Greece Asks for Loans; Volvo, Adidas Up

Mayank Mehta
23 Apr, 2010
New York City

Markets in Europe closed higher led by a sharp gain in Germany. Greek Prime Minister Papandreou asked to activate emergency loans of nearly $60 billion from the IMF and the EU. Industrial new orders increased 1.5% in the region. Adidas and Volvo surged 12% after earnings. Ericsson declined.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – Markets in Europe closed higher led by a sharp gain in Germany. Greek Prime Minister Papandreou asked to activate emergency loans of nearly $60 billion from the IMF and the EU. Industrial new orders increased 1.5% in the region. Adidas and Volvo surged 12% after earnings. Ericsson declined.[/R]

Positive earnings from Adidas and Volvo lifted European market indexes. Indexes in Germany surged 1.5% and led the region and other indexes in sixteen nations gained between 0.3% and 1%. The benchmark index in Athens soared 4% after Greece asked EU-IMF to provide the emergency loans.

Greek Seeks Activation of Aid Package

The Greek Prime Minister George Papandreou in a televised address has urged the EU and the IMF to activate the emergency loan. The Prime Minister requested that this was necessary for the country to return to “the regular course of the economy.”

Greece needs to raise around €10 billion in May to cover redemptions, coupon payments and its primary government deficit.

Greece is forced to borrow money from the multi-lateral agencies as the yields on the Greek bonds hover near record 8.1% and trade as high as 9% on Thursday. The sharp premium to the German bonds has dramatically increased the cost to Greece and then nation is forced to borrow money from the EU and the IMF.

However, the cheap loans require a drastic cut in government spending in bringing the deficit down to 3% from the current 13% level in the next three years.

Talks in Athens between the European Commission, the European Central Bank to finalize the terms of the aid package triggered the Athens composite share index to gain almost 4%.

Meanwhile, Moody''s Investors Service has downgraded the government bond ratings of Greece to A3 from A2.

Prime Minister stressed that Greece has already cut the spending by 6% in the last two austerity measures.

Germany Business Confidence Soars

Decline of the euro, warm weather and export demand has boosted German business confidence.

The Ifo Institute in Munich said its business climate index jumped to 101.6 from 98.2 in March based on a survey of 7,000 executives.

U.K. GDP Rises

In the first quarter, U.K. GDP rose by 0.2%. This was the second consecutive economic expansion since first quarter of 2008. Fourth quarter 2009 unemployment rate stood 7.8% compared to last two quarters.

Industrial New Orders Rises

Industrial new orders for EU16 area increased by 1.5% in February 2010, after an decrease of 1.6% in January and in EU27 new orders rose by 1.1% in February, after an increase of 0.3% in January 2010.

In London FTSE 100 Index closed higher 67.61 or 1.19% to 5,732.94, in Paris CAC 40 Index increased 35.31 or 0.90% to close at 3,959.96, in Frankfurt DAX index higher 95.56 or 1.55% to close at 6,264.28. In Zurich trading SMI increased 38.96 or 0.58% to close at 6,759.05.

Gainers & Losers

AB Volvo, the truck maker said first quarter sales rose 4% to SEK58.6 billion from SEK56.1 billion a year ago. Net profit for the quarter was SEK1.68 billion or SEK0.83 per diluted share compared to net loss of SEK4.23 billion or SEK2.09 per share a year ago.

adidas AG, the sporting-goods maker added 2.4% to €43.82.

AEGON N.V. added 1.4% to €5.26 after U.S. insurer Transamerica Corp was upgraded to “buy” from “hold” at Citigroup Inc.

Akzo Nobel N.V. added 5.0% to €45.92 after the paints and coatings maker said first quarter revenue rose 6% to €3.25 billion from €3.07 billion a year ago. Net profit for the quarter was €81 million or €0.35 per diluted share compared to net loss of €7.0 million or €0.03 per share a year ago.

Compagnie de Saint-Gobain SA, the building materials supplier added 3.7% to €38.25 despite fall in first quarter sales of 0.5% to €8.74 billion from €8.78 billion a year ago.

Damartex SA, the maker of thermal clothing closed unchanged at €19.50.

Eni SpA, the oil and gas company rose 0.9% to €17.68 but first quarter revenue fell 4.4% to €23.7 billion from €24.8 billion a year ago. Net profit for the quarter fell 14% to €1.90 million or €0.53 per diluted share compared to net profit of €2.22 million or €0.61 per share a year ago.

Ericsson AB, the chip equipment maker said first quarter revenue fell 9% to SEK45.1 billion from SEK49.6 billion a year ago. Net profit for the quarter fell 27% to SEK1.26 billion or SEK0.39 per diluted share compared to net profit of SEK1.72 billion or SEK0.54 per share a year ago.

Ingenico SA rose 2.9% to €19.85 after the maker of payment terminals said first quarter revenue rose 8.8% to €173.2 million.

L''Oreal SA advanced 2.1% to €81.60 after the cosmetics maker shares rose 2% after first quarter sales.

STMicroelectronics N.V dropped 2.8% to €7.46 after the chipmaker posted a profit for the first quarter and revenue soared by 40%.

Somfy SA, the maker of motors for awnings and blinds rose 0.8% to €149.00.

Total SA rose 0.2% to €42.56.

Zodiac SA, the maker of aircraft seats and automotive components rose 0.8% to €37.35.

DAX Index Movers

RWE AG led the decliners in the DAX index of 5.38%, followed by decrease in Volkswagen AG of 2.72%, in Salzgitter AG of 2.38%, in Muenchener Rue AG of 0.80%, and in Deutsche Bank AG of 0.59%.

MAN SE led gainers in the DAX index with a rise of 4.26%, followed by increase in Deutsche Boerse AG of 3.99%, in Bayer AG of 3.86%, in BASF SE of 2.57%, and in Metro AG of 1.94%.

CAC-40 Index Movers

STMicroelectronics N.V. led the decliners in the CAC-40 index of 5.21%, in Dexia SA of 0.94%, in Alcatel Lucent of 0.90%, in Electricite de France SA of 0.78% and in Societe Generale SA of 0.58%.

Renault SA gainers in the CAC-40 index with a rise of 7.01%, in Compagnie de Saint-Gobain SA of 6.74%, in Lafarge S.A. of 4.49% in PSA Peugeot Citroen S.A. of 3.61% and in Bouygues SA of 2.70%.