European Indexes Down; GDF Deal

Arthi Gupta
10 Aug, 2010
New York City

The European indexes fall after China said imports grew at the slowest pace indicating that the economy may be slowing down. German wholesale price inflation rises 5.3% in July. French industrial production decelerates in June. GDF Suez agrees to merge with International Power.

[R]4:00 PM Frankfurt – The European indexes fall after China said imports grew at the slowest pace indicating that the economy may be slowing down. German wholesale price inflation rises 5.3% in July. French industrial production decelerates in June. GDF Suez agrees to merge with International Power.[/R]

IWH estimates German economy likely to expand 2.5% in 2010. Swiss consumer confidence drops in the third quarter. Greek import price inflation slackens in June. Spain home sales fall 1.3% in June.

BP plc, the British oil giant announced an initial deposit of $3 billion into a newly-established escrow trust to pay legitimate claims arising from the Gulf of Mexico oil and gas spill.

In Paris CAC 40 Index decreased 54.43 or 1.44% to close at 3,722.94 and in Frankfurt DAX Index edged lower 83.19 or 1.31% to close at 6,268.41.

Consumer price inflation in Germany increased more than expected in July due to higher energy and food prices, according to official data released today.

The consumer price index rose 1.2% year-on-year in July, following a 0.9% increase in June, according to the Federal Statistics Office data published today.

Germany''s wholesale price inflation increased in July, according to a report released by the Federal Statistics Office today.

The wholesale price index rose 5.3% year-on-year in July compared to a 5.1% growth in June. The wholesale price index increased for the eighth consecutive month. A year earlier, wholesale prices were down 10.6%.

The wholesale prices of metals and metal ores rose 23.3% annually in July, while solid fuels and oil products prices rose 10.3%. Wholesale prices of agriculture and food products grew 11.5%.

Month-on-month, wholesale prices dipped 0.3% in July, compared to a 0.2% fall in the preceding month.

The German economy may grow 2.5% this year, an economist at Halle-based think tank, IWH, reportedly said today. The think tank previously forecast 2% growth for 2010.

The Hungarian government upwardly revised its economic outlook for 2010. The Economy Ministry said gross domestic product will expand 0.6% this year.

Consumer price inflation is estimated at 4.7% in 2010, revised up from the previous estimate of 4.3%. At the same time, the ministry retained its forecast for general government deficit at 3.8% of GDP in 2010.

Home sales in Spain fell 1.3% to 37,297 in June, according to the National Statistics Institute report released today. On a yearly basis, home sales rose 7% in June. The total number of property transfers decreased 3.9% in June from the previous year to 155,652.

French industrial production declined more than expected in June as manufacturing output fell led by a sharp decline in vehicle production. Industrial output fell 1.7% month-on-month in June following a revised 1.9% rise in May, according to data released by the statistics office Insee today. The annual growth rate of industrial production eased to 5.7%in June from the previous month''s 8.5%.

Manufacturing output dropped 1.3% in June on a monthly basis after a revised increase of 0.6% in May. On an annual basis, total manufacturing output rose at 5% compared with the 7.8% increase recorded in May.

Swiss consumer confidence was less than expected in the third quarter, according to survey results released by the State Secretariat for Economic Affairs today.

The consumer sentiment index logged 16 points in the July quarter following 14 points in April, according to July''s consumer confidence survey.

The Greek import price inflation eased for the second consecutive month in June, according to data released by the statistics office today.

The import price index grew 6.2% year-on-year in June as against a 7.8% growth in the previous month. The statistics agency said the annual rise in the import price index reflects 1.3% increase in the import price index of the euro-zone market and 11.2% rise in non-euro-zone market.

On a monthly basis, import prices rose 0.6% in June, compared to a 0.5% fall in May.

GDF Suez SP, the French utility firm signed a Memorandum of Understanding with International Power on the proposed combination of International Power and GDF Suez''s Energy International Business areas outside Europe and certain assets in the UK and Turkey, collectively called GDF Suez Energy International.

Upon completion, International Power shareholders will own 30% of the new company while GDF Suez will own 70%. International Power shareholders will also be entitled to receive a cash payment of 92 pence per share through a special dividend.

GDF Suez Energy International will be transferred to International Power with €4.4 billion of net financial debt as at June 30.

The combined entities are expected to generate £165 million of synergies a year, with three-quarters of the projected annualized synergies expected to be realized in the second year after completion of the deal.

Gainers & Losers

Danske Bank A/S slumped 5.30% to 11.61 kroner after the Denmark-based financial institution reported net interest income declined 14% to 5.93 billion kronor.

France Telecom SA fell 1.33% to €21.45 after the France-based telecommunication operator said it is in talks to buy a stake in Medi Telecom, Morocco''s second-largest mobile operator, in an attempt to increase exposure to fast-growing African markets.

Hannover Rueckversicherung AG plunged 5.71% to €36.01 after the German reinsurer said it still expects to achieve its full-year profit forecast of €600 million despite a 28% year-on-year drop in first half net income to €311 million. The company reported second-quarter net income fell 23.5% to €159.6 million from €208.7 million a year earlier.

Saras Spa dropped 1.48% to €1.47 after the Italy-based energy sector company stated second quarter net income slumped 64% to €21.1 million from €58.8 million a year ago. Net income was €2.4 million excluding the changing value of inventories.

Telecom Italia S.p.A. rose 2.74% to €13.86 after the Italian telecom company was upgraded to “overweight” from “equal weight.” at Barclays Capital.