Three-Day Rally in European Markets

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

The European markets extend gains on positive U.S. economic data. The ECB President Trichet approves bank stress tests. The OECD composite leading index rises in May. French industrial production rebounds in May. German CPI inflation confirmed at 0.9% in June.

[R]7:00 PM Frankfurt – The European markets extend gains on positive U.S. economic data. The ECB President Trichet approves bank stress tests. The OECD composite leading index rises in May. French industrial production rebounds in May. German CPI inflation confirmed at 0.9% in June.[/R]

U.S. equities trade weak and Asian markets rise for a second consecutive session. The European Parliament approves data-sharing deal with U.S.

EADS re-enters bidding process for the U.S. Air Force tanker contract.

In London FTSE 100 Index traded higher 8.26 or 0.16% to 5,113.71, in Paris CAC 40 Index increased 6.71 or 0.19% to close at 3,544.96, in Frankfurt DAX Index traded higher 12.00 or 0.20% to close at 6,047.66. In Zurich trading SMI Index increased 34.40 or 0.56% to close at 6,190.12.

The European Central Bank President Jean-Claude Trichet said today that the stress tests that are conducted by the European Union on euro-zone banks is a ""step in the right direction"" and will help restore confidence in the region.

""Publication of the detailed results of a harmonized pan-European stress test is an important step in the right direction,"" Trichet said at a conference in Frankfurt. ""These tests will increase transparency and enhance investors'' confidence in Europe''s banking sector.""

A total of 91 banks across Europe are tested to assess whether they will be able to withstand future shocks in the financial sector. The results are due to be published on July 23.

The composite leading index for the OECD area increased at a slower pace in May, according to a report by the Organization for Economic Co-operation and Development released today.

The composite leading indicator rose to 103.7 in May from 103.6 in the previous month.

""Peaks in the growth cycle have emerged in France, Italy, China and India and tentative signs of a peak are emerging in Canada, the United Kingdom and Brazil,"" the OECD said.

French industrial production rebounded more than expected in May on strong energy and automobile output, supporting the view that the economy grew faster in the second quarter.

Industrial production grew 1.7% in May compared to April''s revised 0.5% fall, according to a report released by the statistics office Insee today. Annual output growth increased to 8.2% from 8.1%.

German consumer price annual inflation slowed to 0.9% in June from 1.2% in May, according to final data from the Federal Statistics Office released today. The rate is still well below the threshold of 2%, which is important for monetary policy, the statistics office said. On a monthly basis, consumer prices edged up 0.1%.

The European Parliament in Strasbourg on Thursday approved a new deal that allows US anti-terrorism investigators access to European banking data and provides safeguards to protect the privacy of European citizens.

The European MPs voted 484 to 109 in favor of the new five-year deal, with 12 abstentions. With Thursday''s approval of the new deal signed by Brussels and Washington last week, the U.S. will now have access to the European banking data from August 1.

The new deal authorizes Europol, the European police organization, to check on the validity of the U.S. requests, and requires the European commission to appoint EU officials to check on the actions of the U.S. investigators and to monitor how the shared data is used.

European Aeronautic Defense and Space Co., the airbus manufacturer announced on Thursday that it intends to submit its 8800+ pages proposal for the multi-billion dollar KC-X U.S. Air Force aerial refueling tanker contract.

EADS North America had announced on April 20 its decision to re-enter the bidding process alone, and had agreed to submit a proposal by July 9 for the 179 tanker aircraft contract, valued at about $35 billion.

EADS said it will offer an A330-based KC-45 tanker, which is the U.S. military version of the proven A330 Multi Role Tanker Transport or MRTT. KC-45 is the most capable aerial refueling system operating today, with a fly-by-wire Aerial Refueling Boom System having an offload rate of 1,200 U.S. gallons per minute, EADS added.

Gainers & Losers

Alstom SA, the power and rail engineering group rose 0.7% to €38.92.

Areva SA fell 1.1% to €330.65 after the nuclear group signed an agreement to develop a clean energy park near the Point Lepreau nuclear station. The project represents the third clean energy park in the world to be developed by AREVA.

HeidelbergCement AG increased 0.9% to €38.71 after the producer of cement upgraded its “buy” recommendation at Credit Suisse Group AG.

Infineon Technologies AG, the chipmaker rose 2.0% to €5.06.

Kaufman & Broad SA gained 5.1% to €17.75. The property developer and builder said first half sales fell 7.6% to €385.7 million from €417.2 million a year ago. Net profit for the first half was €2.3 million or €0.11 per diluted share compared to net loss of €27.5 million or €1.28 per share a year ago.

K+S AG, the potash producer rose 1.2% to €38.72.

Schneider Electric SA rose 1.2% to €84.45 after the electrical equipment maker was upgraded to “outperform” from “neutral” at Credit Suisse Group AG.

ThyssenKrupp AG, the technology company increased 0.9% to €21.58.

Societe Fonciere Lyonnaise SA, the property company rose 0.1% to €29.99.

Vet''Affaires SA, the discount retail chain edged higher 3.4% to €19.10.

Vivendi SA, the communications and entertainment company rose 1.2% to €17.39.