European Markets Climb; PMI Rises

Arthi Gupta
22 Jul, 2010
New York City

The European markets advance after better-than-expected economic data in the region. The IMF approves

[R]4:00 PM Frankfurt – The European markets advance after better-than-expected economic data in the region. The IMF approves €105.8 million loan to Latvia. Euro-zone PMI rises in July, industrial orders surge in May, and current account deficit is €25.4 billion in the first quarter. French PMI drops in July.[/R]

U.S. equities gained on encouraging earnings data and Asian markets closed mixed.

The IMF urges for transparency in bank stress tests in the EU. French manufacturers'' confidence rises but consumer confidence index remains flat in July. German PMI accelerates in July.

Credit Suisse Group reported a marginal rise in second-quarter profit, as lower expenses and one-item gains offset the decline in revenues.

The bank stated second quarter 2010 net income attributable to shareholders of Sfr1.593 billion, up 1% from Sfr1.571 billion in the same period last year.

In Paris CAC 40 Index increased 66.51 or 1.91% to close at 3,560.26 and in Frankfurt DAX Index edged higher 100.69 or 1.68% to close at 6091.66.

The Executive Board of the International Monetary Fund today completed the third review of Latvia''s performance under an economic program. The board is set to approve €105.8 million or $135.6 million, bringing total disbursements to about €1.15 billion or $1.48 billion.

The board also completed the financing assurances review approved a request to waive the applicability of the end-June 2010 performance criterion on the fiscal balance, as data on this criterion were not yet available.

The International Monetary Fund expressed the hope that the stress tests that are currently conducted on European banks must be credible to restore confidence in the region''s banking sector.

A total of 91 banks across Europe, representing 65% of the region''s banking sector, are being tested to assess whether they will be able to withstand future shocks in the financial sector. The results are due on Friday.

""To maximize confidence building, the IMF recommends full disclosure of the findings and effective follow up,"" the lender said in a report on Wednesday. ""Ideally, banks should be able to replenish any capital needs from private sources. But a backstop from official sources may be necessary.""

The Flash Euro-zone Composite Output Index rose for the first time in three months in July, according to data released from Markit Economics today. The index rose to 56.7 in July from 56 in June.

The Flash Purchasing Managers'' Index for manufacturing edged higher to 56.5 in July from 55.6 in June. The services PMI climbed to 56 in July from 55.5 in June.

Industrial orders in the euro-zone rose in May, according to the latest official figures. This bodes well for the manufacturing sector suggesting strong growth. The figures show that new orders rose 3.8% in May faster than the 0.6% growth in April.

New orders across the European Union increased 2.7% month-on-month in May after a rise of 0.3% in April.

Euro-zone reported a current account balance deficit of €25.4 billion in the first quarter compared with a €6.8 billion surplus in the previous quarter, according to a report released by the Eurostat today.

The current account balance was minus 1.1% of gross domestic product in the first quarter compared to a 0.3% of GDP in the previous quarter. A year earlier, the current account balance recorded a surplus of €1.8 billion.

In EU27, the current account deficit widened to €34.8 billion in the first quarter of 2010 compared with a deficit of €50.6 billion in the first quarter of 2009 and a deficit of €13.4 billion in the fourth quarter of 2009.

French manufacturers'' sentiment improved unexpectedly in July, according to a monthly survey from the statistics office Insee released today. The index rose to 98 in July compared to a revised reading of 96 in June.

The personal production outlook for the next month edged higher to minus 9 from minus 7 and the general production outlook increased to minus 2 from minus 4.

French consumer confidence index was minus 39 in July, unchanged from June, according to a survey data released by the statistics office Insee today.

The French manufacturing sector expanded at a slower pace in July, according to a flash report released by the Markit Economics today.

The purchasing managers’ index or PMI for manufacturing dropped to 53.7 in July from 54.8 in June. The manufacturing output index slipped to 56.6 in July from 56.9 in the preceding month.

Private sector growth activity accelerated in Germany in July. The flash composite output index rose to a three-month high of 59.3 in July from 56.7 recorded in June, according to a survey data released by Markit Economics today.

The flash manufacturing PMI climbed to a three-month high of 61.2 in July from 58.4 in June, with the manufacturing output index increasing to 63.1 in July from 60.3 in June. The services PMI edged higher to 57.3 in July compared to 54.8 in June.

Gainers & Losers

Unibail-Rodamco rose 3.9% to €145.60 after the company announced a plan to distribute €1.8 billion or $2.3 billion to investors.

ABB Ltd., the builder of electricity networks advanced 3.5% to Sfr 20.33.

Technip SA edged higher to 4.9% to €50.84 after the oilfield-services provider reported a growing order backlog as it won contracts in Brazil and the North Sea.

Fiat SpA, the largest carmaker increased 2.1% to €9.87 after it was upgraded to “buy” from “hold” at UniCredit SpA and Societe Generale SA.

Nordea Bank AB gained 1.6% to €70.05.