European Markets Drop 2%; ING Net Soars

Arthi Gupta
11 Aug, 2010
New York City

The European markets dropped after the U.S. Fed noted that the U.S. economy may recover at a slower pace than expected. S&P upgraded the long term foreign currency debt outlook for Czech Republic. Portuguese inflation rose 1.8% in July. French current account deficit narrowed in June.

[R]4:00 PM Frankfurt – The European markets dropped after the U.S. Fed noted that the U.S. economy may recover at a slower pace than expected. S&P upgraded the long term foreign currency debt outlook for Czech Republic. Portuguese inflation rose 1.8% in July. French current account deficit narrowed in June.][/R]

U.S. and Asian markets drop amidst global economic concerns. Hungary inflation slowed 4% in July and German business insolvencies rose 1.1% in May.

In Paris CAC 40 Index dropped 84.77 or 2.27% to close at 3,645.81 and in Frankfurt DAX Index edged lower 124.77 or 1.98% to close at 6,161.48.

The Federal Open Market Committee, the monetary policy-setting arm of the Federal Reserve, said it decided to leave interest rates unchanged and reiterated that rates are likely to remain “exceptionally low for an extended period.”

The Fed also said that it would reinvest funds from maturing mortgage-backed securities to maintain the current size of its balance sheet, providing additional stimulus to the economy.

Standard & Poor’s on Tuesday upgraded the outlook on the Czech Republic''s long-term foreign currency rating to positive from stable. At the same time, the outlook on the local currency rating remained stable.

The rating agency affirmed long- and short-term foreign currency sovereign credit ratings at ''A/A-1'' and ''long- and short-term local currency ratings at ''A+/A-1''. The ''AA'' transfer and convertibility assessment remained unchanged.

The Portuguese consumer price index year-on-year rose 1.8% in July as against a 1.2% increase in June, according to a report published by the Statistics Portugal today. Excluding energy and unprocessed food, the annual rate increased to 0.6% in July from 0.2% in June. On a monthly basis, the consumer price index increased 0.1%.

Year-on-year consumer prices in Hungary edged higher 4% in July compared to the 5.3% increase in June, according to the Central Statistics Office report released today. Food prices rose 2.8% in July, led by higher prices for seasonal items such as potatoes, fresh vegetables and fruits. Cheese prices fell 6.8%.

On a month-on-month basis, consumer prices increased 0.1%, following a 0.2% rise in the preceding month. Food prices decreased 0.1%.

France''s current account balance recorded a smaller deficit in June than in May, according to official figures released today. The Bank of France said the current account deficit was €2.7 billion in June compared to a €4 billion deficit in May.

German insolvency courts reported 2,692 business insolvencies in May, which represents a 1.1% increase from a year ago, according to figures released by the Federal Statistics Office today. Consumer insolvencies climbed 14.1% to 8,552 in May compared to the month a year ago.

Gainers & Losers

E.ON AG fell 0.98% to €23.22 after the German utility company reported first half adjusted net profit declined 1.2% to €3.26 billion from €3.3 billion a year earlier. The company said the deterioration of the results is attributable to higher interest payments, as well as an increase in taxes.

ING Groep N.V. tumbled 3.80% to €9.64 after the Dutch financial services provider stated second-quarter net profit soared 1,435% to €1.09 billion or 29 euro cents per diluted share from €71 million or 3 euro cents per share in the second quarter of 2009.

Nestlé S.A. dropped 0.41% to Sfr48.97 after the nutrition and foods company reported sales for the first-half rose 5.9% to Sfr55.344 billion from Sfr52.267 billion a year earlier. Net profit in the period attributable to shareholders of the parent rose 7.5% to Sfr5.450 billion or Sfr1.59 compared to Sfr5.071 billion or Sfr1.40 in the previous year.

Nobel Biocare Holding AG slumped 10.72% to €16.83 after the Swiss medical devices company reported second-quarter sales rose marginally to €155 million from €153.5 million. Net profit in the quarter fell 30.5% to €19.6 million from €28.2 million in the prior-year quarter.

Touax SA rose 2.2% to €24.40 after the holding engaged in the provision of transportation services in France said it increased its shipping container utilization rate to a record 97.1% in July.