Moody

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

The European markets rise for a sixth consecutive session boosted by strong earnings from Alcoa. Moody''s downgrades credit rating of Portugal but reaffirms stable outlook. German inflation eases in June to 5.1% and economic sentiment falls in July. French inflation slackens in June.

[R]7:00 PM Frankfurt – The European markets rise for a sixth consecutive session boosted by strong earnings from Alcoa. Moody''s downgrades credit rating of Portugal but reaffirms stable outlook. German inflation eases in June to 5.1% and economic sentiment falls in July. French inflation slackens in June.[/R]

U.S. stocks advanced and Asian stocks fell after China reiterated that it would maintain lending curbs to curb real estate speculation. BP shares rallied on reports of possible asset sales by the company to cover spill costs. Spanish annual inflation slows in June.

Greece is seeking to raise €1.25 billion through a sale of six-month Treasury bills. The six-month T-bill auction was the nation''s first since accepting a bailout in May.

Moody''s Investors Service today downgraded Portugal''s government bond ratings to A1 from Aa2, saying that the Portuguese government''s financial strength will continue to weaken over the medium term and the economy''s growth prospects are likely to remain weak. The outlook on the rating is stable, with the upside and downside risks evenly balanced.

Looking ahead, Moody''s expects the government''s debt metrics to continue to deteriorate for at least another two to three years, with the debt-to-GDP and debt-to-revenues ratios approaching 90% and 210%, respectively, before stabilizing once the budget has moved back into a primary surplus position.

Germany''s wholesale price inflation eased in June, although wholesale prices increased for the seventh consecutive month, a report by the Federal Statistics Office showed. The wholesale price index rose 5.1% year-on-year in June, slower than a 6.2% growth in the previous month.

The weakening trend in German economic sentiment continued in July with financial experts seeing limited potential for the economy to improve further. Debt woes in many European nations as well as fiscal tightening are likely to dent the recovery in Germany.

The economic sentiment indicator in Germany dropped by 7.5 points to 21.2 points in July, the lowest level since April 2009, according to data released by the Centre for European Economic Research, or ZEW.

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

The wholesale price index rose 5.1% year-on-year in June, slower than a 6.2% growth in the previous month. However, wholesale prices increased for the seventh consecutive month.

Month-on-month, wholesale prices dropped 0.2% in June, compared to a 0.3% growth in the preceding month.

The French consumer price inflation eased for the second straight month in June as energy prices rose at a slower pace. Consumer prices rose 1.5% year-on-year, slightly slower than the 1.6% rise in the previous month, according to data from INSEE. In May, inflation had slowed from April''s 1.7%.

Core inflation, which excludes food, energy and administered prices was 1.4% in June, matching May''s figure.

Spanish consumer price annual inflation eased in June after accelerating for three consecutive months, according to data from the statistics agency INE released today.

Annual inflation fell to 1.5% from 1.8% in May. Month-on-month, consumer prices were up 0.2%, in line with forecast and May''s growth. Excluding food and energy prices, core annual inflation doubled to 0.4% in June.

Swiss chemical company Lonza Group AG said it entered a commercial manufacturing agreement for the future commercial supply of Benlysta with Human Genome Sciences Inc.

Italian highway companies Atlantia SpA and Societa Iniziative Autostradali e Servizi SpA (SIAS) plan to merge their Chilean operations to create a billion-euro company, which may be listed on one or more regulated stock markets.

Europe Markets Review

In London FTSE 100 Index traded higher 80.51 or 1.56% to 5,247.53, in Paris CAC 40 Index increased 57.31 or 1.61% to 3,624.97 and in Frankfurt DAX index traded higher 89.92 or 1.48% to 6,167.11. In Zurich trading SMI increased 58.91 or 0.95% to 6,287.22.