Inflation in Europe Accelerates; Accor Drops

Arthi Gupta
30 Sep, 2010
New York City

The European indexes advanced after French PPI eased in August and German unemployment fell in September. Spain debt was downgraded with a stable outlook. Euro area annual inflation rose in September.

[R]4:00 PM Frankfurt – The European indexes advanced after French PPI eased in August and German unemployment fell in September. Spain debt was downgraded with a stable outlook. Euro area annual inflation rose in September.[/R]

U.S. stocks rose after better-than-expected weekly jobless claims and revised GDP estimate, but Asian markets traded mixed.

Italy''s CPI rose in September. Denmark GDP growth revised up for the second quarter. Portugal retail sales dipped but industrial output grew in August.

In Paris CAC 40 Index gained 17.88 or 0.48% to close at 3,755.00 and in Frankfurt DAX Index edged higher 47.98 or 0.77% to close at 6,294.90.

Ratings agency Moody''s downgraded Spain''s credit rating by one notch to Aa1, citing a worsening financial situation and weak economic prospects. The outlook on the ratings was maintained as stable.

""One of the key drivers for Moody''s decision to downgrade Spain''s rating to Aa1 is its weak growth prospects and the challenge that this presents for fiscal consolidation,"" Moody''s vice president Kathrin Muehlbronner said. ""Over the next few years, the Spanish economy is likely to grow only by about 1% annually on average.""

Euro-zone consumer price inflation accelerated in September. Annual inflation rose to 1.8% in September from 1.6% in August, according to a flash estimate from Eurostat. The European Central Bank targets inflation rates of ''below, but close to, 2%'' over the medium term.

French producer price index rose 0.1% on a monthly basis in August compared to a 0.2% rise in July, the statistics office INSEE said today. The price index for manufactured products grew 0.1% in August.

On an annual basis, the PPI increased 3.5% in August. The price index for manufactured products rose 2.8% in August.

German unemployment decreased by 40,000 in September compared to a fall of 20,000 in August, the Federal Labor Agency said today. The jobless rate fell 7.5% in September, the lowest since 1992, from 7.6% in August.

In another report, the Federal Statistics Office said today that German''s unemployment according to the concept of the International Labor Organization decreased a seasonally adjusted 360,000 persons or 10.8% annually to 2.93 million in August. Compared to the previous month, the seasonally adjusted number of unemployed dropped by 20,000 persons or 0.6%.

Furthermore, the statistics office said the financial deficit of public budgets including extra budgets amounted to €59.7 billion in the first half of the year, which was €2 billion higher than in the first half of 2009.

Italy''s consumer price index rose 1.6% annually and on a monthly basis, the CPI dropped 0.2% in September.

Danish economy expanded at a faster pace in the second quarter, according to a final report released by the Statistics Denmark today.

The gross domestic product grew 1.7% on a sequential basis in the second quarter versus a 0.7% growth in the first quarter. The latest GDP growth was revised from 1% estimated initially.

Portugal''s retail sales dropped 0.7% on an annual basis in August, compared to a 0.4% fall in July, the Statistics Portugal said today. A year earlier, retail sales decreased 3.5%. On a monthly basis, retail sales slipped 0.8% in August, compared to a 2.6% rise in July

Separately, the statistics office said the industrial production grew 0.2% on an annual basis in August, but slower than a 1.5% rise in July. A year earlier, production declined 4.8%. On a monthly basis, industrial output increased to 3.9% from 1% fall in July..

Covance Inc., the drug development services company signed agreements with French diversified pharmaceutical company Sanofi-Aventis to become Sanofi-Aventis’ Research & Development partner. Over the next ten years, Covance expects to provide drug development services to Sanofi-Aventis, with estimated payments ranging from approximately $1.2 billion to $2.2 billion.

Sanofi-Aventis will utilize Covance''s global R&D portfolio of discovery support, toxicology, chemistry, clinical Phase I - IV, central laboratory, and market access services with annual commitments for these services increasing over the next decade.

Elster Group SE, the German measurement and control device providers priced its initial public offering of 16.2 million American depositary shares at $13.00 per ADS, below its estimated offering price range.

Gainers & Losers

ABB Ltd. gained 0.33% to $21.28 after the provider of power and automation technologies agreed to pay over $58 million to resolve criminal and civil charges in relation to alleged conspiracies to pay bribes and kickbacks to win business in Mexico and Iraq.

Accor S.A. rose 0.64% to €26.74 after the hotel group withdrew its offer to sell its 49% stake in Groupe Lucien Barriere on weaker than interest from investors.

Novartis AG fell 0.19% to $57.98 after the drug maker announced that a Swiss corporate law expert reviewed and validated the company''s legal position in the proposed merger with Alcon Inc. under the Swiss Merger Act.

Portugal Telecom SGPS SA increased 1.39% to $13.15 after the telecommunications firm said it is mulling a plan to transfer its pension fund assets to the Portuguese state.

Stolt-Nielsen S.A. dropped 0.27% to NOK 93.25 after the tanker companies reported third quarter revenue declined 1.3% to $456.8 million from $463.0 million in the second quarter. Net profit in the quarter decreased 2.5% to $26.8 million from $27.5 million in the sequential quarter.

Technip S.A. climbed 0.29% to €59.05 after the French oilfield services provider said it obtained two contracts from Valero Refining Co. and Diamond Shamrock Refining Co. for two hydrogen plants at their refineries in Memphis, Tennessee and McKee, Texas.