Volatility marks pace

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Volatility during the last part of Thursday's session was fuelled by comments from European Central Bank President Jean-Claude Trichet and the Bank of England, which announced that interest rates would remain unchanged.

7 March 2008

MADRID - Volatility during the last part of Thursday's session was fuelled by comments from European Central Bank President Jean-Claude Trichet and the Bank of England, which announced that interest rates would remain unchanged.

The Ibex 25 blue-chip index ended in the red, falling 1.12 percent to 12,803 points,  below the resistance level of 13,000 points.

Investors have interpreted the BCE's decision to keep interest rates untouched at 4 percent as the least bad option to keep a lid on inflation.

There was also bad news from the Federal Reserve on the health of the US economy, which is continuing to cool during the first months of the year with strong inflationary pressure due to rocketing commodity prices.

While there are a number of analysts who expect a reduction of interest rates in Europe in the following "two or three months," inflationary concerns voiced by the ECB suggest that interest rates will probably remain stable as long as there is not a sharp downturn in economic growth.

In this respect, investors were watching with weary eyes the oil markets, which showed that  crude had risen to a new record of over USD 105 per barrel in the US and USD 103 in London.

Some of the best performers in yesterday's session were power group Iberdrola, which saw its shares advance by 1.73 percent to EUR 9.94 on merger expectations. Another share that did well was Gamesa, which rose by 3.97 percent to EUR 28.30 after Citigroup had recommended its investors to buy shares of the wind-power company.

Other energy company stocks that did well were Unión Fenosa, Spain's third-largest power group, that rose 2.91 percent to end at EUR 44.20.

[Copyright EL PAÍS / RAFAEL VIDAL 2008]

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