European Stocks Drop; German GDP Expands

Arthi Gupta
24 Aug, 2010
New York City

The European indexes traded lower amidst concerns over the pace of global economic recovery. Euro-zone industrial order growth slackened in June. Germany GDP expanded 2.2% in the second quarter to June and budget deficit rose in the first half.

[R]4:00 PM Frankfurt – The European indexes traded lower amidst concerns over the pace of global economic recovery. Euro-zone industrial order growth slackened in June. Germany GDP expanded 2.2% in the second quarter to June and budget deficit rose in the first half.[/R]

U.S. and Asian markets declined on global economic woes.

Sweden employment dropped in the second quarter. Polish central bank maintained key rate flat at 3.5%. Spanish state retirement pension increased.

Xstrata, the Swiss mining company and Australia-listed iron ore company Sphere Minerals, announced today a A$2.50 per share cash offer by Xstrata to acquire all the issued and outstanding common shares of Sphere.

In Paris CAC 40 Index decreased 65.83 or 1.9% to close at 3,487.40 and in Frankfurt DAX Index edged lower 80.04 or 1.3% to close at 5,930.87.

New industrial orders received by euro area manufacturers eased in June from May, according to official figures released today. New orders rose 2.5% in June compared with the 4.1% growth in May.

Eurostat reported new orders across the European Union increased 2.4% month-on-month in June after a rise of 4% in May. On a yearly basis, EU27 orders increased 22.5%.

The German economy expanded 2.2% between April and June compared to a 0.5% expansion in the first three months of the year, according to a report of the Federal Statistics Office released today.

On a year-over-year basis, the German economy expanded 4.1% compared to the 2.1% rise in the preceding quarter.

Germany''s general government deficit in the first half increased from a year ago as revenue fell and expenditure increased, according to figures released today.

The Statistics office Destatis said net borrowing of the government in the first half of 2010 was €42.8 billion as against the €18.7 billion deficit in the first half of last year, deficit to gross domestic product ratio of 3.5%.

Government revenue fell 1.5% in the six-month period to €526.1 billion.

Sweden''s employment decreased in the second quarter because of a fall in public sector jobs, according to a report released by the Statistics Sweden today.

The number of employed persons declined 0.6% to 4.05 million in the second quarter. Employed persons in the private sector edged higher 0.1%, while it fell 2% in the public sector.

The Polish central bank today left its benchmark reference rate unchanged at 3.5% after the two-day monetary policy meeting. The National Bank of Poland also retained other interest rates. The lombard rate was kept intact at 5% per annum, while the deposit rate was retained at 2%.

According to the central bank the annual inflation in Poland eased to 2% in July from 2.3% in June.

The average state pension for retirees in Spain rose to €886.40 a month at the start of August, according to data released by the Ministry of Employment and Immigration today, 3.5% increase from a year ago.

Approximately 8.7 million pensions were being paid out in Spain at the start of August, up 1.6% annually, with retirement pensions amounting to 5.2 million of the total.

Gainers & Losers

Accor SA gained 0.32% to €23.44 after the French hotel company agreed to sell 48 hotels in Europe for €367 million as part of its plan to cut debt and dispose off some real-estate holdings.

EDAP TMS S.A. plunged 6.41% to €2.19 after the developer and marketer of the Ablatherm device reported second quarter total net sales dropped 17.8% to €5.49 million from €6.68 million in the prior year. Net loss in the quarter widened 89% to €1.02 million or 9 euro cents per diluted share versus net loss of €539,000 million or 5 euro cents per share a year ago.

Lafarge SA declined 4.52% to €36.40 after the cement maker had its recommendation on shares cut to “underperform” from “neutral” by BofA Merrill Lynch.