German Outlook Revised; Nokia Swings to Profit

Arthi Gupta
21 Oct, 2010
New York City

The European indexes gained after Nokia swung to profit. Euro area private sector growth slumped in October and the EU disbursed

[R]4:00 PM Frankfurt – The European indexes gained after Nokia swung to profit. Euro area private sector growth slumped in October. The EU disbursed €200 million to Latvia. Germany revised up 2010 growth outlook. Technip secured subsea contract for Papa-Terra field in Brazil.[/R]

German private sector expanded strongly in October. French manufacturers' confidence improved but private sector activity slackened in October. Spanish export growth increased in August. Swiss trade surplus, watch exports, and M3 money supply growth rose in September.

China's economic growth slowed between July and September as the government rolled back stimulus measures and tightened policy. The National Bureau of Statistics said the Chinese economy expanded 9.6% in the September quarter compared with the quarter a year ago. The economy expanded at 10.3% rate in the June quarter.

In Paris CAC 40 Index increased 39.99 or 1.04% to close at 3,868.14 and in Frankfurt DAX Index edged higher 62.16 or 0.95% to close at 6,586.71.

According to reports, new fiscal rules to tighten public finance position are not fully acceptable to the European Central Bank President Jean-Claude Trichet. """"""""It is correct that the President of the ECB does not subscribe to all elements of the report,"""""""" an ECB spokesman reportedly said.

The European Union on Thursday disbursed €200 million to Latvia as part of the Balance of Payments support. This was the fourth installment of the EU loan as agreed in January 2009. The total value of EU-IMF assistance package is €7.5 billion.

The euro-zone's private sector growth decelerated in October due to a slowdown in the service sector. The Markit euro-zone composite purchasing managers' index fell to a 12-month low of 53.4 in October from 54.1 in September.

The manufacturing PMI rose to 54.1 in October from 53.7 in September, a two-month high. The services PMI dropped to 53.2 in October from 54.1 in September, an eight-month low.

The German government revised up its growth outlook for this year. The Federal Ministry of Economics and Technology predicts the largest euro-zone economy to expand 3.4% in 2010, more than double the 1.4% expansion it had predicted in April.

German unemployment is expected to decrease to 3.2 million this year and to 2.9 million next year from 3.4 million recorded in 2009, the ministry said.

German manufacturing and services sector expanded at a stronger pace during October. The Flash Germany Composite Output Index recorded 56 in October, compared to September's 54.7, Markit Economics said today.

The flash manufacturing purchasing managers' index, or PMI, rose to a two-month high of 56.1 in October, up from 55.1 in September. The PMI for the country's services sector climbed to 56.6 in October from September's 54.9.

According to results of a survey conducted by the German Chamber of Industry and Trade, German businesses are increasingly confident about the economy since last spring. Given the favorable conditions, the business body revised up its forecast for 2010 German economic growth to 3.4% from 2.3%.

The association estimated 2.4% growth for next year.

French manufacturers' confidence index rose to 102 in October from 99 in September, according to a survey data from the statistics office published today.

French private sector expansion slowed in October with the headline composite output index dropping to 55.3 in October from 58.1 in September, a flash report from Markit Economics showed today. This was the lowest reading in 13 months.

The flash manufacturing purchasing managers' index slipped to 55.2 in October, a two-month low, from 56 in September.

Business leaders in the French manufacturing sector saw a notable improvement in the economic situation in October. Both general and personal production outlook recovered strongly.

The business confidence index rose to 102 in October from a revised 99 in September, according to survey data from the statistics office Insee.

Spanish exports grew 27.8% annually in August following a 13.2% rise in July, the Ministry of Industry, Tourism and Commerce said. Imports increased 18.8% in August, as against the 16.7% annual increase in July. The trade balance showed a deficit of €4.4 billion in August, versus July's shortfall of €4.3 billion.

Switzerland's trade surplus rose to Sfr1.7 billion in September from Sfr0.57 billion recorded in August, the Federal Customs Administration said in a report released today. Exports rose 6% annually in real terms, while imports grew 10.1%.

Trade surplus in the third quarter was Sfr5.04 billion, an increase from Sfr4.50 billion seen in the second quarter. During the same period, the export growth slowed to 7.2% from 8.5%. On the other hand, import growth slipped to 11.4% from 11.7%.

Switzerland's watch exports increased in September from the previous year, a report by the Federation of the Swiss Watch Industry FH showed today.

Exports value of Swiss watches surged 25.5% in September from the previous year, to attain a level of Sfr1.44 billion. At the same time, wrist watches exports grew 25.7%, while other products exports climbed 22.7%.

Switzerland's M3 money supply, the broadest measure of money supply in the country, climbed 6.8% annually in September, compared to the revised 6.4% increase in August, the Swiss National Bank said today.

However, M2 money supply growth edged down to 9.5% in September from 9.6% in August and M1 money supply growth slowed to 10.2% in September from 10.3% in August.

Switzerland lowered its foreign currency holdings in the third quarter, according to figures released by the Swiss National Bank today. According to the bank's monthly statistical bulletin, the SNB's total foreign currency holdings amounted to Sfr216.7 billion in the third quarter, down from Sfr226.6 billion in the second quarter.

Gainers & Losers

Akzo Nobel NV fell 2.65% to €43.46 after the paints and coatings company said third quarter revenue increased 15% to €3.9 billion from €3.4 billion prior year. Total net income rose 21% to €238 million from €197 million last year.

Alcon Inc. fell 1.46% to $167.40 after the Swiss eye care company said third quarter revenues increased 9% to $1.76 billion from $1.61 billion in the same quarter last year. Net income in the quarter fell 13% to $446 million or $1.47 per share, compared to net income of $515 million or $1.71 per share in the year-ago quarter, as majority ownership change and merger proposal related costs offset increase in sales.

Credit Suisse Group AG slumped 2.86% to Sfr42.10 after the Swiss banking giant reported third quarter core net revenues declined 30% to Sfr6.284 billion, from Sfr8.917 billion in the comparable period a year earlier. Net income attributable to shareholders slumped 74% to Sfr609 million or Sfr0.48 per diluted share, from Sfr2.35 billion or Sfr1.81 per share in the prior-year period, as revenues at its investment banking segment declined significantly from last year.

Noble Corp. tumbled 3.02% to $34.73 after the offshore drilling contractor said third quarter operating revenues declined 32% to $612.62 million, compared to $905.64 million in the prior-year quarter. Net earnings in the quarter plunged 80% to $86 million or 34 cents per share, compared to net earnings of $426 million or $1.63 per share in the prior-year quarter, due to continuing government restrictions over drilling activities in the Gulf of Mexico region.

Nokia Oyj gained 2.17% to $10.83 after the Finnish handset giant reported third quarter net sales grew 5% to €10.27 billion compared with €9.81 billion in the comparable period. Net profit in the quarter generated was €529 million or 14 euro cents a diluted share, compared with a net loss of €559 million or 15 euro cents a share a year ago.

Novartis AG dropped 1.61% to $58.81 after the Switzerland-based drug manufacturer reported third quarter net sales rose 13% to $12.578 billion from $11.086 billion in the same period last year with strong contributions from all businesses. Net income in the quarter rose 10% to $2.319 billion from $2.112 billion in the prior-year period. Earnings per share were $0.99 compared to $0.93 in the same period prior year.

The company stated the bulk of the sales growth came from the company's new and recently launched products.

Pernod Ricard SA soared 5.69% to €65.06 after the France-based producer and distributor of spirits and wines reported that its consolidated net sales, excluding tax and duties, for the fiscal first quarter 2011 grew 14% to €1.88 billion from €1.65 billion in the prior-year period.

The company attributed this sales growth to an organic growth of 10%, driven by the 14 brands, a 7% positive foreign exchange effect, and a 2% negative group structure effect, mainly relating to the disposal of Nordic and Spanish assets.

Publicis Groupe SA surged 3.99% to €37.17 after the provider of advertising services posted 26.1% increase in third quarter total revenue to €1.32 billion from €1.04 million in the prior, reflecting positive growth in all regions.

Technip SA said it obtained a contract from Papa Terra BV for the supply of Integrated Production Bundles, or IPB, for the Papa-Terra field. The contract includes engineering, procurement, manufacturing and supply of 27 kilometers of IPB risers and flowlines. Also, as part of the deal, an electrical and monitoring module will be installed on the P-63 floating production, storage and offloading unit.