European Markets Slide; CPI Up 1.7%

Arthi Gupta
30 Jul, 2010
New York City

The European markets decline amidst concerns of slow economic growth in the U.S. Euro-zone unemployment rate flat at 10% in June and CPI rises 1.7% in July. Moody''s lowers Iceland government bond ratings to negative from stable.

[R]4:00 PM Frankfurt – The European markets decline amidst concerns of slow economic growth in the U.S. Euro-zone unemployment rate flat at 10% in June and CPI rises 1.7% in July. Moody''s lowers Iceland government bond ratings to negative from stable.[/R]

U.S. indexes traded lower after the release of second quarter GDP expansion rate of 2.4% and Asian markets declined on weak economic data. German retail sales accelerate in June and Greek retail sales drop in May. Italy''s CPI rises in July but PPI slackens in June.

Cheung Kong Infrastructure Holdings, Hongkong Electric Holdings, Li Ka Shing Foundation and Li Ka Shing (Overseas) Foundation announced a formal offer to acquire a group of companies engaging in the business of electricity distribution in the United Kingdom from EDF Energy Plc and CSW Investments.

In Paris CAC 40 Index decreased 35.86 or 0.98% to close at 3,616.05 and in Frankfurt DAX Index edged lower 54.21 or 0.88% to close at 6080.49.

The outlook for Iceland''s Baa3 local and foreign currency government bond ratings was changed to negative from stable by the Moody''s Investors Service on Thursday.

The rating action was taken in view of the recent Supreme Court ruling on the illegality of foreign-exchange-linked loans and government''s continuing difficulties in achieving a resolution to its ""Icesave"" dispute with the UK and Dutch governments.

""These two sources of macroeconomic uncertainty are indicative of the generally asymmetric risks facing Iceland and explains the rationale for the negative outlook on its ratings,"" Moody''s said.

The euro area unemployment rate remained flat at 10% in June, according to official data released by Eurostat today.

The number of unemployed increased 6,000 in June compared to May, totaling 15.77 million. The male unemployment rate was 9.8% while the female unemployment rate was 10.2%. The unemployment rate of the European Union was unchanged at 9.6%.

The euro area annual consumer price inflation rate rose 1.7% in July from June''s unrevised rate of 1.4%, according to a flash estimate released by Eurostat today.

Retail sales in Germany fell more than expected in June on a monthly basis, following a sharp rise in May. The calendar and seasonally adjusted retail sales fell 0.9% following the revised 3% rise in May, according to figures released by the Federal Statistics Office today.

Greek retail sales decline in May. The retail sales index at constant prices dropped 7.3% year-on-year in May compared to the 5.8% fall in the previous month, according to the statistics office today. Retail sales decreased for the second consecutive month. A year earlier, retail sales slipped 14.5%.

Excluding automotive fuel, retail sales fell 7.2% annually in May following a 5.7% fall in April.

Italy''s consumer price inflation edged higher more than expected in July, after slowing slightly in June, according to preliminary figures released by the statistics office Istat today.

The consumer price index including tobacco rose 1.7% annually in July compared to June''s 1.3% increase. On a monthly basis, the CPI rose 0.4% in July.

Italy''s total producer price index rose 3.4% in June after rising 3.7% in May, according to the statistics office Istat. On a monthly basis, total producer prices grew 0.2% in June compared to a 0.6% rise in May.

A consortium controlled by Hong Kong billionaire Li Ka-Shing agreed to buy the UK electricity networks of French power group EDF Energy Plc for £5.78 billion or HK$69.99 billion or $9 billion.

The offer is to acquire a group of companies engaged in the distribution of electricity in the UK from EDF and CSW Investments.

The proposed transaction is subject to the approval of CKI shareholders and HEH independent shareholders. It is also conditional upon the approval of the Commission of European Union.

Gainers & Losers

Enel edged higher 0.40% to €3.74 after the utility reported a 31% decline in its first-half profit.

European Aeronautic, Defense & Space Co. gained 2.2% to €17.98 after the company raised its forecast for 2010 profit.

Gamesa Corporacion Tecnologica SA plunged 12.26% to €6.68 after the Spanish wind turbine maker revised downwards its sales targets for the current year and 2011.