European Indexes Sell-off; Spain in Focus

Arthi Gupta, Mayank Mehta and Sanjay Barot
04 May, 2010
New York City

European stocks decline amidst lingering concerns of financial crisis spreading to Spain and Portugal. The producer price index rises 0.9% in March. UBS posts better-than-expected earnings. Adidas Group increases 2010 financial outlook while Lufthansa loss widens.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European stocks decline amidst lingering concerns of financial crisis spreading to Spain and Portugal. The producer price index rises 0.9% in March. UBS posts better-than-expected earnings. Adidas Group increases 2010 financial outlook while Lufthansa loss widens.[/R]

European shares slumped amid concern that Greece’s debt crisis will spread through the region. Investors are jittery about whether Greece''s aid package will work.

The euro hovered close to a one-year low against the dollar on concerns about Greek debt problems and fears of possible contagion to other vulnerable euro zone countries. Yields on euro zone government bonds were flat to lower.

European finance ministers agreed to a €110 billion bailout package for Greece, but analysts doubt whether the country could make the steep budget cuts necessary, with unions planning more strikes. In exchange, Athens has promised to carry out spending cuts and tax hikes worth €30 billion over three years on stringent austerity measures.

Worries grew that debt problems could spread to Spain and Portugal. The European Central Bank relaxed its standard to take Greek assets collateral, even though they are rated junk.

Producer price index in the euro-zone rose 0.9% on an annual basis in March, compared to the 0.4% fall in the previous month, the Eurostat said today. On a monthly basis, the PPI was up 0.6% in March, faster than the 0.1% growth in the previous month.

Standard Chartered PLC said that it had a ""very strong start of the year,"" with first-quarter income and profit reaching record levels. Standard Chartered derives more than 90% of its income from emerging markets in Asia, Africa and the Middle East.

German flagship airline Deutsche Lufthansa AG said Tuesday its net loss widened in the first three months of the year due to higher costs for fuel, strikes and bad weather, but reiterated that it expects operating profit to rise in 2010.

Lufthansa posted a first-quarter net loss of €298 million, wider than the €267 million loss it posted for the period a year ago. Revenue in the first quarter was €5.8 billion, up from €5 billion a year earlier.

Swiss bank UBS AG has reported a first-quarter net profit attributable to shareholders of 2.2 billion Swiss francs or $2 billion. The Zurich-based bank recorded a net loss of 1.98 billion francs or $1.84 billion in the first quarter of 2009.

In London FTSE 100 Index closed lower 137.55 or 2.48% to 5,415.74, in Paris CAC 40 Index decreased 125.47 or 3.28% to close at 3,702.99, in Frankfurt DAX index lower 142.22 or 2.31% to close at 6,024.70. In Zurich trading SMI decreased 115.13 or 1.74% to close at 6,492.58.

Gainers & Losers

Adidas AG rose 0.5% to €45.50 after the producer of sportswear and sports equipment said first quarter revenues rose 4% to €2.67 billion from €2.58 billion a year ago. Net profit for the quarter surged to €168 million or €0.80 per diluted share compared to net profit of €5 million or €0.04 per share a year ago.

BMW AG fell 0.9% to €37.03. The luxury-car maker reported sales increased 9% of 21,111 vehicles in April.

Continental AG fell 1.1% to €42.10. The automotive industry supplier said first quarter sales rose 39.5% to €6 billion from €4.3 billion a year ago. Net profit for the quarter was €227.7 million or €1.14 per diluted share compared to net loss of €267.3 million or €1.58 per share a year ago.

Credit Agricole SA fell 1.0% to €10.96.

Daimler AG, the carmaker fell 0.3% to €38.49.

Entrepose Contracting SA, the oil-industry contractor gained 3.8% to €74.33.

Fresenius Medical Care AG & Co. KGaA rose 0.3% to €41.23 after the kidney dialysis company said first quarter sales rose 12.5% to $2.88 billion from $2.56 billion a year ago. Net profit for the quarter rose 7% to $211 million or $0.70 per diluted share compared to net profit of $198 million or $0.67 per share a year ago.

Hannover Rueckversicherung AG added 2.1% to €36.12 after the global reinsurance company said first quarter revenues rose 12% to €2.57 billion from €2.29 billion a year ago. Net profit for the quarter fell 31% to €157.2 million or €1.30 per diluted share compared to net profit of €228.6 million or €1.90 per share a year ago.

Holcim Ltd., the suppliers of cement and aggregates said first quarter sales rose 4.4% to CHF4.7 billion from CHF4.5 billion a year ago. Net loss for the quarter was CHF68 million or CHF0.21 per diluted share compared to net profit of CHF74 million or CHF0.26 per share a year ago.

Linde AG fell 1.7% to €90.13 after the gases and engineering firm said first quarter sales rose 7.4% to €2.9 billion from €2.7 billion a year ago. Net profit for the quarter rose 72% to €198 million or €1.16 per diluted share compared to net profit of €115 million or €0.68 per share a year ago.

Qiagen NV rose 0.9% to €17.48 after the provider of sample and assay technologies said first quarter sales rose 20% to $264.4 million from $220.9 million a year ago. Net profit for the quarter rose 34% to $33 million or $0.14 per diluted share compared to net profit of $24.7 million or $0.12 per share a year ago.

Tessi SA, the provider of check- and document- processing services dropped 0.7% to €54.58.

Thales SA, the military electronics maker rose 0.7% to €28.30.

UBS AG rose 1.9% to €15.64. The bank said first quarter net interest income fell 5% to CHF1.8 billion from CHF1.9 billion a year ago. Net profit for the quarter was CHF2.2 billion or CHF0.58 per diluted share compared to net loss of CHF1.98 billion or CHF0.57 per share a year ago.

Vilmorin & Cie SA, the seed company fell 1.7% to €72.59.

Volkswagen AG rose 0.4% to €70.74 after the automaker reported a 42% increase in sales of 23,135 vehicles in April from the same month in 2009.

DAX Index Movers

Deutsche Telekom AG led the decliners in the DAX index of 9.88%, followed by decrease Infineon Technologies AG of 9.12%, in ThyssenKrupp AG of 5.40%, in MAN SE of 5.13%, and in Linde AG of 4.91%.

Beiersdorf AG led gainers in the DAX index with a rise of 0.05%.

CAC-40 Index Movers

PSA Peugeot Citroen S.A. led the decliners in the CAC-40 index of 6.50%, in Renault SA of 6.17%, in Credit Agricole SA of 5.97%, in Dexia SA of 5.47% and STMicroelectronics N.V. of 5.30%.