China Exports Boost European Markets

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

European markets rise after exports from China rose 50% in May. Dubai-based Emirates Airline places $11.5 billion order with Airbus for an additional A380 aircraft. Spain-based Banco Santander to buy back Bank of America''''s 24.9% stake in its Mexican unit for $2.5 billion.

[R]4:00 PM Frankfurt - European markets rise after reports from Reuters suggest exports in China rose 50% in May. Dubai-based Emirates Airline places $11.5 billion order with Airbus for an additional A380 aircraft. Spain-based Banco Santander to buy back Bank of America''s 24.9% stake in its Mexican unit for $2.5 billion.[/R]

European Central Bank President Jean-Claude Trichet said Europe needs quantum leap to strengthen economic governance. The gross domestic product of Estonia drops 2% in the first quarter.

In London FTSE 100 Index traded higher 23.22 or 0.46% to 5,051.37, in Paris CAC 40 Index increased 32.62 or 0.96% to close at 3,412.98, in Frankfurt DAX Index traded higher 65.88 or 1.12% to close at 5,934.43. In Zurich trading SMI Index increased 56.65 or 0.91% to close at 6,302.87.

Europe needs to make a quantum leap in strengthening the governance of economic policies and surveillance, according to the European Central Bank President Jean-Claude Trichet.

""""If we do this, I believe that we will exit the crisis with a policy framework that will be much better and stronger than the one we had when the crisis began,"""" Trichet said in a speech in Frankfurt. Agreeing on an observation that the solution to Europe''s difficulties lies more on European integration, Trichet said the European Union embodies the idea that nations gain from acting collectively. """"In the current circumstances, the very existence of solidarity can give rise to confidence,"""" he stated.

German Chancellor Angela Merkel and French President Nicolas Sarkozy reportedly called for banning naked short selling of shares and sovereign bonds.

In a joint letter to European Commission President Jose Manuel Barroso, Merkel and Sarkozy said the commission should bring possible measures to supervise credit defaults swaps on sovereign bonds and short selling.

Earlier this month, the German cabinet approved a ban on naked short-selling of credit-default swaps on euro-area government bonds and all stocks of German companies in an effort to control speculation.

Dubai-based Emirates Airline said on Tuesday that it placed an order with Airbus, a unit of European Aeronautic Defence and Space Co. N.V. for an additional 32 A380 aircraft. The order for the additional aircraft, which is the biggest single order for the superjumbo to date, is valued at $11.5 billion.

The latest order announced by Emirates takes the total firm order by the carrier for the aircraft to 90, or almost 40% of the 234 firm orders that Airbus has signed for the double-deck plane. The airline has already ordered 58 of the world''s largest passenger plane

Emirates is currently serving eight international destinations with the A380 aircraft, including London Heathrow, Toronto, Paris, Jeddah, Bangkok, Seoul, Sydney and Auckland.

The Emirates deal enables Airbus overcome an order dearth for the world''s largest passenger plane.

European Aeronautic Defence and Space Co. N.V. ((EADSY.PK)) declined 30 cents or 1.57% and closed Tuesday''s regular trading session at $19.35, down $0.30 on a volume of 2,750 shares.

Banco Santander S.A., the Spanish-based bank holding company said today that it has reached a deal to buy back Bank of America Corp.''s 24.9% stake in Grupo Financiero Santander, Santander''s Mexican unit, for $2.50 billion.

The deal would lift Santander''s holding in the Mexican unit to 99.9%, worth $10 billion based on the purchase price of Bank of America''s stake. It was in 2003 that Bank of America acquired 24.9% stake of Santander''s Mexican unit for $1.60 billion.

Banco Santander estimates that the purchase will increase its earnings by 1.3% from year one and lift its return on investment 15% from year three, based on market consensus estimates of Banco Santander Mexico''s earnings. The deal is estimated to reduce Santander''s core capital by 31 basis points.

The acquisition, which is expected to be completed in the third quarter of 2010, is anticipated to boost Mexico''s part of group profit to 7% from 5%. The Mexican government target is for the economy to grow 4.1% in 2010.

Banco Santander S.A. ((BNC.L)) rose €2 or 0.33% and is currently trading at €612.00 per share, on the London Stock Exchange.

Bank of America Corp. ((BAC)) closed Tuesday''s regular trading session at $15.33 per share on the NYSE. In the past 52-week period, the share had traded in the range of $11.27 to $19.86.

Estonia''s economic decline decelerated in the first quarter, according to a report from Statistics Estonia released today.

The gross domestic product dropped 2% in the first quarter, revised from the 2.3% fall reported initially. In the fourth quarter, the GDP decreased 9.5%. The deceleration in the decrease in the GDP was influenced by a low comparing base in the year-ago period, the statistical office said.

On a sequential basis, the GDP slipped 2% in the first quarter, in contrast to the 2.4% rise in the preceding quarter. The first quarter GDP was revised up from the 2.3% decline estimated initially. In the first quarter, the GDP at current prices was EEK 50.5 billion.

Gainers & Losers

Adidas AG, the producer of sportswear and sports equipment rose 1.1% to €42.20.

BASF SE rose 0.3% to €43.27 after the chemical company announced that it has signed an agreement to sell its hydrophilic melt additives business to Techmer PM, LLC.

Bayer AG, the pharmaceutical and chemicals company fell 0.04% to €46.50.

Bilfinger Berger AG rose 1.1% to €45.14. The construction and services group was downgraded to “hold” from “buy” by a Standard & Poor’s equity analyst.

Compagnie de Saint-Gobain SA rose 2.1% to €30.08 after the supplier of building materials upgraded its recommendation to “outperform” from “neutral” at Credit Suisse Group AG.

Electricite de France SA, the integrated energy operator rose 0.8% to €33.92.

EADS NV, the aerospace, defense and related services company rose 4.7% to €17.00.

France Telecom SA rose 0.4% to €15.20 after the telecommunication operator has upgraded its recommendation to “neutral” from “sell” at UBS AG.

Ingenico SA, the producer of financial transaction systems increased 3.2% to €17.00.

K+S AG, the chemical company fell 0.03% €36.81.

Remy Cointreau SA rose 0.7% to €43.00 after the producer of liquor and champagne said fiscal year 2010 sales rose 13% to €807.8 million from €714.1 million a year ago. Net profit for the year rose 0.2% to €86.3 million compared to net profit of €86.1 million a year ago.

Rexel SA increased 4.9% to €11.60 after the electrical equipment distributor upgraded its recommendation to “overweight” from “neutral” at HSBC Holdings Plc.

Salzgitter AG fell 1.2% to €48.04 after the steelmaker was downgraded to “neutral” from “outperform” at Credit Suisse Group AG.

Software AG, the maker of standard software rose 1.6% to €84.47.

Symrise AG rose 2.6% to €16.99 after the fragrances and flavors manufacturer was upgraded to “overweight” from “equal-weight” at Morgan Stanley.

Unibail-Rodamco SA rose 0.3% to €125.60 after the shopping-center owner upgraded its recommendation to “overweight” from “equal-weight” at Morgan Stanley.