Europe: Stocks extend gains at open

[LONDON] European stock indices rose at the open on Tuesday, building on gains won a day earlier, as easing Greece concerns help to offset unrest in commodity markets.

London's benchmark FTSE 100 index climbed 0.10 per cent to 6,795.34 points.

Frankfurt's DAX 30 won 0.21 per cent to 11,760 points and the CAC 40 in Paris advanced 0.22 per cent to 5,153.85 compared with Monday's close.

"A quieter week on the economic calendar and less news flow from Greece may be easing us into the quieter summer months, however there is still plenty to focus on in the markets, with commodities grabbing plenty of attention," said Craig Erlam, senior market analyst at Oanda trading group.

"Meanwhile, earnings season is also well underway and could prove key in determining whether we will see rate hikes this year and companies attempt to weather the strong dollar storm." A sharp plunge in gold prices to a five-year low shook financial markets Monday.

Traders said massive selling in China, where financial markets have been extremely turbulent generally, was behind the drop.

Oil prices are also retreating, with New York-traded crude falling below US$50 a barrel as demand for the dollar-priced commodity takes a hit from a strong US currency, analysts said.

Expectations of more Iranian crude flooding the oversupplied global market within months was also dragging prices down.

Lower commodity prices were meanwhile pressuring shares in heavyweight miners and oil companies in early deals on Tuesday.

"Should the slump in commodities persists and intensify many will ask themselves if this is the precursor to another dip in global growth which consequently could hit stocks too sooner or later," said Markus Huber, senior analyst at brokers Peregrine & Black.

The dollar climbed Tuesday to a five-week high against the yen and held its euro gains on growing expectations the US Federal Reserve will raise interest rates this year.

Markets are keeping a close eye on the Fed as it considers its first rate rise since 2006 as the US economy gets back up to speed.

In Europe, Bank of England governor Mark Carney has indicated that Britain's record-low interest rate could also soon start to rise.

The BoE chief last week said he expected the key rate to climb over the next three years from its current level of 0.50 per cent - where it has stood for more than six years to help stimulate growth after the global financial crisis.

AFP