Euro Area Inflation Rises to 22-Month High

Arthi Gupta
15 Oct, 2010
New York City

The European indexes traded mixed after euro-zone annual inflation surged in September and trade balance widened in August. The ECB member Juergen Stark reiterated that monetary policy is appropriate. European car registrations fell in September.

[R]5:30 PM Frankfurt – The European indexes traded mixed after euro-zone annual inflation surged in September and trade balance widened in August. The ECB member Juergen Stark reiterated that monetary policy is appropriate. European car registrations fell in September.[/R]

U.S. stocks fell after consumer sentiment dipped and Asian markets traded sideways.

In Paris CAC 40 Index decreased 1.46 or 0.04% to close at 3,817.71 and in Frankfurt DAX Index edged higher 20.92 or 0.32% to close at 6,476.19.

The European Central Bank member Juergen Stark said in a speech delivered in Stuttgart that the bank''s current monetary policy is appropriate for now as inflation remains contained.

""The ECB will maintain its policy of gradually and cautiously unwinding its unconventional measures,"" he said.

Euro-zone annual inflation increased in September as initially estimated to a 22-month high, largely due to unfavorable energy base effects.

Euro-zone annual inflation rose to 1.8% in September from 1.6% in August, according to data from Eurostat released today. The statistics office confirmed the initial estimate released on September 30. Inflation continues to stay within the target range of ''below, but close to, 2%''.

Monthly consumer price inflation was 0.2% in September. Core annual inflation remained stable at 1% in September meeting the expectations of several economists.

In the EU16, food prices rose 1.2% annually and alcohol and tobacco prices advanced 3.2%. Clothing and housing prices increased 0.2% and 2.9%, respectively in September.

Euro-zone trade deficit widened more than expected in August as import growth outpaced that of exports, data released by Eurostat showed today.

Trade deficit widened to €1.4 billion in August from €0.2 billion shortfall in July. Exports rose 1% in August on a monthly basis, as against a 0.2% drop in July. On the other hand, imports edged higher 1.8% following a 1.3% drop in July.

On an unadjusted basis, the trade balance swung to a deficit of €4.3 billion in August from a revised €6.2 billion surplus recorded in July.

The seasonally adjusted trade deficit for EU27 increased to €14.2 billion in August from €12.4 billion in July. On an unadjusted basis, EU27 trade deficit widened to €17.3 billion in August from €s6.2 billion in July.

In EU27, the adjusted trade deficit increased to €14.2 billion in August from €12.4 billion in July. Unadjusted trade deficit was €17.3 billion in August, up from a revised €s6.2 billion shortfall in July.

The European Automobile Manufacturers'' Association said registrations of new cars across the European Union decreased 9.6% to 1.2 million in September compared to the same month of last year. This marked the sixth straight month of falling registrations. Car registrations had fallen 12.9% in August.

Sony Ericsson Mobile Communications AB, a joint venture between Sony Corp. and LM Ericsson Telephone Co., reported third quarter net income of €49 million, compared to a net loss of €164 million last year.

Gainers & Losers

Carrefour S.A slumped 4.66% to €38.26 after the grocery retailer reportedly trimmed its full-year profit target this year following an increase in one-off charges related to its Brazilian operations.

HSBC Holdings Plc fell 1.92% to 649.60 pence after the British financial services firm is close to dropping its plans to acquire a 70% stake in South African bank Nedbank Group, including the entire 52% majority stake Anglo-South African insurer Old Mutual Plc owns in Nedbank, according to the Financial Times.

Sanofi-Aventis S.A. gained 1.52% to $35.42 after the pharmaceutical group announced that its investigational multiple sclerosis drug - Teriflunomide, met trial goals, including delayed disability progression, in a late-stage study.

Technip S.A. gained 1.08% to €61.56 after the French oilfield services group finalized agreements with MISC Berhad and Malaysia Marine and Heavy Engineering Holdings Berhad, to establish their long-term collaboration.