European stocks rose on Monday, buoyed by positive corporate news and sharp falls in crude oil prices, while the dollar rose against the yen ahead of an expected rise in U.S. interest rates on Wednesday. Eurozone government debt yields weakened within narrow ranges. Stock futures indicated a stronger opening on Wall Street, as markets awaited U.S. personal income and consumption data for May due at 1230 GMT. European stocks were stronger after equities in Japan rose to nine-week highs. Among the main gainers were Dutch telecoms group KPN , which announced a new share buyback plan, and banking group Credit Suisse , buoyed by a warm investor response to senior management changes. Crude oil prices fell sharply on rising Iraqi oil exports and full resumption of Norwegian production after an industry strike.
Prices were also pushed lower by reports, which were later officially denied by the U.S. military in Baghdad, that Abu Musab al-Zarqawi, a Jordanian militant who Washington says is allied to al Qaeda, had been captured in Iraq. Market players are waiting for the U.S. Federal Reserve's widely-expected decision to raise interest rates on Wednesday, which would be the first U.S. rate hike in four years. U.S. borrowing costs are expected to rise by a quarter point from their current 46-year low of one percent at the end of the Fed's two-day meeting. Besides the U.S. rate decision, markets are eyeing Middle East oil supply conditions. The formal handover of power to an interim Iraqi government was brought forward by two days to Monday, although the move had no immediate effect on prices. Another significant data focus this week is the influential Bank of Japan "tankan" sentiment survey, which is due out on Thursday and expected to confirm a pick-up in Japan's economy.
OIL PRICE FALL
In the oil market, front-month August Brent crude fell 50 cents a barrel to $34.47. Among equity indices, the FTSE Eurotop 300 index <.FTEU3> rose 0.77 percent on the day, while the narrower DJ Euro Stoxx 50 index <.STOXX5OE> firmed 0.89 percent. In Tokyo, the Nikkei average <.225> finished up 0.88 percent or 103.66 points at 11,884.06, showing a strong spurt towards the end of trade and marking its highest close since April 28. Last week, the benchmark gained 3.5 percent. The broader TOPIX index <.TOPX> ended up 1.21 percent at 1,186.60, also its highest finish since April 28. The dollar was flat against the euro, changing hands at $1.2171, while it was up about nearly half a percentage point at 108.11 yen. In the bond market, debt yields -- which move inversely to bond prices -- were mixed. The interest-rate sensitive two-year Schatz yield was down 1.6 basis points at 2.702 percent, while the benchmark 10-year Bund yield was down 0.3 basis points on the day at 4.318 percent.///