Portugal Bonds Sales Revive Confidence

Arthi Gupta
08 Sep, 2010
New York City

The European indexes gained after a successful bond auction in Portugal. Greece

[R]4:00 PM Frankfurt – The European indexes gained after a successful bond auction in Portugal. Greece’s second quarter GDP shrank 3.7% from a year ago. French trade deficit widened in July and German exports fell in July. Galapagos finalized deal to acquire GlaxoSmithKline research centre in Croatia.[/R]

U.S. stocks advanced but Asian markets slid.

Greek GDP fell in the second quarter and Portugal GDP expansion slackened in the second quarter.

In Paris CAC 40 Index increased 17.39 or 0.48% to close at 3,661.20 and in Frankfurt DAX Index edged higher 4.81 or 0.09% to close at 6,140.11.

Greek gross domestic product declined 3.7% year-on-year at constant prices in the second quarter, compared to a 2.3% drop in the first quarter, according to a report released by the Hellenic Statistics Authority today. GDP decreased for the sixth consecutive quarter since the first quarter of 2009.

Portuguese economy expanded at a slower pace in the second quarter, according to a final report released by the Statistics Portugal today.

The gross domestic product increased 1.5% year-on-year in the second quarter, revised from a 1.4% growth estimated initially and slower than a 1.8% rise in the previous quarter. However, the GDP increased for the second consecutive quarter.

The Portuguese government auctioned €661 million, or roughly $840 million worth of three-year notes and €378 million or roughly $480 million worth of 10-year bonds. The sales drew solid demand easing worries about the sovereign debt crisis. Yields rose for the €661 million bonds due in 2013 and €378 million bonds due in 2021.

Deflation in euro area is as unlikely as sharp inflation, the European Central Bank Governing Council member Guy Quaden said in an interview with Belgian business dailies L''Echo and De Tijd, published today.

He said a double dip in Europe is unlikely. ""We start from a positive, albeit weak, growth in the coming quarters,"" the policy maker said. According to Quaden the economy will not relapse into recession.

The French budget deficit narrowed to €93.1 billion in July 2010 compared to the deficit of €108.8 billion in July 2009, according to data published from the Budget Ministry today.

The general budget revenues increased to €159.7 billion in July 2010 from €133.8 billion in the prior year. Expenses rose to €236.1 billion in July 2010, compared to €215.2 billion at the end of July 2009.

The Bank of France said the business sentiment index among manufacturers was at 101 in August, the same as in July. The central bank said rising sentiment in most sectors was offset by a decline in the auto industry. Industrial capacity utilization dipped during the month.

The service sector index edged lower to a reading of 95 in August as against 96 in July.

France''s trade deficit widened in July, after narrowing in the previous month, according to official data released today.

Trade deficit increased to €4.18 billion in July from June''s revised shortfall of €3.72 billion, the Customs Office said.

German industrial production edged higher 0.1% in July from a 0.6% fall in June, the Federal Ministry of Economics and Technology said today.

Data released by the ministry on Tuesday showed a 2.2% monthly fall in factory orders in July. Annually, factory orders growth slowed notably to 17.7% in July from 24.7% in June.

Germany''s exports rose at a slower pace in July compared to June, while imports also decreased, according to official figures.

Statistics office Destatis said exports increased 18.7% in July from a year earlier, markedly slower than the 28.4% rise in June. Imports growth also slowed to 24.9% in July from 31.4% in June.

Exports to the European Union rose 14.6% in July, while imports from the region climbed 21.8%. Exports to countries outside the European Union advanced 25.1% and imports from those countries climbed 30.8%.

Germany''s labor costs continued to increase in the second quarter from the preceding quarter. The seasonally and calendar adjusted labor cost per hour worked increased 0.4% on a sequential basis in the second quarter, but slower than a 0.5% growth in the previous quarter.

On an annual basis, labor costs increased a calendar adjusted 0.5% in the second quarter, slower than a 0.6% growth in the previous quarter.

Germany''s number of business insolvencies increased 2% to 16,468 in the first-half of the year compared to the same period of the previous year, according to data published by the Federal Statistics Office today.

The consumer insolvencies increased 11.6% on an annual basis to 53,864 in the first half of the year.

The German foreign trade balance surplus declined to €13.5 billion in July compared to June''s €14.2 billion surplus, data from the Federal Statistics Office showed today.

Galapagos NV, the Belgium-based biotechnology company agreed to acquire GlaxoSmithKline Plc''s research centre in Zagreb, Croatia. The arrangement is expected to be effective as of September 9.

Terms of the deal include acquisition of research centre along with transfer of about 130 staff. In addition, Galapagos will provide R&D services to GSK under a three year fee-for-service contract to the value of €14 million.

Galapagos said it remains confident of full year guidance for revenues of at least €135 million with positive operating income and cash flow and a positive net result in 2010.

UniversalBusinessListing.org, a service of Name Dynamics Inc. extended its operations to Europe with the opening of its European headquarters in the Netherlands and the launch of its business services in the UK. UniversalBusinessListing.org offers search engine and directory submission services.

UniversalBusinessListing, or UBL, Europe will provide businesses and the agencies that represent them with an effective method for managing business listing profiles as they are seen on search engines, social networks, mobile devices and in directory assistance databases, noted the company.

An internal probe conducted by British energy giant BP plc found that no single factor caused the explosion on a Gulf of Mexico oil rig. The report blamed the accident on ""a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces.""

""It is evident that a series of complex events, rather than a single mistake or failure, led to the tragedy. Multiple parties, including BP, Halliburton and Transocean, were involved,"" BP''s outgoing chief executive Tony Hayward said in a statement.

Gainers & Losers

Cofinimmo NV/SA rose 0.16% to €96.03 after the property investor raised €50 million via a private placement of non-convertible bonds.

Dassault Systemes SA edged higher 0.04% to €49.31 after production software maker said trucks and buses manufacturer Scania has integrated production design, product development, processes and manufacturing using Dassault Systemes'' Product Lifecycle Management solutions.

Galapagos NV surged 3.77% to €10.74 after the Belgium-based biotechnology company agreed to acquire GlaxoSmithKline Plc''s state-of-the-art research centre in Zagreb, Croatia.

Vodafone Group plc fell 0.25% to 159.50 pence after the British mobile network operator sold its minority stake in China Mobile Ltd, China''s largest mobile phone company, for about $6.6 billion.