European Indexes Fall; Adidas Net Soars

Arthi Gupta
04 Aug, 2010
New York City

The European indexes decline after weaker-than-expected global economic data. Romania to receive next aid tranche from the IMF and the EU but retains key rate at 6.25%. Euro-zone retail sales unchanged in June and service sector growth accelerates in July.

[R]4:00 PM Frankfurt – The European indexes decline after weaker-than-expected global economic data. Romania to receive next aid tranche from the IMF and the EU but retains key rate at 6.25%. Euro-zone retail sales unchanged in June and service sector growth accelerates in July.[/R]

U.S. stocks declined amidst reports of a slowdown in economic recovery and mixed trends were seen in the Asian markets. Spanish import price inflation slackens in June.

In Paris CAC 40 Index decreased 1.87 or 0.05% to close at 3,745.64 and in Frankfurt DAX Index edged higher 11.47 or 0.18% to close at 6319.38.

A joint European Commission, the IMF and the World Bank mission concluded that Romania met the conditions for the €20 billion aid deal. The decision came after representatives from the European Commission, the IMF and the World Bank visited Bucharest from July 26 to August 4.

The European Union mission noted that the fiscal consolidation measures undertaken by the government appeared sufficient to reach the agreed budget deficit targets of 6.8% and 4.4% of GDP in 2010 and 2011. Moreover, the country remained committed to reduce its deficit below the EU limit of 3% of GDP in 2012. Also, the government raised the Value Added Tax to 24% and cut public sector wages by 25% to achieve its deficit target.

The IMF estimates inflation to rise temporarily to 7% or 8%, before easing into the National Bank of Romania''s target range during 2011. The International Monetary Fund will release €900 million in September, subject to approval by IMF Management and the Executive Board.

The Board of the National Bank of Romania decided to keep the monetary policy rate at 6.25% per annum, the central bank said in a statement. The Romanian central bank left its key policy rate unchanged for the second session in a row.

Retail sales in the euro-zone remained flat in June, following a moderate rebound in May as trade in food and drinks fell during the month, according to latest figures from Eurostat released today.

Retail sales index rose 0.4% in June. Retail sales of food, drinks and tobacco declined 0.7% in June following a 0.8% rise in May. Non-food sales continued to increase for the second month, rising 0.3% in June compared to a 0.4% growth in May.

Year-on-year, sales rose 0.4% in the euro-zone during June, slower than the 0.6% increase in the previous month.

In the EU27, the retail sales index edged 0.1% in June compared to a 0.6% rise in May.

The euro-zone service sector showed a faster expansion in July, driven by higher levels of activity in France and Germany, according to a key survey published today.

The Markit services business activity index rose to 55.8 in July from 55.5 in June.

Spanish import price inflation eased in June from the previous year, but export price inflation climbed, according to a latest report released by the National Institute of Statistics today. The import price index rose 10.1% year-on-year in June compared to a 10.2% growth in May. On a monthly basis, import prices increased 0.8% in June compared to a 1.7% growth in the previous month.

The export price index increased 5.8% on an annual basis in June, faster than a 5.6% growth in the previous month.

Gainers & Losers

adidas AG fell 0.14% to €41.86 after the sportswear and sports equipment maker reported second quarter revenues grew 19% to €2.91 billion from €2.45 billion in 2009. Net income soared 1300% to €126 million or €0.60 per share from €9 million or €0.06 per share a year ago.

The company stated second-quarter profit surged as sales momentum picked up owing to FIFA World Cup 2010 as well as resurgence of the Reebok brand in North America. The company also lifted its full-year outlook.

Axa SA declined 0.88% to €14.59 after the insurer reported first half total revenues rose 3.1% to €49.93 billion from €48.41 billion in the previous year. Net income declined 29% to €944 million from €1.32 billion last year. Earnings per share declined to €0.35 from €0.56 a year earlier.

Henkel AG & Co. KGaA gained 2.04% to €33.26 after the household consumer products maker said sales increased 11.6% to €3,890 millions with strong contribution from the Adhesive Technologies and Cosmetics/Toiletries business sectors.

Societe Generale SA rose 0.74% to €45.73 after the French bank reported second-quarter net income surged 249.5% to €1.08 billion from €309 million last year. Operating income soared 199.6% to €1.60 billion from €534 million a year ago. Net banking income for the quarter rose 16.8% to €6.68 billion from €5.72 billion in the previous year.