European Markets Retreat In Face Of Higher Oil Prices

June 24, 2008 9:20 a.m. EST

(AHN) - European markets retreated from earlier gains as the impact of higher oil prices was felt by automakers, package delivery services and others.

The U.K. FTSE 100 fell more than 1 percent to 5,596 as homebuilder Taylor Wimpey dropped 7 percent following a report that mortgages fell to a low unseen since May. Banks, however, were on an uptick as investors felt more confident the bottom may have finally been reached.

Mortgage bank Bradford & Bingley rose almost 10 percent on news of more funding opportunities.

The pan-European Dow Jones Stoxx 600 index lost almost 1 percent to 292 with automakers hit by higher oil prices leading declining shares.

Germany's luxury automaker Porsche shed 3 percent, along with the country's Volkswagon, which lost 2 percent. Italy's Fiat dropped 4 percent while France's Renault fell 3 percent.

Credit Suisse warned that higher oil prices could mark a return to "a 1970's-style shock to vehicle sales."

The German DAX fell nearly two percent to 6,467 as Deutsche Post fell 1 percent in the wake of UPS warned oil prices could hurt profits.

Along with automakers and package-delivery firms, oil prices also slammed home-building. In France, the CAC-40 dropped 1 percent to 4,438 as Saint Gobain lost more than 3 percent.

Europe's slide was happening as New York trading appeared headed for a lower start.