EU Current Account Deficit Widened

Arthi Gupta
10 Sep, 2010
New York City

The European indexes fell after EU current account deficit widened in the second quarter. The ECB President Trichet reiterated credit measures essential for euro area recovery. IfW raised German growth outlook. French industrial output improved in July.

[R]4:00 PM Frankfurt – The European indexes fell after EU current account deficit widened in the second quarter. The ECB President Trichet reiterated credit measures essential for euro area recovery. IfW raised German growth outlook. French industrial output improved in July.[/R]

U.S. and Asian markets gained.

Spanish inflation eased in August. Swedish industrial output surged in July and Greek jobless rate fell in June. Italy GDP expanded in the second quarter. Hungary CPI slackened in August.

In Paris CAC 40 Index decreased 2.82 or 0.08% to close at 3,719.33 and in Frankfurt DAX Index edged lower 18.57 or 0.30% to close at 6,202.95.

EU27 external current account recorded a deficit of €50.8 billion in the second quarter of 2010, compared with a deficit of €44.7 billion in the second quarter of 2009 and a deficit of €34.8 billion in the first quarter of 2010.

The European Central Bank President Jean-Claude Trichet said in an interview with the Financial Times newspaper that the special credit measures extended to banks in the euro area will have to be maintained for some time yet to protect the recovery.

Additionally, he said, ""As markets stabilize, our non-standard measures, which are fully consistent with our mandate and temporary in nature, will continue to be progressively phased out.""

Germany''s Kiel institute for the World Economy or IfW raised its growth forecast for the country citing the stronger-than-expected upturn in the second quarter and a booming exports sector.

The institute now estimates the economy to grow 3.4% this year, notably faster than the 2.1% growth predicted in June and raised the forecast for next year to 1.7% from 1.2%. However, the think-tank predicts that though the economy will continue to grow in the third quarter, the expansion will lose its momentum.

French industrial production increased 6.4% year-on-year in July, the statistics office Insee said today. Month-on-month, industrial output rose 0.9% in July.

Manufacturing production rose 5.9% annually in July. On a monthly basis, production in manufacturing industry grew 1.4%.

Spanish consumer price index rose 1.8% year-on-year in August, after a 1.9% rise in July, according to data published by the statistics office INE today. Prices increased for the 10th month in a row. Month-on-month, prices rose 0.3% in August, following a 0.4% decline in July.

Excluding food and energy, core annual inflation rose 1% during August from 0.8% in July. The rate increased for the fourth consecutive month.

Swedish industrial production grew 14.4% year-on-year in July after adjusting to working-day variations, compared to the revised 12.4% production growth in June, according to a report released by the Statistics Sweden today. This was the fastest growth rate since 2000.

Industrial output rose a seasonally adjusted 2.9% in July from a month ago compared to upwardly revised 1.3% monthly production increase in June.

Greece''s unemployment rate eased to 11.6% in June from 12% in May, the Hellenic Statistics Authority said today. A year ago, the rate was 8.6%.

The number of unemployed rose 154,657 persons or 36.2% year-on-year to 582,364 persons in June. The number of employed fell 142,493 persons or 3.1% year-on-year to 4,429,823 persons in June.

Consumer prices in Hungary increased 3.7% year-on-year in August compared to a 4% growth in July, according to a report released by the Central Statistics Office today. Food prices increased 3.7% in August from a year earlier.

On a monthly basis, consumer prices decreased 0.6% in August, following a 0.1% rise in July. Food prices fell 1.9%.

Italian gross domestic product grew 0.5% on a sequential basis in the second quarter, according to a final report released by the statistics office Istat today. The latest GDP was revised upward from a 0.4% increase reported initially. In the first quarter, the GDP increased 0.4%.

GDP increased 1.3% in the second quarter from a year ago, revised from a 1.1% rise estimated earlier.

Switzerland''s KOF economic Institute raised this year''s growth forecast to 2.3% from 1.7% estimated in June while projecting moderate growth next year.

According to the economists at the institute, the gross domestic product may rise 1.7% in 2011, compared to 1.6% predicted earlier. The think-tank predicts 7.8% growth in exports this year, stronger than the 4.6% rise estimated in June.

Nokia Corp. today appointed Stephen Elop as President and Chief Executive Officer of the company, effective September 21. Elop replaces Olli-Pekka Kallasvuo, who will leave his position as President and CEO of Nokia on September 20 and his position on the Nokia board as well.

Gainers & Losers

Deutsche Bank AG slumped 4.45% to €47.79 after the investment bank planned to raise up to €9 billion through a rights issue to cover the revised and stricter capital adequacy rules.

Gas Natural SDG SA fell 0.16% to €12.14 after the Spain-based energy company reported France’s GDF Suez sold its entire stake in the company.

Novartis AG rose 1.1% to Sfr54.950 after the pharmaceutical company announced that the Russian health authority, the Federal Service on Surveillance in Healthcare and Social Development granted approval for Gilenya for treatment of relapsing remitting multiple sclerosis.