German Construction Index, Czech Sales Up

Arthi Gupta
06 Sep, 2010
New York City

The European markets gained after German construction index surged in August. The IMF Chief Economist estimated weak economic growth in the U.S. and Europe. Euro-zone investor confidence declined, Finland auto sales increased but Czech retail sales declined.

[R]4:00 PM Frankfurt – The European markets gained after German construction index surged in August. The IMF Chief Economist estimated weak economic growth in the U.S. and Europe. Euro-zone investor confidence declined, Finland auto sales increased but Czech retail sales declined.[/R]

European market indexes edged fractionally higher with mixed economic data in the region. The U.S. markets are closed today for Labor Day holiday and Asian markets closed higher. Czech retail sales fell in July and Finland new motor vehicle registrations rose in August.

In Paris CAC 40 Index increased 12.37 or 0.34% to close at 3,684.57 and in Frankfurt DAX Index edged higher 19.15 or 0.31% to close at 6,153.77.

Economic growth in the U.S. and Europe will probably remain weak in the months ahead, despite better than expected growth in Europe in the June quarter, the International Monetary Fund Chief Economist Olivier Blanchard told French daily Le Figaro.

Blanchard said consumption and investment were still weak in Europe, while the financial system was fragile.

He urged euro-zone countries to have credible medium-term plans in place to cut their budget deficits to convince financial markets, rather than worry about meeting target dates.

Blanchard also said a slowdown in the U.S. economy will almost certainly spark a ""significant"" slowdown in Asia.

The euro area economy is expected to be less buoyant for the rest of the year than in the second quarter, the European Central Bank President Jean-Claude Trichet told CNBC in an interview today. He stressed the need for making the euro-zone a more flexible economy as it will augment the growth in the region.

A report from the Bank for International Settlements stated financial crises tend to be followed by a protracted period of debt reduction in the non-financial private sector.

Economists Garry Tang and Christian Upper wrote in the September Quarterly Review released today that in 17 of the 20 systemic banking crises, a period of debt reduction followed. Debt relative to gross domestic product decreased by an average of 38 percentage points, returning to approximately the levels seen before the crisis.

""If history is any guide, we should expect to see a much more significant reduction in private sector debt, particularly of households, than has so far taken place after the recent crisis,"" the two economists noted.

Euro-zone investor confidence deteriorated in September, according to a survey published by the Sentix research group today. The indicator fell to 7.6 in September from 8.5 in August.

Germany''s construction activity increased in August from the previous month, according to a report released by the Markit Economics today.

The seasonally adjusted construction purchasing managers'' index rose to 48.5 in August from 44.8 recorded in July.

In another report, the state-owned development bank KfW said on Friday that the German economy may expand at a record pace of 3.6% this year. But, the economic growth is expected to slow to 2.3% in 2011.

The report further stated in the second quarter, the gross domestic product grew 2.2% sequentially, which was the strongest growth rate since the reunification. However, during the third quarter, the expansion will ease to 1.2%.

Czech retail sales, including automotive segment, decreased 1.3% month-on-month at constant prices in July, while it increased 2.1% from a year ago, the Czech Statistics Office reported today.

Finnish new motor vehicle registrations increased in August from the previous year.

The new motor vehicle registrations increased 25.3% on an annual basis in August, according to a report published by the Statistics Finland today. The number of new motor vehicles totaled 15,573 in August, of which 9,741 were automobiles. In July, the new motor vehicle registrations climbed 0.7%.

BP Plc has successfully installed a fully functioning and tested Blow Out Preventer on the cemented Macondo 252 well, National Incident Commander Admiral Thad Allen said in a statement issued on Friday.

Gainers & Losers

BioMerieux S.A. soared 2.80% to €83.10 after the France-based company that specializes in the field of in-vitro diagnostics for medical and industrial applications reported first-half net income rose 14% to €72 million.

GN Store Nord A/S surged 5.19% to DKK44.60 after the Danish hearing aid and headset maker has been awarded around DKK2.9 billion in an arbitration case against Telekomunikacja Polska S.A.

Siemens AG dropped 0.24% to €74.45 after the company engaged in electronics and electrical engineering had its shares upgraded to “buy” from “neutral” by UBS.

Societe Television Francaise 1 fell 2.4% to €12.16 after the integrated communications group had its shares downgraded to “sell” from “hold” by Deutsche Bank AG.

Zumtobel AG gained 0.52% to €13.55 after the maker of industrial lighting said net income for the three months through July rose 34% to €13.6 million.