European Indexes Up; Sanofi-Aventis Up

Arthi Gupta
29 Jul, 2010
New York City

The European markets soared after strong earnings and economic data. Euro-zone economic sentiment rises in July but household saving and business investment rate declines in the first quarter. German unemployment falls in July. Sanofi-Aventis and Siemens report net rises.

[R]4:00 PM Frankfurt – The European markets soared after strong earnings and economic data. Euro-zone economic sentiment rises in July but household saving and business investment rate declines in the first quarter. German unemployment falls in July. Sanofi-Aventis and Siemens report net rises.[/R]

U.S. stocks climb on upbeat earnings and Asian markets traded mixed. Swedish retail sales dips in June. Spanish HICP inflation accelerates in July.

In Paris CAC 40 Index increased 34.37 or 0.94% to close at 3,704.73 and in Frankfurt DAX Index edged higher 42.20 or 0.68% to close at 6221.24.

Euro-zone economic sentiment rose to a 28-month high in July, driven by strong performance in Germany. The euro-zone economic sentiment indicator rose to 101.3 in July from 99.0 in June, according to a report released by the European Commission today.

The EC''s indicator for consumer confidence rose to -14 from -17 after optimism about the general economic situation and easing unemployment fears in Germany contributed to the improvement.

The index measuring confidence in the manufacturing sector rose slightly to -4 from -6. The commission also said the business climate indicator for the euro area increased to 0.66 from 0.40.

Euro-zone household saving rate fell in the first quarter as real disposable income dropped at a faster pace than real final consumption expenditure, according to latest data published by Eurostat.

The seasonally adjusted gross saving rate of households was 14.6% in the first quarter compared with 15% in the fourth quarter. Real disposable income dropped 0.6%, faster than the 0.1% decline seen in the real final consumption expenditure.

In EU27, the seasonally adjusted gross saving rate of households was 13%, compared with 13.4% in the fourth quarter of 2009.

The European Union statistics agency Eurostat reported that business investment rate in the euro area fell in the first quarter.

The seasonally adjusted gross investment rate of non-financial corporations fell to 20.2% in the first quarter from 20.4% recorded in the fourth quarter of 2009. The decrease was due to gross fixed capital formation falling faster than value added.

The gross profit share of non-financial corporations rose to 38% in the first quarter compared with 37.7% in the previous quarter, according to Eurostat. The increase was due to compensation of employees plus taxes less subsidies on production falling faster than value added.

Greek producer price inflation slackened for the second consecutive month in June. The producer price index rose 6.5% year-on-year in June compared to 7.9% in the previous month, according to the statistics office report released today. A year earlier, the PPI decreased 9.2%.

On a monthly basis, the PPI increased 0.8% in June compared to a 0.5% fall in the previous month.

Swedish retail sales fell a seasonally-adjusted 0.2% in June following a 1.3% growth in May, according to data published by the Statistics Sweden today.

In the second quarter, the seasonally adjusted sales grew 1.3% quarter-on-quarter compared to 0.1% rise in the first quarter. Year-on-year, retail sales volume increased a working day adjusted 2.8% in June, slightly faster than the 2.6% rise in May.

The seasonally adjusted number of unemployed in Germany dropped for the thirteenth consecutive month in July boosted by improved economic conditions in the labor market.

There were 20,000 fewer unemployed in Germany in the month of July compared to a revised figure of 21,000 in June, according to data released by the Federal Labor Agency today. The seasonally adjusted rate of unemployment declined marginally to 7.6% in July from 7.7% recorded in June.

Spanish inflation as measured by the harmonized index of consumer prices accelerated since November 2008 in July, according to official data released today. The increase was apparently driven by a hike in the value added tax, effective July 1.

Annual inflation edged higher to 1.9% in July from 1.5% in June, according to a flash estimate of the statistics office INE released today. The rise in the overall index is due to higher prices of food and non-alcoholic beverages, gas and package holidays.

Gainers & Losers

Deutsche Lufthansa AG fell 2.42% to €12.49 after the airliner reported a recovery in demand for passenger and freight traffic in the first half. The company said first half sales rose 23.5% to €12.6 billion from €10.2 billion a year ago. Net loss for the first half was €104 million or €0.23 per diluted share compared to net loss of €178 million or €0.39 per share a year ago.

Sanofi-Aventis SA gained 1.19% to €29.82 after the French pharmaceutical company said second-quarter net sales rose 4.6% to €7.78 billion from €7.44 billion a year ago. Net income in the quarter surged 61.2% to €1.71 billion or €1.31 per diluted share from €1.06 billion or €0.81 per share a year-ago quarter.

Siemens AG declined 2.52% to €74.67 after the electronics and electrical engineering company third-quarter profit rose 12% as revenues and order growth improved.

Revenue in the quarter edged higher 4.9% to €19.2 billion from €18.3 billion a year-ago quarter. Net quarterly income rose 12% to €1.41 billion or €1.60 per share from €1.26 billion or €1.44 per share in the prior-year quarter.