August 08, 2006	Tuesday	Rajab 12, 1427

LONDON, Aug 7: European stock markets fell strongly on Monday as oil prices jumped higher, while investor sentiment was cautious on the eve of a US interest rate decision, dealers said.

In Paris, the French CAC 40 index of leading shares sank 1.55 per cent to 4,962.84, Frankfurt’s DAX 30 index shed 1.26 per cent to 5,650.69 points and London’s FTSE 100 dropped 0.83 per cent to 5,840.30 points.

The DJ Euro Stoxx 50 index of leading eurozone shares slumped 1.36 per cent to 3,667.40 points.

The euro stood at 1.2873 dollars.

Before the weekend, US shares had ended marginally lower Friday on profit-taking after a government report issued ahead of a crunch Federal Reserve meeting next week revealed tepid job growth in July.

Japanese share prices tumbled to a two-week low on Monday as traders fretted over the outlook for US interest rates, dealers said.

Meanwhile, world oil prices spiked on Monday after British energy major BP began to cut production in a key oil field in Alaska due to a pipeline spill.

High crude prices bite into corporate profits and raise investor concerns that increased costs may hamper global economic growth.

British oil major BP said late Sunday that it had begun to shut down a key oil field in Alaska which accounts for eight per cent of total crude output in the United States.

In London, BP shares sank 1.49 per cent to 626.5 pence.

In Paris, the share price of French oil giant Total fell 0.57 per cent to 52.1 euros.

Shares in easyJet fell 1.39 per cent to 425.5 pence, while the British capital’s second-tier FTSE 250 index, on which easyJet’s shares are traded, fell 0.77 per cent to 9,286.60 points.

In a third-quarter trading update, easyJet held its guidance of a 40-50 per cent increase in annual pre-tax profit but said it now expected capacity growth of about 13 per cent — less than previously expected.

On Friday in New York, the Dow Jones Industrial Average closed down a slight 0.02 per cent at 11,240.35 points and the technology-stacked Nasdaq index ended 0.35 per cent lower at 2,085.05 points.

The Standard and Poor’s 500 broad-market index was also barely changed at 1,279.36, down 0.07 per cent.

Wall Street had opened higher after the government reported non-farm payrolls rose by just 113,000 new positions last month, much slower than a Wall Street forecast of 145,000 jobs.

Traders pushed up the market in the belief the report would pressure the Fed to put its rate hike campaign on pause when it meets on Tuesday. After 17 rise in a row, the fed funds rate stands at 5.25 per cent.

—AFP