Hungarian Worries Drag European Indices 2%

Arthi Gupta, Mayank Mehta and Sanjay Barot
04 Jun, 2010
New York City

European stocks trade lower after disappointing jobs data from the U.S. and talks of a sovereign debt crisis in Hungary. The euro declined after comments from Hungarian officials. Euro-zone GDP expands 0.2% in the first quarter ending in March.

[R]4:30 PM Frankfurt; 10:30 AM New York - European stocks trade lower after disappointing jobs data from the U.S. and talks of a sovereign debt crisis in Hungary. The euro declined after comments from Hungarian officials. Euro-zone GDP expands 0.2% in the first quarter ending in March.[/R]

European indices decline after Hungarian officials warn of fiscal woes and possible debt default. The euro sank to a new four-year low. Spanish industrial production grows 2.4% year-over-year in April.

In London FTSE 100 Index traded lower 97.85 or 1.88% to 5,113.33, in Paris CAC 40 Index decreased 97.03 or 2.73% to close at 3,460.31, in Frankfurt DAX index lower 112.11 or 1.85% to close at 5,942.52. In Zurich trading SMI decreased 98.93 or 1.54% to close at 6,319.89.

Hungarian officials said the country''s budget was in ""much worse"" condition than the previous government had stated, raising new fears about sovereign debt burdens in Europe.

Hungary''s fiscal situation is “grave” because the previous government “manipulated” figures and “lied” about the state of the economy, said Peter Szijjarto, spokesman for Prime Minister Viktor Orban. Earlier, in October 2008, Hungary secured a €20 billion or $24 billion loan from the IMF, the European Union and the World Bank to avoid recession.

First quarter gross domestic product in the euro area and wider zone of 27 nations increased 0.2% compared to the previous quarter. Seasonally adjusted GDP compared to the quarter a year ago increased 0.6% in the euro area and 0.5% in the EU27 in the first quarter of 2010.

In Spain, the National Institute of Statistics said Spanish industrial production grew by a working day adjusted 2.4% year-over-year in April compared to a 5.7% increase seen in March.

The U.S. Administration sent a preliminary bill for $69.09 million to BP Plc and other responsible parties for recovery operations in progress in the Gulf of Mexico in response to the Deepwater Horizon Oil Spill off the Louisiana coast.

Gainers & Losers

Air Berlin Plc fell 1.1% to €3.55 after the low-cost airline was downgraded to “sell” from “hold” at Royal Bank of Scotland Group Plc.

Aeroports de Paris SA, the airport group fell 1.1% to €56.50.

BNP Paribas SA fell 0.4% to €45.87 after the bank entered into a memorandum of understanding regarding the merger of Türk Ekonomi Bankasý A.Þ. and Fortis Bank A.Þ. Under the MoU, which is subject to regulatory authorities approval it has been agreed that the two banks will be merged under TEB.

Fielmann AG fell 0.3% to €62.28 after the glasses and contact lens retailer was downgraded to “hold” from “buy” at Hamburger Sparkasse.

France Telecom SA, the telecommunications operators rose 1.1% to €15.83. The company has decided to drop a proposal to merge its Orange Suisse mobile telephony unit with Denmark''s TDC A/S''s Sunrise mobile unit in Switzerland after careful examination of the Swiss antitrust authority''s April 22 ruling against the merger.

JCDecaux SA, the outdoor advertising company rose 1.4% to €20.08.

RWE AG, the electric power and natural gas public utility company rose 0.6% to €59.42.

Transgene SA, the biopharmaceutical company rose 3.0% to €16.50.