European Markets Lower; Deficit

Arthi Gupta
16 Jul, 2010
New York City

The European markets decline after weaker-than-expected revenue from U.S. corporations. The Basel Committee urges for a countercyclical capital buffer proposal. French PM optimistic Europe will rebound from the current financial crisis. Euro-zone trade balance slides to

[R]4:30 PM Frankfurt – The European markets decline after weaker-than-expected revenue from U.S. corporations. The Basel Committee urges for a countercyclical capital buffer proposal. French PM optimistic Europe will rebound from the current financial crisis. Euro-zone trade balance slides to €3.4 billion deficit.[/R]

U.S. stocks edge lower on disappointing revenue from U.S. companies and Asian stocks fall after weak U.S. economic data. Spanish industrial turnover and new orders increased in May but home prices declined in the second quarter.

The Basel Committee on Banking Supervision reviewed the design and overall calibration of the capital and liquidity frameworks at its 14-15 July meeting.

Based on this review, the Committee has developed concrete recommendations for completing its package of regulatory reforms. The Basel Committee''s oversight body - the Group of Central Bank Governors and Heads of Supervision - will review the Committee''s progress and recommendations at its upcoming meeting later in July. The Committee will present to the Central Bank Governors and Heads of Supervision concrete recommendations for the definition of capital, the treatment of counterparty credit risk, the leverage ratio, the conservation buffer and the liquidity ratios.

The Committee issued for consultation a “countercyclical capital buffer proposal.”

Mr Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank, noted that ""the Committee made significant progress at its meeting and remains fully on track to deliver a complete package of capital and liquidity reforms, including design and calibration, in time for the November 2010 G20 Leaders Summit in Seoul.""

The French Prime Minister Francois Fillon reiterated in Tokyo that “the euro is still a very strong currency."" ""In the past it was overvalued and that was a problem for export competitiveness. I''m not concerned about the rate of the euro in the mid to long-term.""

""I think we can say that every time there has been a crisis, Europe has actually come out stronger from all these difficulties,"" he further added.

Banking stress tests in Europe are unlikely to reveal any major catastrophes, Eurogroup Chairman Jean-Claude Juncker told Austrian newspaper Kurier.

Juncker, who is also the Prime Minister of Luxembourg, noted that the euro-zone needs a more stringent stability pact.

The euro-zone''s trade balance swung into deficit in May from a small surplus in April, as imports rose by more than exports, according to official figures.

The deficit was €3.4 billion, compared with a surplus of €0.3 billion in April. The reason was a 4.2% rise in imports compared to a 1.6% rise in exports.

The 27-nation European Union showed a €15.1 billion trade deficit, according to the official figures released from Eurostat.

Spanish industrial turnover and new orders increased in May, according to a report released by the National Institute of Statistics today.

The Industrial Turnover index rose 10.2% year-on-year in May compared to a 6.2% growth in April. Industrial turnover in consumer goods grew 2.1% annually in May compared to the 1.3% fall in April.

Industrial new orders rose 12.2% on an annual basis in May compared to a 4.4% growth in the previous month.

Home prices in Spain fell between April and June compared to the preceding three months, official figures show.

The Ministry of Housing said its home price index dropped 3.6% year-on-year in the June quarter following a 4.5% fall in the March quarter. On a quarterly basis, house prices dipped 0.9% in the June quarter.

Italy''s total trade deficit rose in May, according to data released by the statistical office Istat today. The trade deficit widened to €1.96 billion in May from April''s revised €860 million.