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Market Update

Europe Extends Losses as Oil Drops 2% to One-Year Low

Author: Lucy Stoeva
Last Update: 11:39 AM ET December 04 2015

4:00 PM Frankfurt – European markets extended losses dragged down by energy stocks. OPEC raised production ceiling to 31.5 million barrels of oil a day. French insurer AXA and the U.K. homebuilder Berkeley increased their dividends. Volkswagen U.K. sales plunged 20%.

Market indexes in Europe extended losses on Friday as lower oil prices dragged down energy stocks, while the disappointment over the ECB decision continued to depress the broader market.

Even the positive news from several companies increasing their dividends, could not improve market sentiment.

OPEC, the Organization of the Petroleum Exporting Countries, reportedly raised its production ceiling to 31.5 million barrels of oil a day during its Vienna, Austria meeting today.

The new production ceiling is in line with current oil output.

Brent crude oil price slipped nearly 2% to $42.97 on the Intercontinental Exchange Europe, while U.S. crude oil futures fell almost 3% to $39.92 a barrel and dropped below $40 mark for the first time in a year.

In London trading, FTSE 100 index dropped 18.77 or 0.3% to 6,255.96 and in Frankfurt the DAX index slipped 70.21 or 0.7% to 11,717.79.

In Paris, CAC 40 index slumped 30.88 or 0.7% to 4,699.41.

For the week, FTSE 100 index decreased 1.9% and the DAX index plunged 5.1% and the CAC 40 index declined 4.7%.

AXA SA jumped 3.6% to €25.36 after the company announced it will pay higher dividends as it secured regulatory approval for its internal models.

The approval lowers the capital needed to comply with the Solvency II, the new European banking capital requirement standard, effective from January 1.

The French insurer will now pay 45% to 55% of its earnings as dividends, up from the previously announced 40% to 45%.

Berkeley Group Holdings Plc soared 7.2% to 3,593.9 pence after the U.K.-based home builder reported revenues in the first-half ending in October jumped 11.7% from a year ago to £1.14 billion.

Net profit in the period declined 3.8% from a year ago to £293.3 million and diluted earnings per share dropped to 149.2 pence from 158.8 pence.

The company sold 2,091 new homes across London and the South of England at an average selling price of £506,000.

Berkeley plans to increase its dividend program with £500 million as a result of strong industry fundamentals and £3.1 billion of committed cash from forward sales.

Under the new plan, shareholders will receive £16.34 per share by 2021, up from £13 a share previously.

Technip gained 2.7% to €48.51 after the France-based oil services provider secured a contract by Unipetrol to provide four cracking furnaces for the ethylene plant in Zaluzi, Czech Republic.

The contract is valued up to €100 million.

The project will be executed by Technip’s ethylene technology center in Zoetermeer, the Netherlands.

Volkswagen AG gained 1.8% to €127.85 on reports that the auto maker assured its lenders that, if necessary, it would sell assets to fund repayment of the one-year €20 billion loan for covering the costs of diesel-emissions scandal.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc