European Markets Surge

Arthi Gupta, Mayank Mehta and Sanjay Barot
06 Jul, 2010
New York City

European markets rise on bargain hunting after markets in China region rallied The European Central Bank official said bank stress test transparency will restore confidence in the economy. The ECB settles covered bond purchases worth

[R]7:00 PM Frankfurt - European markets rise on bargain hunting after markets in China region rallied The European Central Bank official said bank stress test transparency will restore confidence in the economy. The ECB settles covered bond purchases worth €61.11 billion. Swiss inflation eases in June.[/R]

U.S. equities and Asian markets rose after China region stocks rose nearly 2%. European Central Bank Governing Council member Christian Noyer expressed optimism that French banks are likely to do well in stress tests.

In London FTSE 100 Index traded higher 118.14 or 2.45% to 4,941.67, in Paris CAC 40 Index increased 108.96 or 3.27% to close at 3,441.42, in Frankfurt DAX Index traded higher 146.28 or 2.52% to close at 5,962.48. In Zurich trading SMI Index increased 116.25 or 1.96% to close at 6,058.50.

The European Union should dispel worries about its banking system, European Commissioner for Economic and Monetary Affairs Olli Rehn said on Monday, adding that full transparency is required for tests conducted to ensure banks'' resilience.

""We need to remain vigilant, in particular with regard to the financial markets,"" Rehn told European Parliamentarians in Strasbourg, France. ""The doubts about the health of the European banks need to be dispelled, which is why the stress tests are so important.""

""The Commission is in favor of full transparency and advocated the extension of bank stress tests and the publication of the results by the end of July,"" Rehn said.

The European Central Bank today said it settled €61.11 billion covered bond purchases as of July 5. On July 4, the central bank had settled covered bond purchases worth €61.08 billion.

Swiss consumer price inflation slowed to 0.5% in June from 1.1% in May, according to data released by the Federal Statistical Office today. A year ago, consumer prices had dropped 1%.

Core consumer prices, which excludes food, beverages, tobacco, seasonal products, energy and fuel rose 0.2% annually, while it fell 0.4% on a monthly basis.

Germany''s construction sector saw a faster decline in activity in June, while construction firms remain downbeat over their outlook amid concerns over public sector demand, a survey shows.

Markit Economics said that the construction purchasing managers'' index stood at 46.7 in June, down from 48.6 in May.

French banks are expected to do well in the stress tests, European Central Bank Governing Council member Christian Noyer reportedly said today.

Speaking in Europlace conference in Paris, Noyer, who heads the Bank of France, said financial regulatory reforms are key to address global imbalances. He noted that coordinated policy decisions are necessary to normalize economic growth. Noyer warned that delaying reforms too long would harm long-term prospects.

Gainers & Losers

Alstom SA, the power and rail engineering group rose 5.0% to €38.63.

Altira AG rose 3.2% to €9.60 after the asset management company said 2009 sales rose 8% to €19.4 million from €18.0 million a year ago. Net profit for the year was €1.4 million compared to net loss of €2.3 million a year ago.

Bayerische Motoren Werke AG, the automobile manufacturer rose 2.1% to €38.92.

Daimler AG, the vehicle maker rose 3.5% to €41.39.

Deutsche Bank AG rose 1.3% to €45.50 after the global investment bank was downgraded to “underweight” from “neutral” at JPMorgan Chase & Co.

Grenkeleasing AG rose 1.2% to €32.90 after the leasing company was upgraded to “buy” from “neutral” by Bank of America Corp.

Infineon Technologies AG rose 3.4% to €4.96 after the semiconductor maker was upgraded to “neutral” from “underperform” at Bank of America.

LVL Medical Groupe SA, the provider of home respiration assistance services rose 0.4% to €15.52.

MAN SE, the engineering group rose 3.9% to €69.49 and Q-Cells SE, the solar company rose 2.3% to €5.41.

Salzgitter AG, the steelmaker rose 4.3% to €48.58 and SolarWorld AG rose 3.6% to €10.17 after the solar power technology company rose 2.3% to €10.01.

SMA Solar Technology AG surges 18.0% to €99.63 after the solar technology company rose 8.9% to €92.08.

ThyssenKrupp AG, the technology company rose 4.6% to €21.15.

Tonnellerie Francois Freres SA, the maker of wine barrels rose 3.7% to €31.75.

Wacker Chemie AG rose 1.2% to €121.00 after the chemical industry was upgraded to “neutral” from “underperform” by Credit Suisse Group AG.

Zodiac SA rose 8.0% to €39.84 after the aeronautical company was upgraded to “buy” from “hold” at Societe Generale SA.