Greek Deficit Revised Higher; Nokia Plunges

Mayank Mehta
22 Apr, 2010
New York City

The euro and market indexes in Europe declined after a surprised revision in Greek budget deficit. Separately, debt to government deficit in the region soared to 6.3% in 2009 from 2% a year ago. Nokia plunged after sales gained less than expected.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – The euro and market indexes in Europe declined after a surprised revision in Greek budget deficit. Separately, debt to government deficit in the region soared to 6.3% in 2009 from 2% a year ago. Nokia plunged after sales gained less than expected.[/R]

European markets traded lower after the eurostat revised Greek budget deficit higher. The euro and stocks declined after the surprised revision.

The European statistics office revised higher the estimate of Greek budget deficit to 13.6% of GDP compared to 12.9% estimated by the government only two weeks ago.

The surprise debt revision put investors on the defensive and dragged the euro and the Greek bonds sharply lower. The yield of 10-year bonds rose to a record 8.49% as the eurostat said that the deficit may be revised further higher by 0.5 percentage point.

The larger than estimated Greek deficit put the European Union officials on the defensive too as it now raises more questions about the union’s ability to monitor member nations and enforce strict rules in data gathering.

Separately, the eurostat said 2009 the government deficit and debt in euro area increased but GDP fell. Deficit to GDP ratio rose 6.3% compared to 2% in 2008 and in EU27 debt to GDP rose 6.8% compared to 2.3% in 2008.

EU27 external current account recorded a deficit of 9.2 billion euro in the fourth quarter of 2009, compared with a deficit of 54.8 billion euros in the fourth quarter of 2008 and a deficit of 23.1 billion euros in the third quarter of 2009.

In London FTSE 100 Index closed lower 52.24 or 0.91% to 5,671.19, in Paris CAC 40 Index decreased 46.94 or 1.18% to close at 3,930.73, in Frankfurt DAX index lower 56.52 or 0.91% to close at 6,173.86. In Zurich trading SMI decreased 93.34 or 1.37% to close at 6,721.37.

Gainers & Losers

ABB Ltd the builder of electricity networks said first quarter revenues fell 4% to $6.93 billion from $7.21 billion a year ago. Net profit for the quarter fell 28% to $463 million or 20 cents per diluted share compared to net profit of $641 million or 29 cents per share a year ago.

Credit Suisse Group AG the financial services company said first quarter revenues rose 11% to CHF9.01 billion from CHF8.11 billion a year ago. Net profit for the quarter rose 2% to CHF2.06 billion or CHF1.63 per diluted share compared to net profit of CHF2.01 billion or CHF1.59 per share a year ago.

Le Carbone Lorraine SA the maker of brushes for electrical motors added 4.5% to €28.23.

Deutsche Bank AG fell 0.7% to €54.90.

Klepierre SA the shopping-center owner rose 0.5% to €27.35.

L''Oreal SA added 2.0% to €81.62 after the cosmetics maker to buy Essie Cosmetics to expand in the nail color and care market in the U.S.

Merck added 2.3% to €63.25 after the drugs and chemicals maker was upgraded to “buy” from “hold” at Deutsche Bank.

Nexans SA declined 6.0% to €61.10 after the maker of cables and wires expects full-year sales to be close to 2009 levels on the rebound in the second half helped annual sales to recover.

Nokia Corporation plunged 14.7% to €12.75 after the maker of mobile devices said first quarter revenues rose 3% to €9.52 billion from €9.28 billion a year ago. Net profit for the quarter rose 186% to €349 million or €0.09 per diluted share compared to net profit of €122 million or €0.03 per share a year ago.

Publicis Groupe SA rose 2.0% to €34.12 after the owner of the Saatchi & Saatchi and Leo Burnett ad agencies said first-quarter sales climbed 8.1%.

Remy Cointreau SA increased 4.6% to €45.28 after the producer of champagne and spirits maker said 2009 revenues rose 13% to €807.8 million from €714.1 million a year ago.

Schneider Electric SA fell 1.1% to €87.10 after the maker of circuit breakers first quarter sales increased 2.3% and indicated improving sales trend.

Siemens AG rose 0.2% to €73.29 after the Siemens Energy, a unit of German industrial giant Siemens AG said Wednesday that it has signed a $15 million contract with a unit of Hawaiian Electric Industries Inc to build a ""smart grid"" system in Honolulu.

Snam Rete Gas SpA decreased 0.6% to €3.76 after the natural gas grid operator said first quarter revenues rose 87% to €866 million from €462 million a year ago. Net profit for the quarter rose 159.5% to €301 million or €0.09 per diluted share compared to net profit of €116 million or €0.07 per share a year ago.

Vallourec SA rose 0.4% to €150.10 after the tubemaker agreed to acquire Serimax, a provider of welding solutions for offshore line pipes for €150 million.

DAX Index Movers

Commerzbank AG led the decliners in the DAX index of 3.08%, followed by decrease in Salzgitter AG of 2.51%, in Deutsche Bank AG of 2.47%, in Allianz SE of 2.46%, and in Siemens AG of 2.09%.

Merck KGaA led gainers in the DAX index with a rise of 1.97%, followed by increase in Volkswagen AG of 1.67%, in Deutsche Boerse AG of 0.66%, in Adidas AG of 0.62%, and in SAP AG of 0.55%.

CAC-40 Index Movers

Dexia SA led the decliners in the CAC-40 index of 3.40%, in Alstom SA of 2.97%, in Credit Agricole SA of 2.96%, in Bouygues SA of 2.85% and in Technip of 2.82%.

PPR SA gainers in the CAC-40 index with a rise of 1.73%, in Pernod Ricard SA of 0.69%, in Alcatel Lucent of 0.67% in Air Liquide SA of 0.39% and in Vivendi SA of 0.37%.