Retail Sales, Service Sector in Europe Decline

Arthi Gupta
05 Oct, 2010
New York City

The European indexes gained after euro area retail sales fell 0.4% in August and private sector growth slowed in September. German service sector growth faltered in the month and French service sector activity growth eased.

[R]4:00 PM Frankfurt – The European indexes gained after euro area retail sales fell 0.4% in August and private sector growth slowed in September. German service sector growth faltered in the month and French service sector activity growth eased.[/R]

U.S. and Asian markets climbed on encouraging global economic data and European markets closed higher after Japan lowered its key rate and Australia left its rates unchanged.

Moody''s raised Turkey''s rating outlook. Spanish services sector activity fell in September. Greek economic sentiment indicator declined in September.

The Bank of Japan cut its benchmark interest rate to zero to 0.1% from 0.1%. The central bank also unveiled a new asset purchase scheme to buy up government bonds and boost liquidity in the deflation-wracked economy.

The Reserve Bank of Australia surprisingly decided to keep interest rates on hold at 4.5% at the conclusion of its policy board meeting for the fifth straight month.

In Paris CAC 40 Index increased 60.78 or 1.67% to close at 3,710.59 and in Frankfurt DAX Index edged higher 50.23 or 0.82% to close at 6,184.44.

Moody''s Investors Service placed Ireland''s Aa2 local currency and foreign currency government bond ratings on review for possible downgrade. At the same time, Ireland''s short-term rating was affirmed at Prime-1.

The European Commission said in its quarterly report today that the ongoing balance sheet adjustment process in the euro-zone corporate sector will influence the recovery ahead.

The Commission said macroeconomic impact of the balance sheet adjustment results in a weak GDP growth for a protracted period and hence it is crucial to counteract these dampening forces on growth by frontloading growth-enhancing reforms.

Euro-zone retail sales fell 0.4% in August from a 0.1% rise in July, according to Eurostat. On an annual basis, sales rose 0.6% in August compared to the 1.1% increase in July.

In the EU27, retail sales dropped 0.3% on a monthly basis and grew 0.8% annually.

Growth of business activity in the euro-zone private sector slowed to a seven-month low at the end of the third quarter, according to survey data from Markit Economics published today.

The final composite output index dropped to 54.1 in September from 56.2 in August. The flash estimate for September was 53.8.

The Purchasing Managers'' Index for services fell to a six-month low of 54.1 in September from 55.9 in August. But the index was above the flash estimate of 53.6.

German service sector growth moderated in September, according to a final report from Markit Economics released today. The services business activity index dropped to a revised 54.9 in September from 57.2 in August.

The composite output index was 54.7 in September, broadly unchanged from the flash reading of 54.8. In August, the PMI was at 58.4.

Moody''s Investors Service changed the outlook on Turkey''s Ba2 local and foreign currency government bond ratings to positive from stable. Further, the rating agency revised up its forecast for Turkey''s real GDP growth to 6.5% this year and 5% in 2011.

French services sector activity growth eased to a six-month low in September, according to survey data released by Markit Economics today.

The Markit France services purchasing managers'' index fell to 58.2 in September from 60.4 recorded in August.

A composite index that combines both services and manufacturing PMIs logged 58.1 in September, also a six-month low. The index fell from 59.5 recorded in August.

Spanish service sector activity declined for the second consecutive month in September, according to a survey by Markit Economics. The headline seasonally adjusted business activity index fell to 47.9 in September from 49.2 in August.

The Greek economic sentiment indicator fell in September, as outlook for construction and retail trade sectors weakened, according to a survey by the Foundation for Economic and Industrial Research, released today.

The headline economic climate index rose to 66.6 in September from 67.9 in August. The index covers expectations in industry, construction, retail trade and services as well as consumer confidence and is calculated after surveying more than 1,000 firms and 1,500 consumers.

VimpelCom, the Russian telecommunication operator and Weather Investments S.p.A. signed an agreement to merge their assets, thereby creating a new global telecom player with over 174 million mobile subscribers.

Upon closing of the transaction, VimpelCom will secure around 51.7% stake in Orascom Telecom holding S.A.E and 100% ownership of Wind Telecomunicazioni S.p.A. or wind Italy, the subsidiaries of Weather.

In exchange, shareholders of Weather will receive around 20% economic interest and an 18.5% voting interest in the enlarged VimpelCom group, plus $1.8 billion in cash as well as certain assets that will be demerged from Orascom Telecom and from Wind Italy.

Two UK-based Russian scientists, Andre Geim and Konstantin Novoselov, professors at the University of Manchester have won this year''s Nobel Prize for physics for their ""groundbreaking experiments regarding the two-dimensional graphene,"" a material with amazing properties.

Skype appointed Tony Bates, a former executive of Cisco, Systems Inc., as its new Chief Executive and a member of the board of directors, replacing Josh Silverman, who has been at the company''s helm since February 2008.

Gainers & Losers

Alcon, Inc. fell 0.70% to $166.93 after the eye-care company appointed Robert Karsunky as Senior Vice President and Chief Financial Officer effective November 1, 2010.

E.ON AG declined 1.75% to €21.00 after the power and gas company had its rating downgraded to “underweight” from “neutral” by HSBC.

Homeserve Plc surged 3.57% to 457.80 pence after the emergency-repair service provider was rated as “outperform” in new coverage at Credit Suisse Group AG.

Novartis AG dropped 0.14% to $57.05 after the Swiss drugmaker discontinued the development of two investigational compounds, Mycograb and Zalbin, in its pharmaceutical pipeline, citing enhanced focus on portfolio prioritization and productivity and expects related impairment and other charges of about $590 million to be taken in third quarter of 2010.

Prowebce S.A. surged 11.9% to €15.28 after the website developer said first-half operating profit increased 28.3% to €680,000 from €530,000.