Cautious Trading in Europe

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

European markets climb after the group of 20 leaders endorsed targets to cut deficits by at least half by 2013. Euro-zone private lending rose 0.2% in May. German consumer price inflation eases 0.1% in June.

[R]4:30 PM Frankfurt - European markets climb after the group of 20 leaders endorsed targets to cut deficits by at least half by 2013. Euro-zone private lending rose 0.2% in May. German consumer price inflation eases 0.1% in June.[/R]

In London FTSE 100 Index traded lower 1.41 or 0.03% to 5,045.06, in Paris CAC 40 Index increased 23.34 or 0.66% to close at 3,543.07, in Frankfurt DAX Index traded higher 40.90 or 0.67% to close at 6,111.50. In Zurich trading SMI Index increased 21.06 or 0.34% to close at 6,296.41.

At a summit in Toronto on Sunday, the Group of 20 endorsed a flexible timeline for banks for building up higher levels of capital and liquidity in an effort to contain market disruption and a slowdown in economic recovery.

World leaders agreed to balance fiscal consolidation with the need to maintain pro-growth economic policies, according to excerpts from a leaked copy of the G20''s final communiqué posted online.

The proposal from Canada was agreed by G20 to commit to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016, according to the leaked draft.

The US joined the G20 in calling for negotiators to reach agreement on new capital and liquidity standards by the G20''s meeting, which takes place in South Korea this November.

The G20 threw support behind a special tax on banks, stating that the ""financial sector should make a fair and substantial contribution toward paying any burdens associated with government intervention, where they occur, to repair the financial system or fund resolution.""

China managed to keep the yuan out of the final G20 statement. The draft was reportedly set to welcome China''s recent decision to free the yuan from being essentially pegged to the dollar.

Euro-zone private sector credit growth showed a moderate improvement in May, despite huge liquidity injections, according to figures released by the European Central Bank today.

Lending to private sectors by euro-zone banks rose 0.2% year-on-year in May, following a 0.1% increase in April. That was the second consecutive rise following declines in past seven months.

The ECB data showed that loans to non-financial corporations decreased at a slower annual pace of 2.1% in May compared to 2.6% in April.

Euro-zone M3 money supply recorded an annual fall of 0.2% in May, according to data released by the European Central Bank today. The rate of decline for April was revised to 0.2% from 0.1%. The three-month average of the annual rate of decline in M3 over the period March to May was 0.2%, unchanged from the previous period.

Germany''s consumer price inflation eased in June, according to a flash report by the Federal Statistical Office released today.

The consumer price index rose 0.9% year-on-year in June, slower than a 1.2% growth in the previous month. The rise in CPI was mainly due to an increase in heating oil and motor fuels prices.

The CPI rose 0.1% in June from May, same as in the previous month.

Gainers & Losers

Aareal Bank AG, the real estate bank rose 2.2% to €14.20.

Bauer AG rose 3.7% to €28.80 after the manufacturer of construction and machinery has upgraded its recommendation to “buy” from “hold” at Berenberg Bank.

Bayerische Motoren Werke AG, the automobile manufacturer rose 1.9% to €41.14.

Bourbon SA rose 0.9% to €34.43 after the international player in marine services was upgraded to “add” from “reduce” at Oddo Securities.

Daimler AG, the carmaker rose 1.8% to €42.81.

Deutsche Bank AG, the global investment bank rose 1.4% to €47.79.

Deutsche Telekom AG, the integrated telecommunications provider fell 0.4% to €9.70.

E.ON AG rose 0.2% to €22.95 after the power and gas company.

Eurazeo SA, the investment company rose 0.9% to €48.90.

France Telecom SA, the telecommunications operator fell 0.6% to €14.59.

Imerys SA rose 1.4% to €43.96 after the provider of extraction and processing of minerals upgraded the shares to “add” from “sell” at AlphaValue.

Infineon Technologies AG, the chipmaker rose 1.8% to €5.09.

Latecoere SA, the aerospace supplier rose 1.8% to €6.12.

MagForce Nanotechnologies AG rose 1.1% to €43.00 after the medical technology company received European regulatory approval for its Nano-Cancer therapy under the provisions of the German Medical Devices Act.

MAN SE, the engineering group rose 1.7% to €68.80 and Metro AG, the retailer traded unchanged at €42.75.

PSA Peugeot Citroen S.A., the automobile manufacturer rose 2.5% to €22.24 and Volkswagen AG, the automobile manufacturer rose 0.8% to €71.49.