Germany Sanctions Greece Bailout

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

European stocks pare losses as U.S. employment increases. Germany agrees to contribute emergency loans to Greece. U.K. election ends in stalemate. Munich Re''s first quarter profit rises 11%.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York – European stocks pare losses as U.S. employment increases. Germany agrees to contribute emergency loans to Greece. U.K. election ends in stalemate. Munich Re''s first quarter profit rises 11%.[/R]

European stocks remain sluggish on growing eurozone worries. With financial and civil unrest in Greece and fears of contagion from the Greece''s debt crisis reviving risk aversion, stocks in the U.S. nosedived.

European shares pare losses as a report showed U.S. employment increased in April by the most in four years.

The Group of Seven plans to hold a conference call today to discuss the Greek debt crisis, according to Japanese Finance Minister Naoto Kan. European members “will probably explain” steps taken with the International Monetary Fund to assist Greece, Kan said at a press conference in Tokyo today. “I don’t think we will be asked to take specific action, such as currency intervention.”

The Bank of Japan has announced that it will pump 2 trillion yen into the financial system after the Greek debt crisis caused instability in financial markets in the U.S. and Europe. The emergency measure represents the bank''s first same-day repurchase operations since December. The balance of current-account deposits held by financial institutions at the central bank will likely increase to 16.9 trillion yen, up 800 billion yen from yesterday, the central bank said.

Greece took a step closer to receiving rescue funds after its parliament approved a €30 billion austerity bill late on Thursday and the French Senate approved France''s contribution to the European Union aid package.

Germany''s Bundestag, the lower house of parliament has voted to approve a €22.4 billion package to contribute to the Greek bailout. The bailout will be made up of contributions from both the European Union and the International Monetary Fund and total €110 billion.

Yields on the two-year Greek note rose 94 basis points to 19.38%.

World markets demanded a greater participation from the European policy makers in a bid to restore stability and avoid a global sovereign-debt crisis. As euro-region leaders prepared to meet in Brussels tonight to endorse the Greek bailout, bond yields surged across threatening to undermine the single currency.

The euro was up at $1.2771, from a low of $1.2586, after the German lower house approved the Greek aid package. National benchmark indexes fell in all of the 18 western European markets.

Conservative leader David Cameron appealed to the Liberal Democrats to form an alliance after the U.K. general election failed to deliver a majority to any party. With 638 of 650 results declared, Cameron’s Conservatives had 301 seats to 255 for Labor and 55 for Clegg.

In London FTSE 100 Index closed lower 30.98 or 0.59% to 5,230.01, in Paris CAC 40 Index decreased 52.82 or 1.49% to close at 3,503.29, in Frankfurt DAX index lower 42.39 or 0.72% to close at 5,865.87. In Zurich trading SMI decreased 44.50 or 0.70% to close at 6,343.02.

Gainers & Losers

Aurubis AG decreased 0.4% to €34.71. The copper producer said first half revenues rose 50% to €4.5 billion from €3.0 billion a year ago. Net profit for the first half was €119 million or €2.90 per diluted share compared to loss of €53 million or €1.30 per share a year ago.

Belgacom SA fell 1.9% to €25.03. The provider of fixed and mobile telecommunication services said first quarter revenues rose 40% to €2.1 billion from €1.5 billion a year ago. Net profit for the quarter rose 201% to €638 million or €1.99 per diluted share compared to net profit of €212 million or €0.66 per share a year ago.

Boizel Chanoine Champagne SA fell 2.4% to €53.25. The champagne maker said first quarter revenue increased 21% to €48.83 million.

Brenntag AG slipped 2.8% to €53.44 after the chemicals distributor was upgraded “buy” in new coverage at Deutsche Bank AG and Bank of America Merrill Lynch Global Research.

Commerzbank AG added 3.6% to €5.86 after the bank was upgraded to “outperform” from “underperform” at Credit Suisse Group AG.

Etablissements Maurel & Prom SA, the oil explorer slipped 1.8% to €10.64. First quarter revenue rose to €48.9 million from €27.3 million.

Heidelberger Druckmaschinen AG rose 1.1% to €5.82 after the printing-press maker was upgraded to “overweight” from “neutral” at HSBC Holdings Plc.

Hypo Real Estate Holding AG, the international real estate financing company said first quarter net interest income fell 21.6% to €291 million from €371 million a year ago. Pre tax loss for the quarter was €324 million compared to pre tax loss of €406 million a year ago.

Italcementi SpA fell 2.9% to €7.49 after the producer and distributor of cement said first quarter revenues fell 10.7% to €1.07 billion from €1.20 billion a year ago. Net loss for the quarter was €37.5 million compared to net loss of €12.7 million a year ago.

JCDecaux SA, the seller of outdoor advertising dropped 2.5% to €19.82.

Maisons France Confort SA, the homebuilder fell 2.2% to €28.90.

Munich RE closed unchanged at €106.15 after the reinsurance company said first quarter gross premiums written rose 12.5% to €11.7 billion from €10.4 billion a year ago. Net profit for the quarter rose 11.3% to €482 million or €2.54 per diluted share compared to net profit of €433 million or €2.22 per share a year ago.

Pfleiderer AG rose 1.0% to €4.11. The producer and supplier of engineered wood products said first quarter revenues fell 0.7% to €355.6 million from €358.0 million a year ago. Net loss for the quarter was €19.9 million or €0.35 per diluted share compared to net profit of €0.1 million or break even per share a year ago.

Rational AG fell 0.3% to €114.30 after the maker of appliances to the catering industry was also upgraded to “overweight” from “neutral” by the broker.

Veolia Environnement dropped 2.3% to €22.33 after the company posted a 2.3% drop in its first quarter earnings before interest, taxes, depreciation and amortization, or EBITDA.