Euro Area Inflation Slackens; Employment Flat

Arthi Gupta
15 Sep, 2010
New York City

The European indexes declined after euro-zone inflation slowed in August and employment remained static in the second quarter. The OECD urged Turkey for withdrawal of monetary stimulus. The IMF noted Greek fiscal consolidation program on track.

[R]4:00 PM Frankfurt – The European indexes declined after euro-zone inflation slowed in August and employment remained static in the second quarter. The OECD urged Turkey for withdrawal of monetary stimulus. The IMF noted Greek fiscal consolidation program on track.[/R]

U.S. stocks fell and Asian markets traded mixed.

Spanish home prices rose in the second quarter and inflation in Italy declined in August.

The Japanese government and the Bank of Japan intervened in the currency market for the first time in six years, pushing down the value of the yen by over 2% against the dollar.

In Paris CAC 40 Index decreased 31.49 or 0.83% to close at 3,742.91 and in Frankfurt DAX Index edged lower 38.67 or 0.62% to close at 6,236.74.

Euro-zone annual inflation slowed from a 20-month high in August, according to official data released today.

Eurostat said consumer prices in the 16 euro-zone countries rose 1.6% in August, compared to a 1.7% rise in July, and is lower than the 2% target set by the European Central Bank.

Prices of alcohol & tobacco and transport both soared 3.3% in August, while housing costs rose 2.6%. On the other hand, communication costs fell 0.5%, while recreation & culture declined 0.1%.

Consumer prices climbed 0.2% from a month ago.

Inflation in the wider region of European Union of 27 nations slowed to 2% in August from 2.1% in July. Month-on-month, prices increased 0.2% in August.

Euro area employment remained unchanged in the second quarter from the preceding three months period, according to a report by the Eurostat.

Compared to the previous year, the number of employed decreased 0.6% in the second quarter, compared to a 1.2% fall in the previous quarter.

Quarterly decreases in employment were recorded in agriculture, manufacturing, construction, trade, transport & communication services, the statistical office said. Financial services and business activities recorded an increase in employment.

In EU27, the number of persons employed remained unchanged on a sequential basis in the second quarter, compared to a 0.2% decline in the first quarter. Employment decreased 0.6% from the previous year.

The Organization for Economic Co-operation and Development said today that the Turkish central bank should maintain the credibility of the monetary policy by removing the oversized monetary stimulus.

The International Monetary Fund stated the fiscal consolidation program of the Greek government remains on track. The lender noted the end-June quantitative performance criteria have been met and reforms are ahead of schedule. In addition, the government intends to spend €4 billion less than previously planned this year.

Spanish home price index increased 1.6% on a sequential basis in the second quarter, the National Statistics Institute said today. Home prices increased for the first time since the third quarter of 2007.

The home price index decreased 0.9% on an annual basis in the second quarter, compared to a 1.1% fall in the previous quarter.

Italy''s consumer price measure of inflation slowed to 1.6% in August from 1.8% in July, a final report by the statistics office Istat showed today.

On a monthly basis, consumer prices rose 0.2% in August confirming preliminary estimates published on August 31.

The harmonized index of consumer prices rose 1.8% on an annual basis in August and edged higher 0.2% on a monthly basis.

An indicator of Swiss economic sentiment declined sharply in September, data from the Center for European Economic Research showed today. The Credit Suisse-ZEW economic sentiment indicator dropped 14.2 points to minus 5.1, its lowest level since April 2009, in September.

The Swedish economy developed strongly so far this year and the recovery is benefiting from rapid growth of world trade, according to the minutes of the Riksbank''s Monetary Policy meeting released today.

However, the minutes noted continuing modest activity in the euro-zone and a more protracted recovery in the United States are expected to dampen developments in Sweden somewhat in the long run.

Vitol SA, the Geneva-based energy trading company will pay $6 million to settle charges for failing to disclose information to the New York Mercantile Exchange or Nymex on the relationship between two of the company''s subsidiaries.

Gainers & Losers

Deutsche Telekom AG fell 0.24% to €10.44 after the integrated telecommunications provider reported German prosecutors are investigating eight people including the company’s CEO, Rene Obermann in connection with suspicions of bribery payments in some of the company''s eastern European businesses.

Gamesa Corporacion Tecnologica SA slumped 3.56% to €5.50 after the Spanish wind turbine maker was downgraded to “sell” from “hold” by Citigroup.

Iberia Lineas Aereas de Espana S.A. dropped 0.46% to €2.80 after the Spanish airline said its passenger load factor rose to 85.5% in August from 82.4% in the year-ago month.

Nokia Corporation declined 1.26% to $9.81 after the manufacturer of mobile devices reported the Chairman, Jorma Ollila, is considering stepping down in 2012. Also, Citigroup downgraded the company’s shares to ‘sell’ from ‘hold.’

PSA Peugeot Citroen S.A. soared 3.98% to €24.29 after the France-based manufacturer of passenger cars and light commercial vehicles’ shares recommendation was upgraded to ‘overweight’ from ‘underweight’ by Morgan Stanley.