European Indexes Up; BNP Soars 5%

Arthi Gupta
02 Aug, 2010
New York City

The European markets surge after BNP Paribas and HSBC reported upbeat results. Euro-zone and German manufacturing indexes rise to a three-month high but the index for France drops to 10-month low in July. Swiss retail sales fall in June.

[R]4:00 PM Frankfurt – The European markets surge after BNP Paribas and HSBC reported upbeat results. Euro-zone and German manufacturing indexes rise to a three-month high but the index for France drops to 10-month low in July. Swiss retail sales fall in June.[/R]

U.S. and Asian markets advanced on strong earnings trends. Norway M2 money supply increases in June. Greek manufacturing growth eases in July. Geely completes the purchase of Volvo Car Corp. for $1.8 billion.

HSBC Holdings plc, the financial services firm reported a surge in profit for the first half of fiscal 2010 reflecting a reduction in loan impairment charges and other credit risk provisions, mainly in its North American business.

BNP Paribas, the French bank reported a 31% rise in profit for the second quarter on 12% growth in revenues, as cost of risk declined about 54% from last year.

In Paris CAC 40 Index increased 83.70 or 2.30% to close at 3,726.84 and in Frankfurt DAX Index edged higher 109.49 or 1.78% to close at 6257.46.

Euro-zone manufacturing activity showed strong momentum in July, led by a growth spurt in Germany, suggesting robust economic expansion at the beginning of the third quarter, according to a closely watched survey report published today.

The final Purchasing Managers'' Index for the manufacturing sector rose to a three-month high of 56.7 in July from 55.6 in June, according to a survey conducted by Markit Economics. The reading signaled the tenth successive monthly improvement in overall operating conditions.

Germany''s manufacturing activity showed a highest reading for three months, according to a final report released by the Markit Economics today.

The BME manufacturing purchasing managers'' index rose to a seasonally adjusted 61.2 in July compared to 58.4 in the previous month.

French manufacturing sector fell to its lowest level in 10 months in July, reflecting weaker expansions of output and new orders, alongside a faster decline in employment.

The Markit manufacturing purchasing managers'' index fell to 53.9 in July from 54.8 in June.

The seasonally adjusted Markit purchasing managers'' index for Greece rose to 45.3 in July, the highest reading in six months, from 42.2 in June.

Swiss retail sales declined 0.4% in June from a 1.2% rise in May, according to the Federal Statistic Office report released today. Year-on-year retail turnover rose 0.9% in June as against a 3.9% rise in May.

Norway''s M2 money supply rose 2.6% year-on-year in June compared to a 1.1% growth in May, according to a report released by the statistics office today. The increase in the M2 growth came from enterprises and households.

Zhejiang Geely Holding Group Co., Ltd., the Chinese carmaker said it has completed the acquisition of Volvo Car Corp. from Ford Motor Co. for $1.8 billion.

The deal value included a $200 million note with the balance paid in cash. Geely issued the note and paid $1.3 billion in cash for Volvo Cars, utilizing financing from Chinese institutions and its own balance sheet as well as international capital market resources.

Under the new ownership, Volvo Cars will retain its headquarters and manufacturing presence in Sweden and Belgium. Furthermore, Geely stated as part of the deal, Volvo and Ford will maintain close component and supply relationships.

The company also said Stefan Jacoby, the Chief Executive of Volkswagen Group of America would become President and Chief Executive Officer of Volvo Cars, while Hans-Oskarsson, Deputy Chief Financial Officer will become acting CFO of Volvo Cars, replacing Stuart Rowley.

Gainers & Losers

BNP Paribas rose 5.26% to €55.48 after the French banking giant reported second-quarter revenue increased 11.8% to €11.17 billion compared to €9.99 billion in the prior-year quarter. Net income in the quarter soared 31.2% to €2.105 billion from €1.60 billion reported in the same period last year.

TNT N.V fell 2.60% to €22.31 after the delivery company’s second-quarter net profit slumped 96% to €3 million from €81 million a year earlier. Sales rose 9.6% to €2.77 billion from €2.53 billion boosted by higher express revenues. The Dutch firm also said it will fully split its mail and express operations into separate companies.

UCB SA gained 2.08% to €25.25 after Belgium’s biggest drugmaker reported first-half earnings before interest, tax, depreciation, amortization and one-time items rose 9.6% to €398 million from €363 million, according to a statement on its Web site. Sales rose 3% to €1.64 billion from €1.6 billion.