Reply #11: Oils gain but rate jitters dampen European stocks [View All]

Tue Jun 27, 2006 10:35 AM BST

LONDON, June 27 (Reuters) - European stocks pared early gains on Tuesday as worries over the prospect of further interest rate rises cast a shadow over the market and helped negate a rise in oil producer shares.

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By 0902 GMT, the pan-European FTSEurofirst index <.FTEU3> of 300 leading shares was broadly unchanged at 1,279.2 points.

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"The market is very concerned about interest rates at the moment," said Rolf Elgeti, European strategist, ABN Amro. "The sell-off we've had in recent weeks has attracted some fundamental buyers. We are overweight in both oil and mining. Even if oil prices were to drop further, we still think these companies are too cheap."

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The equity market saw little immediate reaction to the Munich-based Ifo institute survey of German business sentiment which unexpectedly rose in June.

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