Greek Protest; European Markets Weak

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

European stocks edge lower after jitters about liquidity issues ahead of bank repayments to the European Central Bank later this week. IMF approves

[R]4:30 PM Frankfurt - European stocks edge lower after jitters about liquidity issues ahead of bank repayments to the European Central Bank later this week. IMF approves €383.2 million to Serbia. European Commission extends bank support schemes in Ireland, Spain, Denmark, and Hungary.[/R]

European markets traded lower as banks face stress test and the repayment of loans to the European Central Bank. Resource stocks fell after a private researcher lowered China economic outlook.

In early European trading, the key benchmarks in France, Germany and UK were down between 1.5% and 2.7% on worries that moves by world leaders to cut spending could derail a fragile recovery.

Public services including local transport remained shut and domestic flights canceled as workers staged the latest round of strike today in protest against the government''s planned cost-cutting reforms.

In London FTSE 100 Index traded lower 111.30 or 2.19% to 4,960.38, in Paris CAC 40 Index decreased 105.71 or 2.96% to close at 3,470.74, in Frankfurt DAX Index traded lower 146.41 or 2.38% to close at 6,010.81. In Zurich trading SMI Index decreased 120.35 or 1.91% to close at 6,190.80.

Euro-zone economic confidence rose in June but French consumer sentiment weakens and Spanish retail sales dropped 1.8% in May.

The International Monetary Fund on Monday made immediate disbursement of €383.2 million to Serbia from €3.14 billion loan offer agreed last year. Drawing the full amount would bring total disbursements under the program to about €1.80 billion.

The IMF Executive Board also approved Serbia''s request for a waiver of non-observance of the March quantitative performance criterion on the consolidated general government deficit.

The European Commission today extended guarantee schemes for banks in Ireland, Spain and Denmark and a liquidity scheme in Hungary for six months until the end of 2010. The extended schemes feature higher premiums to be paid by the banks for the guarantees and liquidity granted by the state.

The Commission said the move is to encourage banks to finance themselves without the state support and to limit distortions of competition.

Euro-zone economic confidence in June rose to 98.7 in June from 98.4 in May, according to a survey from European Commission released today.

Consumer sentiment improved by 1 point to minus 17 in June, after unemployment fears eased and consumers were more optimistic about the general economic situation.

French consumer confidence dropped again in June, according to a monthly survey from statistics office Insee released today. The consumer confidence index fell to minus 39 in June from minus 38 in May.

Spanish retail sales dropped 1.8% in May from the previous year, following a 2.4% fall in April, the statistics agency INE revealed today. Food product sales dipped 0.9% in May and non-food sales declined 0.7%. For the first five months of the year, average retail sales were down 1.3%.

Separate data from the statistics office showed today that EU harmonized inflation in Spain slowed for the first time in four months. Spanish HICP rose 1.5% year-on-year in June, slower than 1.8% in May.

Emerson Electric Co.''s board announced the terms of cash offer to be made by its subsidiary, Rutherfurd Acquisitions Ltd., to purchase Chloride Group for 375 pence per share in cash. Emerson''s offer values Chloride at around £997 million higher than the current offer from ABB.

Recently, Chloride Group agreed to be acquired by ABB Ltd. for £860 million or about $1.25 billion. ABB''s all-cash offer values each Chloride Group share at 325 pence per share.

Gainers & Losers

Aixtron AG fell 3.2% to €20.25 after the manufacturer of high-power light emitting diodes announced today that Philips Lumileds Lighting Company has ordered an additional AIXTRON G5 HT MOCVD reactor for the production of its LUXEON power LEDs.

Arcandor AG, the tourism and retail group plunged 17.0% to €0.195.

Compagnie de Saint-Gobain SA, the construction materials and building products firm fell 2.6% to €31.83.

Conergy AG, the renewable energy company rose 3.7% to €0.740.

Etablissementen Franz Colruyt NV, the discount supermarket chain said fiscal year 2010 revenues rose 8% to €6.8 billion from €6.3 billion a year ago. Net profit for the year rose 8% to €329.6 million or €10.45 per diluted share compared to net profit of €304.4 million or €9.50 per share a year ago.

Etam Developpement SCA rose 4.5% to €34.09 after the women''s fashion company takes note of the results of the share repurchase tender offer that took place from June 2 to June 22, 2010. The offer was for a total of 2,857,142 ETAM Development shares, at a price of €35 per share, representing 26.53% of the share capital of the company.

Fresenius Medical Care AG & Co. KGaA, the kidney dialysis company fell 0.6% to €44.43.

Gesco AG fell 0.7% to €41.00 after the mechanical engineering and plastics technology company said fiscal year 2010 revenues fell 27% to €277.7 million from €378.4 million a year ago. Net profit for the year fell 59% to €8.9 million or €2.95 per diluted share compared to net profit of €21.6 million or €7.16 per share a year ago.

Interseroh SE, the environmental services provider rose 2.1% to €45.60.

RWE AG fell 1.7% to €54.12 after the utility said that Topell Energy and RWE Innogy are laying the foundation stone today at Duiven in the Dutch province of Gelderland for the first commercial-scale plant for the production of biocoal pellets. The investment in the plant will total €15 million.

Suez Environnement SA fell 0.4% to €13.80 after the utility said that AGBAR, subsidiary of Suez Environnement, is going to launch a public tender offer on the Spanish mixed company AIGÜES DE SABADELL SA at a price of €71 per share.

This public tender offer concerns 68% of the share capital, with AGBAR already holding 11.2% of the capital.

SolarWorld AG rose 0.3% to €9.82 after the solar company was upgraded to “neutral” from “underweight” at JPMorgan Chase & Co.

Technip fell 1.8% to €49.61 after the operator of gas and oil engineering, technologies and projects announced today that it has reached final agreement with the U.S. Department of Justice and Securities and Exchange Commission to fully resolve all potential claims arising from Technip’s participation in the TSKJ joint venture between 1994 and 2004.