Greece Austerity Bill Passed

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

Greece austerity bill gets parliament approval. German factory orders surges. General elections in UK today. Commerzbank AG returns to profit in first quarter. BNP Paribas

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – Greece austerity bill gets parliament approval. German factory orders surges. General elections in UK today. Commerzbank AG returns to profit in first quarter. BNP Paribas’ profit soars 47%. Air Berlin passenger traffic down 16.5% in April.[/R]

European stocks traded sideways as investors’ fear of euro zone contagion eases amid the recent successful Spanish bond auction. Spain was able to sell 2.23 billion euros of 5-year notes with a max yield of 3.58%.

A €110 billion or $140 billion aid package to avoid a default by Greece has failed to prevent bond yields from rising, driving up borrowing costs for countries including Spain and Portugal.

The European Central Bank''s Governing Council didn''t discuss the option of purchasing euro-zone government bonds in the secondary market when they met Thursday in Lisbon, ECB President Jean-Claude Trichet said at his monthly news conference Thursday. Trichet said Greece''s ambitious fiscal consolidation plan justified a change in the ECB''s collateral rules for Greek government debt, he said. The ECB announced Monday that it would accept Greek government bonds as collateral for loans regardless of their rating. Trichet told reporters the prospect of a default within the euro zone ""is, for me, out of the question.""

“We call for decisive actions by governments to achieving a lasting and credible consolidation of public finances,” Trichet told reporters today after the ECB’s Governing Council met in Lisbon. Spain and Portugal are “not Greece,” he said.

Trichet also said that the ECB’s benchmark rate is “appropriate,” indicating he sees no need to cut it from the current record low of 1%.

Europe’s fiscal crisis could threaten banks in Portugal, Spain, Italy, Ireland and the U.K. as the risk of contagion grows, Moody’s said in a report today. “Each of these countries’ banking systems faces different challenges of different magnitudes, but warns that contagion risk could dilute these differences and impose very real, common threats on all of them,” Moody’s said in the report.

The euro fell to a new fourteen-month low of $1.2692 against the U.S. dollar. National benchmark indexes fell in 11 of the 18 western European markets.

The crucial Greek austerity bill has won enough votes for passage in parliament. Thursday''s vote was being carried out by roll call, and reached the simple majority of 151 votes in favor in the 300-member parliament to pass.

Greek Prime Minister George Papandreou told parliament that a consensus is needed from all political parties to prevent the country from going bankrupt.

""We won''t allow the country to fall into bankruptcy, or allow speculators to destabilize us and we won''t fail to live up to our responsibilities because of political cost,"" said Mr. Papandreou, leader of the governing socialist party.

The country faces €8.5 billion in bond redemptions on May 19. Meanwhile, Greece''s two major unions, private sector GSEE and public sector ADEDY, have called for a further protest outside of parliament.

German factory orders surged more than economists forecast in March, signaling the pace of Germany’s recovery is gathering speed. Orders, adjusted for seasonal swings and inflation, rose 5% from February, when they stagnated, the Economy Ministry in Berlin said today. The increase in March orders was driven by a 5.4% jump in domestic orders, with export demand gaining 4.7%.

The Swiss consumer price index, or CPI, rose 1.4% year-on-year in April, unchanged from March, the Federal Statistical Office said today. On a monthly basis, consumer prices climbed 0.9% in April, following just 0.1% rise in March. Prices rose slightly faster than the expected 0.8% growth.

Britain votes today in an election that polls show may produce no parliamentary majority for the first time since 1974. Investors are worried that the country''s budget deficit will remain wide.

French banking group BNP Paribas SA said its first-quarter net profit climbed a stronger-than-forecast 47%, as it benefited from the contribution of assets acquired from Fortis last year.

In London FTSE 100 Index closed lower 12.85 or 0.24% to 5,329.08, in Paris CAC 40 Index increased 21.06 or 0.58% to close at 3,657.09, in Frankfurt DAX index higher 8.75 or 0.15% to close at 5,967.20. In Zurich trading SMI decreased 4.58 or 0.07% to close at 6,443.91

Gainers & Losers

Adecco SA, the human resources group said first quarter revenues rose 7% to €3.96 billion from €3.70 billion a year ago. Net profit for the quarter rose 148% to €57 million or €0.29 per diluted share compared to net profit of €23 million or €0.13 per share a year ago.

Air Berlin Plc rose 0.8% to €3.63.

Alcatel Lucent fell 0.6% to €3.02 after the telecommunications-equipment maker said first quarter revenues fell 10% to €3.25 billion from €3.6 billion a year ago. Net loss for the quarter was €515 million or €0.23 per diluted share compared to net loss of €402 million or €0.18 per share a year ago.

Balda AG, the maker of mobile-phone casings closed unchanged at €3.52.

BNP Paribas SA fell 1.3% to €48.44. The bank said first quarter revenues rose 21% to €11.5 billion from €9.5 billion a year ago. Net profit for the quarter rose 47% to €2.28 billion or €1.87 per diluted share compared to net profit of €1.56 billion a year ago.

Commerzbank AG fell 0.3% to €5.70. The bank said first quarter net interest income rose 12% to €1.9 billion from €1.7 billion a year ago. Net profit for the quarter was €708 million or €0.60 per diluted share compared to net loss of €864 million or €1.02 per share a year ago.

Deutz AG rose 2.4% to €4.13 after the engine maker was upgraded to “buy” from “neutral” at UBS AG.

GDF Suez SA fell 1.0% to €25.91 after the natural-gas grid had the outlook on its senior unsecured debt downgraded to “negative” from “stable” by Moody’s Investors Service.

HeidelbergCement AG rose 0.5% to €43.99. The producer of cement said first quarter revenues fell 7.6% to €2.18 billion from €2.36 billion a year ago. Net loss for the quarter was €199 million or €1.06 per diluted share compared to net loss of €63 million or €0.50 per share a year ago.

Lafarge S.A fell 0.5% to €50.06 after the cement maker was downgraded to “strong sell” from “sell” at Standard & Poor’s.

Legrand SA rose 3.0% to €24.09.

Metro AG, the retailer fell 3.0% to €43.28.

Nexity SA fell 3.0% to €24.70.

ProSiebenSat.1 Media AG decreased 3.7% to €12.56. The broadcasting company said first quarter revenues rose 5% to €658.4 million from €627.0 million a year ago. Net profit for the quarter was €21.2 million compared to net loss of €1.7 million a year ago.

SolarWorld AG dropped 2.4% to €9.82 after the solar company was downgraded to “hold” from “buy” at Citigroup Inc.

Swiss Re, the global reinsurer said first quarter revenues rose 56% to $8.1 billion from $5.2 billion a year ago. Net profit for the quarter rose 22% to $158 million or $0.45 per diluted share compared to net profit of $130 million or $0.39 per share a year ago.

Tenaris SA rose 0.07% to €15.00. The supplier of tubes and related services said first quarter revenues fell 32.5% to $1.64 billion from $2.43 billion a year ago. Net profit for the quarter fell 40% to $219.5 million or $0.37 per ADS compared to net profit of $366 million or $0.62 per ADS a year ago.

Theolia SA decreased 4.6% to €2.65 after the wind-power producer said first-quarter sales fell to €31 million from €78.2 million.