European Stocks Fall; Swedish GDP Rises

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

European stocks decline amidst concerns on U.S. economic data. Spanish Parliament approves public sector spending cuts. Swedish economic growth accelerates in the first quarter. Greece producer price inflation rises 9.8% in April.

[R]7:00 PM Frankfurt, Paris; 1:00 PM New York. - European stocks decline amidst concerns on U.S. economic data. Spanish Parliament approves public sector spending cuts. Swedish economic growth accelerates in the first quarter. Greece producer price inflation rises 9.8% in April.[/R]

The European markets decline on U.S. economic data. EU calls to remove trade restrictions. German import prices increased 7.9% year-on-year and Switzerland''s trade surplus increased to CHF 2.02 billion in April.

Portugal Telecom rejects $7.3 billion Telefonica bid for Vivo.

In London FTSE 100 Index traded higher 21.02 or 0.40% to 5,216.19, in Paris CAC 40 Index increased 1.58 or 0.04% to close at 3,526.89, in Frankfurt DAX index higher 12.91 or 0.22% to close at 5,950.05. In Zurich trading SMI increased 40.57 or 0.64% to close at 6,345.75.

The European Commission on Friday called its major trading partners to remove trade restrictions put in place during the height of economic crisis. It added that withdrawal of such barriers are much needed to boost economic recovery.

""There is a risk that trade restrictive measures introduced by our partners during the crisis will become part of the trade regime even when the economy picks up speed. What we need now is an exit strategy from protectionism,"" said EU Trade Commissioner Karel De Gucht.

Prime Minister José Luis Rodríguez Zapatero''s minority Socialist Government''s proposal to bring about €15 billion spending cuts passed through the Spanish Parliament by the narrow margin of one vote. The final tally was 169-168.

This €15 billion spending cut package would help Spain reduce its budget deficit to 6% in 2011 from the current high of 11.2%.

German import prices increased 7.9% year-on-year in April after logging 5% rise in March, the Federal Statistical Office said today. That was the highest price increase since August 2008, when import prices grew 8.3%. On a monthly basis import prices were up 2%. Prices were expected to climb 1.5%. It follows 1.7% growth in March.

Sweden''s economic growth accelerated in the first quarter. The economy grew 1.4% sequentially in the first quarter, following a revised 0.4% expansion in the fourth quarter of 2009, the Statistics Sweden reported today. Annually, gross domestic product grew at a faster pace of 3% and stood above the consensus forecast of 1.4%.

Greek producer prices increased for the sixth consecutive month in April, a report by the statistical office showed on Friday. The Producer Price Index rose 9.8% year-on-year in April, faster than 8.7% in the previous month. It was the biggest increase since October 2008. A year earlier, prices were down 8.1%. On a monthly basis, the PPI climbed 1.5% in April, following a 1.4% rise in March

Switzerland''s trade surplus increased to CHF 2.02 billion in April, data from the Federal Customs Administration showed today. The trade surplus totaled CHF 1.68 billion in March and CHF 1.28 billion in February

Portugal Telecom SGPS SA rejected a €5.7 billion or $7.3 billion unsolicited and unconditional offer made by its Spanish partner Telefonica SA to acquire the company''s stake in their Brazilian wireless joint venture Vivo Participacoes SA

Rejecting the offer unanimously, the board of directors of Portugal Telecom said Vivo is core to its strategy and the sale of its stake would be against its long term growth prospects.

Following the offer, which expires on June 6, 2010, shares of Portugal Telecom gapped open on the NYSE and rose around 12.7% in mid-day trading. PA is currently trading at around 8% on the NYSE.

Around 60% interest in Vivo is currently held by the Netherlands-based Brazilcel and Portugal Telecom owns around 50% of this stake.

Vivo is one of the largest mobile phone service provider in Brazil and whole of South America, and enjoys a subscriber strength of around 50 million. In the first quarter, profit of Vivo increased 44.3% to $107 million on revenues of $2.36 billion.

Following the rejection, Telefonica, S.A said it will launch a tender to buy 11.1% of Vivo''s ordinary share not owned by Brazilcel for about €600 million. On a per share basis, the price quoted represents 80% of the value assigned to each ordinary share owned by Brazilcel.

Telefonica is one of the five major stake holders of Portugal Telecom and owns around 9.16% stake in the company.

PT is currently at $9.54, up $0.73 or 8.29%, on a volume of $0.56 million shares

Gainers & Losers

Cap Gemini SA, the computer services company rose 0.8% to €37.03 pence.

Daimler AG, the maker of luxury cars rose 1.5% to €40.55.

Derichebourg SA, the environmental services company rose 7.9% to €3.12.

EDF Energies Nouvelles SA, the producer of electricity through renewable energy sources fell 3.3% to €29.91.

EuropaCorp SA rose 6.8% to €5.18 after the entertainment industry said fiscal year 2010 revenues rose 41% to €181.3 million from €128.5 million a year ago.

GDF Suez SA, the natural gas and electricity supplier rose 0.08% to €25.59.

KWS SAAT AG, the agricultural company rose 2.9% to €120.10. Net sales of corn and sugarbeet rose 6% to €317.6 from €298.7 million.

Natixis SA, the bank rose 0.7% to €3.51.

Renault SA, the carmaker rose 0.4% to €29.30.

Veolia Environnement, the provider of environmental management services fell 2.1% to €20.33. The company said it bagged a €270 million concession contract for the new waste-water treatment plant at Grand Prado in the district of Sainte-Marie.