Markets Cool in Europe on Bailout Conditions

123jump.com Staff
11 May, 2010
New York City

European stocks fell amid concerns the proposed $1 trillion rescue package may not offer a long-term solution to the region''s fiscal woes. The euro fell to 4-day low. Wholesale price index for April rises 6% Germany. Deutsche Post AG profit rises 85%.

[R]6:00 PM Frankfurt, Paris; 12:00 PM New York – European stocks fell amid concerns the proposed $1 trillion rescue package may not offer a long-term solution to the region''s fiscal woes. The euro fell to 4-day low. Wholesale price index for April rises 6% Germany. Deutsche Post AG profit rises 85%.[/R]

European stocks fell amid concerns the proposed $1 trillion rescue package may not offer a long-term solution to the region''s fiscal woes.

Marek Belka, the director of the IMF’s European department, yesterday said he doesn’t consider the latest European rescue package a “long-term solution.” ECB council member Axel Weber said the bank’s purchase of government bonds poses “significant” risks, Germany’s Boersen-Zeitung reported.

European Union Economic and Monetary Affairs Commissioner Olli Rehn told the French daily Les Echos in an interview that Spain and Portugal must take immediate steps to improve their public finances. Measures will be discussed at the next meeting of EU finance ministers on May 18, Rehn told Les Echos.

Greece may have its credit rating lowered to junk within the next month, Moody’s said late yesterday, citing the country’s “dismal” economic prospects.

Portugal’s rating, which is also on review for a downgrade, will probably be lowered one level to Aa3 from Aa2, though an “adjustment” of two steps to A1 can’t be ruled out, Moody’s said.

The euro has been extending its downtrend against other major currencies as investors are concerned over Greece''s ability to reduce its huge deficit with the proposed rescue package. The euro fell to 4-day lows against the pound, the Swiss franc and the dollar. The euro dropped 0.7% to $1.2702 and 1.2% to 117.91 yen.

National benchmark indexes fell in all 18 western European markets, except Iceland.

Germany''s Federal Statistical Office announced that the wholesale price index or WPI rose 6% year-over-year in April, faster than the 4.3% growth in the previous month.

Germany''s consumer price inflation eased to 1% in April from 1.1% in March, the Federal Statistical Office confirmed today. On a monthly basis, consumer prices were down 0.1%, the first fall in three months. In March, prices rose 0.5% month-on-month

Annual inflation rate clearly remained under the threshold of 2%, which is important for monetary policy, the statistical agency said.

Shares of Portugal Telecom soared as much as 20% on Tuesday after the company said it had received an unsolicited €5.7 billion or $7.3 billion offer for its 50% stake in Brazil''s top mobile operator, Vivo, from its Spanish partner in the venture, Telefonica SA.

The board of Portugal Telecom unanimously rejected the approach, arguing that Vivo, on which it''s relying to offset slowing growth and increasing competition at home, is core to its strategy.

The Telefonica offer values Vivo at almost 32 times projected 2010 earnings, according to Credit Suisse calculations.

Portugal Telecom shares advanced 7% in afternoon action. Telefonica shares fell 6.5% in Madrid.

For Telefonica, the situation is complicated by the fact that it is far from the only operator interested in gaining control of assets in Brazil, South America''s largest mobile market, where the number of subscribers is forecast to rise 11% this year.

In London FTSE 100 Index closed lower 103.63 or 1.92% to 5,283.79, in Paris CAC 40 Index decreased 67.61 or 1.82% to close at 3,652.68, in Frankfurt DAX index lower 43.85 or 0.73% to close at 5,974.06. In Zurich trading SMI decreased 20.78 or 0.32% to close at 6,461.17.

Gainers & Losers

Air France-KLM fell 1.3% to €10.45.

Alten SA, the contract-technology research company rose 1.5% to €21.93.

Aurubis AG fell 0.6% to €37.19. The copper refiner was upgraded to “buy” from “add” at Commerzbank AG.

Centrotherm photovoltaics AG fell 1.7% to €29.20 after the provider of equipment for the production of solar silicon said first quarter revenues fell 12% to €115.3 million from €131.0 million a year ago. Net profit for the quarter fell 37% to €6.6 million or €0.31 per diluted share compared to net profit of €10.5 million or €0.50 per share a year ago.

Crucell N.V decreased 3.7% to €14.69 after the biopharmaceutical company said first quarter revenues fell 18% to €58.0 million from €70.5 million a year ago. Net loss for the quarter was €2.3 million or €0.03 per diluted share compared to net profit of €0.2 million or break even per share a year ago.

Deutsche Post AG added 3.0% to €12.30 after the global logistics provider said first quarter revenues rose 4% to €12.0 billion from €11.5 billion a year ago. Net profit for the quarter rose 85% to €1.75 billion or €1.44 per diluted share compared to net profit of €944 million or €0.78 per share a year ago.

E.ON AG dropped 1.0% to €25.07. The power and gas company said first quarter revenues rose 1% to €26.0 billion from €25.9 billion a year ago. Net profit for the quarter fell 8% to €2.3 billion or €1.20 per diluted share compared to net profit of €2.5 billion or €1.29 per share a year ago.

Eutelsat Communications SA, the satellite company advanced 3.9% to €27.42.

Fraport AG fell 1.6% to €37.76. The owner and operator of the international airport said first quarter revenues rose 4.3% to €476.1 million from €456.5 million a year ago. Net profit for the quarter fell 77.6% to €4.6 million or €0.05 per diluted share compared to net profit of €20.5 million or €0.22 per share a year ago.

Fresenius SE fell 0.4% to €50.46. The provider of kidney dialysis was upgraded to “buy” from “hold” at NordLB.

GDF Suez SA fell 1.7% to €25.42 after the natural-gas grid sold 12.5% stake in Elia to Publi-T for €160 million.

Lanxess AG, the chemical company said first quarter revenues rose 53% to €1.61 billion from €1.05 billion a year ago. Net profit for the quarter was €104 million compared to net loss of €14 million a year ago.

Marseille-Kliniken AG declined 2.3% to €4.59 after the stock was downgraded to “hold” from “buy” at SES Research GmbH.

SolarWorld AG fell 6.4% to €9.16. The manufacturer of silicon solar wafer said first quarter revenues rose 28% to €225.6 million from €176.3 million a year ago. Net profit for the quarter fell 78% to €5.3 million or €0.05 per diluted share compared to net profit of €23.8 million or €0.21 per share a year ago.

Thales SA rose 3.5% to €28.75 after the maker of defense electronics said that its revenue for the first three months of this year rose 7.8% from the same year-ago period.