Declines in European Markets Accelerate

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

European markets accelerated declines in the late afternoon as the tensions rise in the region and the euro traded weak. Markets in the region and UK dropped between 2.2% and 3%. Valeo SA buys 100% of Electrical Systems venture in India. Air France-KLM Group net loss surged to

[R]5:00 PM Frankfurt, Paris; 11:00 PM New York – European markets accelerated declines in the late afternoon as the tensions rise in the region and the euro traded weak. Markets in the region and UK dropped between 2.2% and 3%. Valeo SA buys 100% of Electrical Systems venture in India. Air France-KLM Group net loss surged to €1.56 billion.[/R]

European markets accelerated losses in the late afternoon trading on the rising tension in the region and the mounting resistance in Greece against the austerity measures. The euro eases against most majors.

Equities were under pressure as Europe’s financial stability and a unilateral German ban on short selling of euro denominated government bonds and banking stocks weighed on investor sentiment.

The euro edged back towards a four-year low today amid concerns about political divisions in Europe and growing uncertainty over market regulation. The euro eased from a 10-day high against the pound and a 2-day high against the dollar.

The euro traded near 1.2381 against the dollar, down 0.4% from yesterday''s close of 1.2428.

The French economy minister Christine Lagarde told RTL radio Thursday, “I absolutely do not think that the euro is in danger.”

However, crude oil futures for June delivery traded above $70 a barrel in New York but traded lower in New York after European market close, boosted by data showing a lower-than-expected rise in U.S crude inventories.

Germany''s Federal Statistical Office announced that the producer price index or PPI rose 0.6% year-over-year in April compared to the 1.5% fall in the previous month.

On a monthly basis, the PPI rose 0.8% in April, faster than the 0.7% growth in the preceding month.

Europe''s biggest airline Air France-KLM Group reported a net loss of €1.56 billion for the fiscal year ended March, almost double its €814 million loss in the previous year.

French auto-parts maker Valeo SA said it now owns 100% of the capital in its India-based electrical systems manufacturing unit.

In London FTSE 100 Index closed lower 113.50 or 2.20% to 5,044.58, in Paris CAC 40 Index decreased 109.26 or 3.11% to close at 3,402.41, in Frankfurt DAX index lower 162.02 or 2.71% to close at 5,826.65. In Zurich trading SMI decreased 138.31 or 2.17% to close at 6,236.12.

Gainers & Losers

Air France-KLM added 2.3% to €9.82. The airline company said fiscal year 2010 revenues fell 15% to €21 billion from €24.7 billion a year ago. Net loss for the year was €1.56 billion or €5.30 per diluted share compared to net loss of €811 million or €2.75 per share a year ago.

BASF SE, the chemical company rose 0.3% to €43.92.

Credit Agricole SA, the bank advanced 2.4% to €9.60.

Elexis AG rose 0.09% to €10.95 after the producer of automated machinery announced that its subsidiary EMG Automation GmbH will acquire a majority shareholding (51%) in Protagon Process Technologies GmbH in the next few days.

Gecina SA rose 0.1% to €68.09 after the real-estate company that it has sold off three office buildings, with two located in Paris, on Boulevard Romain Rolland in Montrouge, totaling 17,000 sqm, and a third in Paris with a surface area of 3,700 sqm.

PPR SA, the owner of Gucci Group rose 0.5% to €99.88.

Salzgitter AG fell 0.1% to €51.68 after the steelmaker was upgraded to “neutral” from “underperform” at BofA Merrill Lynch Global Research.

Valeo SA, the car-parts maker dropped 0.1% to €22.31.