8.9%.

Natixis was lower though after it reported a second-quarter loss that was above expectations. It reported a net loss of €1.02bn.

Insurers also did well despite shares of Swiss Life slumping after it said first-half earnings missed estimates and warned on profits.

Across the markets, Frankfurt closed 99 higher at 6,420, the French CAC rallied 88 to 4,461, while the Swiss exchange ended the session with a lead of 103.

Supermarket owner Royal Ahold fell on sliding second-quarter profit, while eyeglass lens maker Essilor International saw net income rise 9% to €198.3m.

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