By Blaise Robinson
PARIS, May 30 (Reuters) - European stocks gained ground for
the third straight session on Friday as banks rose and a drop in
oil prices brought some relief to airline stocks, though it
dragged energy shares lower.
At 0822 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.2 percent at 1,333.20 points, after
rising to as high as 1,337.43 points, the index's highest level
in a week.
Recently hammered airlines stocks were the biggest gainers,
with Air France <AIRF.PA> topping European winners with a 7.7
percent gain, British Airways <BAY.L> soaring 6.3 percent and
Ryanair <RYA.I> adding 3.9 percent.
Oil prices dipped to below $126 on Friday, after a steep
fall in the previous session, as a rise in the dollar eclipsed
the biggest drop in U.S. inventories since 2004, while worries
over global energy demand grew.
"The fall in oil prices can't hurt, but that being said, the
pressure is still high as even at $100 a barrel, oil has a
tremendous impact on consumers," said Yann Lepape, chief global
macro strategist at Oddo Securities in Paris.
Banks recouped some recent losses, with Unicredit <CRDI.MI>
up 2.1 percent, Societe Generale <SOGN.PA> rising 1.4 percent
and Credit Suisse <CSGN.VX> 0.8 percent higher.
The index's advances were limited by a retreat in mining
shares, hit by a drop in metal prices. Shanghai zinc fell by 4
percent, while copper and aluminium dipped, as the rise in the
dollar sparked a sell-off in commodities.
Rio Tinto <RIO.L> fell 2 percent, BHP Billiton <BLT.L> shed
3.7 percent and Xstrata <XTA.L> lost 2.5 percent.
The UK's FTSE 100 index <> dipped 0.05 percent, hit by
falling heavyweight resource-related stocks, while Germany's DAX
index <> gained 0.4 percent and France's CAC 40 <>
rose 0.4 percent.
RECESSION FEARS EASING?
Although the drop in oil slightly eased recent worries over
the impact on corporate profits and fears of rising inflation,
it weighed on energy stocks on Friday, with BP <BP.L> down 1.4
percent, Total <TOTF.PA> down 1.6 percent and Repsol YPF
<REP.MC> down 0.9 percent.
"The recent more robust macro dataflow is offering
credibility to an equity pick-up," JPMorgan analysts wrote in a
note.
"However, the risk coming from oil and inflation remains,
where we acknowledge that any further oil rally, which is not
the JPM view, is likely to weigh negatively on stocks. If the
energy price remains at $135 throughout 2008, U.S. headline
inflation would move up another 1 percent, to 5.1 percent
year-over-year rate in August."
Investors got some relief on the macro front on Thursday,
after an upward revision in a broad measure of U.S. economic
growth fuelled some hope that a recession could be avoided.
"U.S. preliminary GDP for Q1 duly came in at plus 0.9
percent which rather makes a mockery of all that talk of
recession over the past six months or so," Simon Denham,
managing director at Capital Spreads, wrote in a note.
"Whilst the rise in energy and fall in house prices since
the end of March will not have exactly helped the cause of this
perception, across the board things have not deteriorated quite
enough in the second quarter to have pushed the number into
negative territory."
Investors will comb through a flurry of macroeconomic data
expected during the session on Friday, including U.S. core
personal consumption expenditure and the University of Michigan
confidence data, for more clues on the health of the world's
largest economy.
(Editing by Paul Bolding)
