European Indexes Up; Euro-Area PMI Falls

Arthi Gupta
23 Aug, 2010
New York City

The European indexes gained on merger and acquisition-related reports and a rise in mining stocks. The Bundesbank President Axel Weber noted modest euro area growth revisions. Euro area private sector growth slackened in August. German manufacturing dropped in August.

[R]4:00 PM Frankfurt – The European indexes gained on merger and acquisition-related reports and a rise in mining stocks. The Bundesbank President Axel Weber noted modest euro area growth revisions. Euro area private sector growth slackened in August. German manufacturing dropped in August.[/R]

U.S. stocks climbed and Asian markets fell.

The Australian Parliament is facing the prospect of a hung Parliament for the first time in seventy years. The proposed mining profits tax may be scrapped if the opposition Liberal Party forms the new government in Australia.

French private sector growth decelerated in August. Denmark consumer confidence rose in August. Swiss money supply growth fell in July. Hungary retained key rate at 5.25%.

In Paris CAC 40 Index increased 29.36 or 0.83% to close at 3,555.48 and in Frankfurt DAX Index edged higher 23.58 or 0.39% to close at 6,028.74.

Chancellor Angela Merkel on Sunday challenged German atomic-power plant operators E.ON and RWE to come up with alternatives to a proposed tax on nuclear energy production which they call a threat to investment.

German central bank President Axel Weber supported extending unlimited lending to banks until the end of this year and said policy makers should discuss about exit in early 2011.

""Most of these discussions about the continuation of the exit I think will be focused on the first quarter,"" he said in an interview with Bloomberg Television in Frankfurt on Thursday. He added, ""It''s clear that we need to re-embark on a normalization procedure.""

On the economy Weber said, growth projections for the euro area are likely to be revised up as a result of the strong second quarter performance by Germany. He asserted that the euro-region revisions will be ""more modest"" than Germany''s because of weaker growth in some peripheral countries. In June, the ECB had forecast 1% growth for euro area this year and 1.2% rise in 2011.

The euro-zone''s private sector growth decelerated slightly in August as manufacturing and services both slowed, according to figures released today.

The Markit euro-zone composite purchasing managers'' index fell to 56.1 in August from 56.7 in July. This marks a two-month high in the indicator. This was mainly due to a fall in the manufacturing PMI, which fell to 55.0 in August from 56.7 in July, a six-month low.

At the same time, the services PMI slid to 55.6 in August from 55.8 in July, a two-month low.

German manufacturing growth fell to a six-month low in August, but service sector growth accelerated to a three-year high, according to figures published today.

The Markit Germany composite purchasing managers'' index edged higher to a four-month high to 59.3 in August from 59.0 in July. Mainly on the rise in the PMI service index to 58.5 in August from 56.5 and a three-year high.

The manufacturing PMI slid to 58.2 in August from 61.2 in July, a six-month low. The manufacturing output index fell to 60.9 in August from 63.6 in July, a two-month low.

France''s private sector expansion decreased in August from July led by slower growth in the service sector, according to figures released today.

The Markit France composite purchasing managers'' index fell to a five-month low to 59.0 in August from 59.7 in July, on the four-month low in the PMI service index, which dropped to 59.9 in August from 61.1 in July.

The manufacturing output index rose to a three-month high of 57.1 in August from 56.7 in July.

Denmark’s consumer confidence rose to 4.4 in August from 4.1 in July according to reports released by the Statistics Denmark today.

Consumer assessment of the household financial situation in the past 12 months fell to 1.8 in August from 2.5 in July, while views on the household financial situation over the next 12 months eased to 11.8 from 15.5.

Switzerland’s M3 money supply rose 6.5% year-on-year in July, slower than the 7.4% increase in June, the Swiss National Bank said today.

The Hungarian central bank decided to keep the key policy rate unchanged at 5.25% during its monetary policy council meeting today.

HSBC Holdings plc reported exclusive discussions with Anglo-South African insurer, Old Mutual plc about the possible acquisition of a 70% stake in Nedbank Group Ltd, including the entire 52% stake Old Mutual owns in Nedbank.

Old Mutual said the proceeds would be used to partially reinvest in South Africa and partially in various emerging markets via Old Mutual SA, and to reduce existing debt.

BP Plc announced that it commenced Open Water Fishing Operations aimed at removing drill pipe within the MC252 Blow Out Preventer or BOP Operations.

Gainers & Losers

Air Berlin Plc rose 0.29% to €3.42 after the German aviation company plans to improve service levels on long-haul sectors, WirtschaftsWoche reported.

Bilfinger Berger AG fell 0.11% to €46.90 after the German construction company denied a report that Hesse Prime Minister Roland Koch would succeed Chief Executive Officer Herbert Bodner.

Hochtief AG gained 0.82% to €53.18 after the construction company reported its subsidiaries Turner and Flatiron have received new orders in the U.S. with a total value of €284.4 million or $366.1 million.

Merck KGaA advanced 1.33% to €68.15 after the chemicals and drugmaker was raised to ""buy"" from ""hold"" at UniCredit.

SBM Offshore NV increased 0.97% to €11.93 after the oil services company reported first-half revenue fell 4.2% to $1.38 billion, compared with $1.44 billion a year earlier. Net profit for the period fell 14.1% to $77.6 million compared to net income of $90.3 million in the same period a year earlier.