Euro 1-year Low; Contagion Fears Deepen

Mayank Mehta, Arthi Gupta and Darlington Musarurwa
28 Apr, 2010
New York City

European stocks declined as Greek bond yields surge to record level and bonds of Portugal and Spain decline sharply. The euro dropped to one-year low against the dollar. Merck KGaA and Puma decline. Continental AG sees 2010 sales up as much as 10%. Rhodia SA swung to a quarterly profit.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European stocks declined as Greek bond yields surge to record level and bonds of Portugal and Spain decline sharply. The euro dropped to one-year low against the dollar. Merck KGaA and Puma decline. Continental AG sees 2010 sales up as much as 10%. Rhodia SA swung to a quarterly profit. Renault SA quarterly sales increased 28%.[/R]

European stocks fell as S&P lowered Greek bond ratings by three levels to junk and Portugal debt by two notches to A-. The euro hit a one-year low against the dollar.

Investors are increasingly worried that Greek debt will have to be restructured and investors may recoup as little as 30% of their bonds principal.

Germany’s Chancellor Angela Merkel has been reluctant to expedite the bailout package unless there is more deficit reduction from Greece which has driven bond yields of Greece, Portugal and Spain in record zones.

Greek Prime Minister George Papandreou speaking at a Cabinet meeting in Athens broadcast live on state-run NET TV, urged EU policy makers to act quickly to prevent “the fire” of Greece’s fiscal crisis from engulfing the world’s economy. He said talks involving Greek, EU and IMF officials on an aid package for Greece will be completed “very soon.”

National benchmark indexes fell in 14 of the 18 western European markets. Spain’s IBEX 35 and Italy’s FTSE MIB both lost 2.3%. Portugal’s PSI-20 slipped 1.1%. Greece’s ASE Index rose 0.6%.

In London FTSE 100 Index closed higher 20.25 or 0.36% to 5,623.77, in Paris CAC 40 Index decreased 17.58 or 0.46% to close at 3,827.02, in Frankfurt DAX index lower 25.44 or 0.41% to close at 6,134.07. In Zurich trading SMI decreased 24.51 or 0.37% to close at 6,642.96.

Merck KGaA, the pharmaceutical and chemicals company said first quarter sales rose 13% to €2.1 billion from €1.86 billion a year ago. Net profit for the quarter rose 238% to €191.4 million or €0.88 per diluted share compared to net profit of €56.7 million or €0.26 per share a year ago.

Puma AG Rudolf Dassler Sport, the sportlifestyle company said first quarter sales fell 2% to €683.1 million from €697.4 million a year ago. Net profit for the quarter rose 1,384% to €83.1 million or €5.50 per diluted share compared to net profit of €5.6 million or €0.37 per share a year ago.

Gainers & Losers

Banco Bilbao Vizcaya Argentaria, S.A, the diversified international financial group said first quarter net interest income rose 4% to €3.39 billion from €3.27 billion a year ago. Net profit for the quarter rose 0.2% to €1.24 billion or €0.32 per diluted share compared to net profit of €1.238 billion or €0.34 per share a year ago.

Continental AG, the car-parts maker fell 1.7% to €41.53.

Duerr AG fell 4.9% to €17.12 after the suppliers of products and services for automobile manufacturing said first quarter sales fell 25.6% to €230.3 million from €309.5 million a year ago. Net loss for the quarter was €10.4 million or €0.60 per diluted share compared to net profit of €0.5 million or €0.01 per share a year ago.

Electricite de France SA rose 0.3% to €39.94.

F Marc de Lacharriere rose 0.2% to €37.60 after the financial services company said second quarter sales rose to €141.2 million from €128.8 million a year ago.

Groupe SEB, the appliance maker fell 1.8% to €53.72.

Infineon Technologies AG decreased 3.2% to €5.13. The chipmaker said second quarter revenues rose 55% to €1.04 billion from €669 million a year ago. Net profit for the quarter was €79 million or €0.07 per diluted share compared to net loss of €239 million or €0.29 per share a year ago.

MAN SE slipped 4.0% to €66.48 after the truckmaker was downgraded to “sell” from “buy” at DZ Bank AG.

Merck KGaA fell 1.5% to €63.32. The pharmaceutical and chemicals company said first quarter sales rose 13% to €2.1 billion from €1.86 billion a year ago. Net profit for the quarter rose 238% to €191.4 million or €0.88 per diluted share compared to net profit of €56.7 million or €0.26 per share a year ago.

Nordea Bank AB, the financial services group said first quarter net interest income fell 9% to €1.24 billion from €1.36 billion a year ago. Net profit for the quarter rose 2.6% to €643 million or €0.16 per diluted share compared to net profit of €627 million or €0.19 per share a year ago.

Puma AG Rudolf Dassler Sport fell 1.4% to €250.00 after the sportlifestyle company said first quarter sales fell 2% to €683.1 million from €697.4 million a year ago. Net profit for the quarter rose 1,384% to €83.1 million or €5.50 per diluted share compared to net profit of €5.6 million or €0.37 per share a year ago.

Rhodia SA decreased 3.3% to €17.24. The specialty chemicals company said first quarter sales rose 28% to €1.18 billion from €920 million a year ago. Net profit for the quarter was €69 million or €0.69 per diluted share compared to net loss of €134 million or €1.35 per share a year ago.

Renault SA dropped 2.8% to €35.19 but the carmaker said first quarter sales increased 28%.

SAP AG fell 1.0% to €36.41. The provider of business software said first quarter sales rose 4.6% to €2.51 billion from €2.4 billion a year ago. Net profit for the quarter rose 97% to €387 million or €0.33 per diluted share compared to net profit of €196 million or €0.16 per share a year ago.

Software AG fell 1.1% to €87.65 after the software maker was upgraded “hold” in new coverage by Independent Research GmbH.

STRATEC Biomedical Systems AG dropped 4.2% to €26.92 but the manufacturer of fully automated analyzer systems said first quarter rose 21% to €20.2 million from €16.7 million a year ago. Net profit for the quarter rose 32% to €2.87 million or €0.25 per diluted share compared to net profit of €2.18 million or €0.19 per share a year ago.

Skandinaviska Enskilda Banken AB said first quarter interest income fell 34% to SEK3.88 billion from SEK5.90 billion a year ago. Net profit for the quarter fell 34% to SEK674 million or SEK0.31 per diluted share compared to net profit of SEK1.03 billion or SEK1.03 per share a year ago.

Trigano SA added 2.4% to €17.41 after the maker of recreational vehicles said its first-half loss narrowed to €3.2 million from €17.1 million a year ago.

Vestas Wind Systems A/S, the wind power industry said first quarter revenues fell 32% to €755 million from €1.11 billion a year ago. Net loss for the quarter was €82 million compared to net profit of €56 million a year ago.

Vossloh AG, the maker of railway components fell 2.1% to €77.74.

DAX Index Movers

SAP AG led the decliners in the DAX index of 3.35%, followed by decrease MAN SE of 2.72%, in Metro AG of 2.04%, in Volkswagen AG of 1.73%, and in Salzgitter AG of 1.70%.

E.ON AG led gainers in the DAX index with a rise of 1.39%, followed by increase in Fresenius SE of 0.85%, in RWE AG of 0.74%, in Bayer AG of 0.42%, and in K+S AG of 0.22%.

CAC-40 Index Movers

Technip led the decliners in the CAC-40 index of 4.50%, in Alcatel Lucent of 4.47%, in Renault SA of 3.26%, in Accor SA of 2.84% and Pernod Ricard SA of 2.55%.

BNP Paribas SA gainers in the CAC-40 index with a rise of 2.54%, in Societe Generale SA of 1.53%, in Electricite de France SA of 1.11% in STMicroelectronics N.V. of 0.53% and in Vallourec SA of 0.34%.