European Markets Advance; Trade Surplus Declines

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

European markets rebound after Moody''s lowered its rating on Greece bonds to Ba1 from A3 or ""junk"" status, amid continued financial concerns for the country but offered a stable outlook.

[R]6:00 PM Frankfurt – European markets rebound after Moody''s lowered its rating on Greece bonds to Ba1 from A3 or ""junk"" status, amid continued financial concerns for the country but offered a stable outlook.[/R]

Euro-zone trade surplus falls in April and employment stabilizes in the first quarter. Debt worries dent German investor confidence in June.

Faiveley Transport SA net rises 38%. Heidelberger Druckmaschinen AG sales falls 23%.

In London FTSE 100 Index traded higher 27.78 or 0.53% to 5,229.91, in Paris CAC 40 Index increased 27.64 or 0.76% to close at 3,653.68, in Frankfurt DAX Index traded higher 37.82 or 0.62% to close at 6,162.82. In Zurich trading SMI Index increased 36.33 or 0.56% to close at 6,508.45.

Moody''s Investors Service reported that it has downgraded Greece’s government bond ratings by four notches to Ba1 from A3, reflecting its view of the country''s medium-term credit fundamentals. It also downgraded Greece''s short-term issuer rating to Not-Prime from Prime-1. Greece''s country ceilings for bonds and bank deposits are unaffected by the review and remain at Aaa, in line with the euro-zone''s rating. The outlook on all ratings is stable.

Moody''s said that the rating action concludes the review for possible downgrade, which it initiated on April 22, when it downgraded the country''s rating to A3 and placed it under review for further downgrade.

Moody''s said that the outlook on Greece''s ratings is stable, reflecting the substantial probability that it will not change over the next 12 to 18 months. Factors that will influence the rating agency''s view will be the performance of the Greek economy, especially that of GDP and tax revenues.

Euro-zone trade surplus dropped to an unadjusted €1.8 billion in April from the €4.5 billion surplus in the previous month, according to the latest report from Eurostat.

In EU27, the trade deficit stood at €10.2 billion in April, widening from €7.2 billion in March, which was revised from the €7.1 billion deficit reported initially. The seasonally adjusted exports and imports dropped by 2.4% and 2.8% respectively compared to the preceding month.

The number of people employed in the euro-zone was stable in the March quarter compared with the previous quarter, according to Eurostat. This follows a 0.2% decrease in employment in the December quarter of last year. Compared to a year ago, the number of employed decreased by 1.2% in the March quarter.

The economic sentiment indicator for Germany plunged to 28.7 from 45.8 in May, the Mannheim-based Centre for European Economic Research, or ZEW said today. That was the lowest level since April 2009.

Gainers & Losers

BNP Paribas SA fell 0.6% to €47.16 after the bank and Commerzbank have concluded an agreement for major cooperation to jointly develop consumer credit in Germany.

Faiveley Transport SA rose 1.8% to €56.50 after the producer of electromechanical components for rail vehicles said fiscal year 2010 sales rose 3% to €875.9 million from €852.0 million a year ago. Net profit for the year rose 38% to €71.1 million or €5.04 per diluted share compared to net profit of €51.5 million or €4.06 per share a year ago.

Faurecia SA, the automotive equipment supplier fell 0.9% to €14.68.

Heidelberger Druckmaschinen AG fell 9.0% to €7.92 after the maker of printing presses said fiscal year 2010 sales fell 23% to €2.3 billion from €3.0 billion a year ago. Net loss for the year was €229 million compared to net loss of €249 million a year ago.

Infineon Technologies AG, the chipmaker rose 2.9% to €5.06.

Natixis SA, the bank traded unchanged at €3.68.

PSA Peugeot Citroen S.A., the carmaker fell 1.2% to €21.91.

Tonnellerie Francois Freres SA, the manufacturer of oak barrels rose 0.2% to €29.80.