Spain Raises

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

European markets rise after Spain raised

[R]4:30 PM Frankfurt - European markets rise after Spain raised €3.5 billion. EU construction falls 0.3% in April. BP Plc sets aside $20 billion to meet claims from the Gulf oil spill and will remain liable for unknown amount for criminal charges and repairs.[/R]

Swiss Parliament approves UBS tax data transfer deal. The BP board announces a $20 billion claims fund over the next three-and-a-half years for the Deepwater Horizon spill.

In London FTSE 100 Index traded higher 28.32 or 0.54% to 5,266.24, in Paris CAC 40 Index increased 10.69 or 0.29% to close at 3,686.62, in Frankfurt DAX Index traded higher 8.30 or 0.13% to close at 6,199.21. In Zurich trading SMI Index decreased 5.78 or 0.09% to close at 6,484.29.

Seasonally adjusted construction activities in April decreased 0.3% in euro area and unchanged in the EU27 compared to a month ago. In March 2010, activities in the euro zone and EU 27 rose by 6.5% and by 6.0% respectively.

Spain successfully raised €3.5 billion through the sale of 10-year and 30-year bonds today. On Wednesday, the Spanish government''s cost of borrowing hit a new high, after reports emerged that a special credit facility was prepared by the IMF and the EU to support Spain.

The interest rate the Spanish government is being asked to pay investors for borrowing money is now 2.23 percentage points above that demanded for the German bonds.

EU leaders are due to meet later today in a key summit in Brussels to tackle the challenge of getting the economic recovery on track and focus on public debts and deficits.

The Bank of Spain said that it would make public the results of stress tests it has conducted on the state of Spain''s commercial banks.

""The bank intends to make public the results of these stress tests, showing estimated loan losses, the consequent capital requirements and the contribution of promised balance sheet reinforcements, so the markets have a good understanding of the circumstances of the Spanish banking system,"" the bank''s governor Miguel Angel Fernandez Ordonez.

For all euro-zone countries, structural reforms leading to higher growth and employment are crucial to support a sustainable recovery, the European Central Bank said today in its June monthly bulletin.

""Existing competitiveness problems, as well as domestic and external imbalances, need to be urgently addressed by the countries concerned,"" the ECB said. To that end, wage-bargaining should allow wages to adjust appropriately to the competitiveness and unemployment situation, the bank added. Moreover, measures that increase price flexibility and non-price competitiveness are essential.

On the economy, the central bank said its Governing Council sees moderate economic growth, in an environment of continued tensions in some financial market segments and of unusually high uncertainty. Further, the monetary analysis confirmed that inflationary pressures over the medium term remain “contained.”

Swiss legislators today approved a U.S.-Swiss Government agreement, under which financial services firm UBS AG will hand over account information on 4,450 alleged U.S. tax evaders to the Internal Revenue Service, or IRS. UBS welcomed the approval of the Swiss Parliamentary.

UBS said, “This vote is an important step to support the resolution at the governmental level.” The company noted that it continues to focus on its comprehensive and timely compliance with all obligations under its separate settlement agreements with the US Department of Justice and the Securities and Exchange Commission, or SEC. UBS is also confident that this will be achieved by the relevant deadlines in August 2010.

The two houses of Swiss Parliament agreed that there would be no national referendum on the matter.

The U.S. Department of Justice charged that UBS, by setting up secret offshore bank accounts, helped thousands of Americans evade taxes, as much as $20 billion of income.

Under the settlement, UBS admitted widespread wrongdoing and agreed to provide the IRS with the names of 4,450 American account holders, which must be handed over by August.

Gainers & Losers

Aeroports de Paris SA fell 2.1% to €54.44. The airport group said passenger traffic increased 3.3% compared in May 2009 to 7.5 million.

Cegid Group SA, the business software designer rose 1.8% to €21.91 after the acquisition of Vedior Front RH.

Draegerwerk AG & Co. KGaA, the medical and safety technology company fell 1.9% to €52.09.

Eiffage SA, the construction and concessions group surges 11.6% to €40.37.

GDF Suez SA, the natural gas and electricity supplier fell 0.2% to €25.86.

Groupe Danone SA, the yogurt maker rose 0.2% to €44.31.

Heidelberger Druckmaschinen AG rose 0.1% to €7.87 after the maker of printing presses was upgraded to “hold” from “sell” at Norddeutsche Landesbank Girozentrale.

Hochtief AG, the global construction group rose 1.4% to €53.50.

Imerys SA rose 5.7% to €44.85 after the minerals processor upgraded its recommendation on the stock to “outperform” from “underperform” at Cheuvreux.

LVMH Moet Hennessy Louis Vuitton SA, the luxury goods company rose 0.9% to €92.99.

Merck KGaA, the pharmaceutical and chemical company rose 0.02% to €62.01 and PPR SA, the retail and luxury goods distributor fell 0.2% to €102.00.

Rhodia, the producer of specialty chemicals rose 4.2% to €14.97.

Technip, the engineering company fell 0.2% to €52.61.