European Index Waver Ahead of Economic Data

Arthi Gupta
04 Oct, 2010
New York City

The European indexes declined after euro area investor confidence improved in October and PPI slid to 3.6% in August. Spanish unemployment rate increased and consumer confidence index fell in September. Sanofi-Aventis launched hostile bid for Genzyme.

[R]4:00 PM Frankfurt – The European indexes declined after euro area investor confidence improved in October and PPI slid to 3.6% in August. Spanish unemployment rate increased and consumer confidence index fell in September. Sanofi-Aventis launched hostile bid for Genzyme.[/R]

Markets in Asia and U.S. declined and indexes in Europe tracked lower on the first day of week where a flood of economic data is anticipated by investors.

Central banks in Europe, England, Australia and Japan are expected to make announcement on interest rate this week and Germany is scheduled to release industrial production data and the retail sales for the euro-zone from the Eurostat. U.S. is scheduled to release non-farm payroll, factory orders and pending home sales.

Italy budget deficit declined to 6.1% of GDP and Romanian PPI rose in August.

In Paris CAC 40 Index decreased 37.53 or 1.02% to close at 3,654.56 and in Frankfurt DAX Index edged lower 32.59 or 0.96% to close at 6,152.00.

The Swiss Financial Market Supervisory Authority said that UBS and Credit Suisse must hold significantly more capital than stipulated by the new Basel banking reforms. The government commission noted the stricter rules were needed as Switzerland is at a greater risk to a major banking collapse than other nations.

Chinese Premier Wen Jiabao pledged to buy euro government bonds over the weekend during a visit to Athens. He is scheduled to meet European Union leaders in Brussels today at the start of a two-day Asia-E.U. summit.

The index reflecting investor confidence in the euro-zone rose to 8.8 in October from September''s 7.6, Sentix said. The current situation index of the survey was at 15 in October, unchanged from September. It was the second highest level since July 2008.

Euro area producer prices rose 3.6% from a year earlier in August, as against the 4% increase in July, Eurostat said today. Factory prices excluding the energy sector increased 2.2% in August.

On a monthly basis, producer prices rose 0.1% in August, compared to the 0.2% increase in July.

Spanish unemployment increased for the second month in a row in September. The number of unemployed increased 1.2% on a monthly basis in September to 4,017,763, compared to the 1.6% increase in August of 3,969,661 unemployed, according to data released by the Labor Ministry today.

The Spanish consumer confidence indicator dropped in September from August, according to a report published by the Instituto de Crédito Oficial today.

The consumer confidence index decreased to 72.8 in September from 74.9 in August. However, the current situation index dropped by 3.9 points to 50.9 in September.

Spanish export and import price inflation eased in August from July, according to official figures released by National Statistics Institute today.

Export prices rose 5.3% annually in August annually following a 5.6% increase in July. Export price inflation eased for the second straight month. On a monthly basis, export prices stagnated in August.

Import price inflation eased on a yearly basis in August to 8.5% from 9.2% in July. Import prices picked up 0.3% on a monthly basis in August from July''s 0.8% fall.

Italy''s public spending deficit fell to 6.1% of gross domestic product at the end of the June quarter from 8.8% in the March quarter, according to statistics office Istat.

Romania''s producer price index rose 6.7% on an annual basis in August following a 6.9% rise in July, according to data from the National Institute of Statistics published today.

On a monthly basis, the PPI climbed 0.4% in August following a 0.1% rise in July. Mining and quarrying PPI fell 0.52%, while the manufacturing PPI rose 0.55% in August.

Sanofi-Aventis SA, the French pharmaceutical giant commenced a tender offer for all outstanding shares of biotechnology company Genzyme Corp. for $69 per share in cash. The offer, unanimously approved by Sanofi''s Board of Directors, is scheduled to expire on December 10. The transaction is valued at $18.5 billion.

The tender offer represents a premium of 38% over Genzyme''s unaffected share price of $49.86 on July 1 and marks a premium of almost 31% over the one-month historical average share price through July 22, the day prior to press speculation about Sanofi''s approach to Genzyme. Genzyme, with products catering to rare genetic diseases, has been rejecting Sanofi''s offers as too low.

Gainers & Losers

AstraZeneca Plc gained 0.57% to $50.99 and the drugmaker announced a 21,000-patient study to determine the efficacy of its blood-thinning drug Brilinta for longer-term treatment of heart-attack survivors.

Banco Popolare Societa Cooperativa fell 1.77% to €4.30 after the Italy-based banking company agreed to sell its 95% stake in Banca Caripe to Banca Tercas for €228 million.

Fondiaria-Sai rose 0.41% to €7.34 and the insurer is in talks to sell its Liguria-Sasa unit, the group''s Chief Executive Fausto Marchionni told La Stampa newspaper in an interview.

Daimler AG slumped 3.20% to €44.06 after the German automaker said its September U.S sales for the Mercedes-Benz USA and smart USA combined increased 18.5% to 21,088 units from 17,799 units in September last year.

Roche Holding AG declined 0.52% to Sfr134.90 and the pharmaceuticals and diagnostics company announced that cobas TaqScreen DPX Test for use on the cobas 201 system is now available with the CE Mark.

Safran S.A. dropped 0.67% to €20.08 after the French aerospace group agreed to buy chemicals firm SNPE''s Materiaux Energetiques unit.