German Growth Outlook Revised Higher; Syngenta Soars 3%

Arthi Gupta
14 Oct, 2010
New York City

The European indexes traded mixed and several institutes raised German growth outlook. The ECB noted euro area economic growth is estimated to slow in the second-half. Hungary industrial output grew in August. Dutch retail sales growth declined in August.

[R]4:00 PM Frankfurt – The European indexes traded mixed and several institutes raised German growth outlook. The ECB noted euro area economic growth is estimated to slow in the second-half. Hungary industrial output grew in August. Dutch retail sales growth declined in August.[/R]

U.S. stocks traded sideways after disappointing economic data and Asian markets closed higher tracking the overnight rally in New York and Europe.

Greek unemployment rate climbed in July and Spain’s inflation rose in September. The Netherlands retail sales slowed in August.

In Paris CAC 40 Index decreased 3.17 or 0.08% to close at 3,825.17 and in Frankfurt DAX Index edged higher 22.64 or 0.35% to close at 6,455.04.

The European Central Bank said in its latest monthly bulletin that major reforms are particularly needed in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. The central bank noted that the removal of labor market rigidities and the strengthening of productivity growth would provide additional support the adjustment process of these economies.

Furthermore, the ECB stated recent statistical releases and survey evidence confirm the expectation of a moderation in euro-zone economic growth in the second-half of this year.

The German economy would grow more than expected this year and next, leading think tanks said in a joint report released today.

The institutes, which include Ifo, Kiel, Halle and RWI Essen, forecast a growth in real GDP of 3.5% for 2010 and 2% for 2011. In April, the institutes had forecast 1.5% growth for this year before slowing to 1.4% next year.

The outlook for the German banking system remains negative, Moody''s Investors Service said today in its new banking system outlook on Germany.

The rating agency''s negative outlook was driven by three main credit factors - historical weaknesses persist in the system, intrinsic balance-sheet vulnerabilities due to high leverage, and the low quality of capital and the pressures arising from the conditions attached to government support.

The Hungarian Central Statistics Office stated Hungary''s industrial production grew 17.6% annually in August, compared to a 9% rise in July. The latest output growth was unrevised from the preliminary estimate.

On a monthly basis, the volume of industrial production increased a seasonally and working-day adjusted 2.2% in August, compared to a 1.1% fall in July.

Spanish annual inflation rose to 2.1% in September from 1.8% in August lifted by higher transportation costs, statistics office INE said today. On a monthly basis, consumer prices increased 0.1% in September, following the 0.3% rise in August.

The Netherlands annual retail sales growth eased in August, the Central Bureau of Statistics said today.

Retail sales value grew 0.6% on an annual basis in August, as against a 1% rise in July, which was revised from 0.9% growth reported initially. Turnover in food and beverage stores dropped 1.4% annually in August, compared to a 4.1% rise in July.

Retail sales volume dropped 0.5% on an annual basis in August, compared to a revised 0.6% fall in July.

Greece''s unemployment rate rose to 12% in July from 11.6% in June, according to government data released today. The unemployment rate had been 9.6% in July 2009. The female unemployment rate, at 15.7%, was markedly higher than the male unemployment rate at 9.4%.

In a report entitled ""Transparency report to the shareholders of UBS AG"", UBS AG published a review of the events in connection with the losses incurred during the financial market crisis and the problems in relation to the cross-border U.S. wealth management business.

In its review of the events related to the financial market crisis, UBS said that it comes to the conclusion that the growth strategy in the investment banking area, which was not planned in a sufficiently systematic manner, made a significant contribution to the large losses posted by the bank. But, the bank said it will not take any legal action against its former management.

The UBS Board thinks initiating any legal proceedings against former management may last many years, generate high costs, lead to negative international publicity and thus hamper its efforts to restore its name.

The Swedish central bank raised the repo rate from an extremely low level and the current path pointed to a negative real interest rate for a good time to come, central bank Deputy Governor Barbro Wickman-Parak said today.

Justifying Riksbank''s current monetary stance, Wickman-Parak noted that ""the Swedish economy is strong and to attain the target a couple of years ahead we need only to start easing up on the accelerator.""

Pernod Ricard signed an agreement to sell the cognac Renault brand together with some finished products inventories to Altia, for a cash consideration of €10 million. The closing of the transaction is subject to clearance by the Swedish and Norwegian competition authorities.

Gainers & Losers

Belgacom S.A. fell 0.63% to €28.52 after the telecom operator said that the Belgian competition watchdog had raided its Brussels offices following allegations by rivals Mobistar and KPN regarding its wholesale DSL services.

Cap Gemini S.A. declined 0.47% to €38.36 after the information technology company said it finalized its acquisition of a 55% stake in Brazilian computer-services company CPM Braxis for €233 million.

Casino Guichard-Perrachon S.A. dropped 0.43% to €66.96 after the retailer reported third quarter revenue of €7.18 billion, up modestly from €7.12 billion a year earlier.

EDF Energies Nouvelles S.A. declined 0.73% to €30.50 after the renewable energy corporation completed the commissioning of its 79.2-megawatt Soma I wind farm in northern Turkey.

Galapagos NV gained 0.38% to €13.15 after the biotechnology company said that its BioFocus service division expanded its collaboration with Chiesi Farmaceutici, a privately-held Italian pharmaceutical company for a total value of €2.5 million.

Rio Tinto PLC gained 1.50% to 4,098.50 pence after the multinational mining and resources group reported that its third quarter iron ore production totaled 47.608 million tons, up 1% from last year period and 9% from June quarter. For the first nine months of 2010, attributable iron ore production increased 10% from the last year period.

Syngenta AG soared 3.03% to Sfr272.00 after the agribusiness company stated third quarter total crop protection sales rose 10% to $1.76 billion compared to sales of $1.60 billion the prior year.