German Business Confidence Up; Ericsson Net Soars; Alfa Laval Plunges

Arthi Gupta
22 Oct, 2010
New York City

The European indexes declined after euro-zone consumer confidence remained flat in October. German building industry orders rose in August and business confidence rose unexpectedly in October. Ericsson net more than tripled and Volvo swung to profit.

[R]5.30 PM Frankfurt – The European indexes declined after euro-zone consumer confidence remained flat in October. German building industry orders rose in August and business confidence rose unexpectedly in October. Ericsson net more than tripled and Volvo swung to profit.[/R]

French manufacturers estimated rising demand for goods in the fourth quarter. Italian retail sales slowed more than expected in August.

In Paris CAC 40 Index decreased 5.54 or 0.14% to close at 3,872.73 and in Frankfurt DAX Index edged higher 1.18 or 0.02% to close at 6,612.19.

The latest data from the statistics office Eurostat published today stated no member state of the European Union recorded a government surplus in 2009.

The largest government deficits in percentage of GDP were recorded in Ireland and the UK. Ireland deficit was 14.4% of GDP and UK deficit at 11.4%. The lowest deficit was recorded by Luxembourg at 0.7% in 2009.

The European Central Bank cannot raise key interest rate prematurely as it will jeopardize the economic recovery, Ewald Nowotny, governing council member of the central bank said in Vienna today. He estimated that rates will go higher in the long term.

The European Central Bank Executive Board member Lorenzo Bini Smaghi stated in a speech delivered in Rome today that the industrialized nations are facing the worst labor market situation since the World War II and the situation may worsen further in the absence of proper actions.

Bini Smaghi said there is a risk that the situation will be even worse for the next generation. ""If there is not a rapid reversal of this trend, our societies may face huge economic and social problems,"" he warned.

Euro area consumer confidence indicator remained unchanged in October from September, according to the flash estimate by the European Commission released today. The EC's consumer confidence indicator for euro area was at minus 11 in October, same as September. The consumer confidence index for the EU nations slightly improved to minus 11.6 in October from minus 11.7 in September, the agency said.

According to the European Central Bank, euro-zone's small and medium sized enterprises had easier access to bank loans between March and September compared to the period from October 2009 to March 2010, citing results of the survey on the access to finance of small and medium-sized enterprises in the euro area.

The proportion of small and medium enterprises reporting a worsening in access to bank loans was 24%, almost half compared to the previous survey, when it was at 42%. At the same time, 12% of SMEs reported an improvement in access to bank loans, compared with 10% in the previous round.

The total price-adjusted value of orders received by building construction and civil and underground engineering enterprises in Germany increased 0.5% annually in August, the Federal Statistics Office said. In building construction demand increased 9.2%, in civil and underground engineering it decreased 7.7%, the official report showed.

A leading indicator of the German economy climbed at a slower pace in August than July, pointing to moderate growth in the coming months. The Conference Board leading index climbed 0.7% from July, when it grew 1.1%. Six of the seven components of the index increased in August, led by new orders in investment goods industries, consumer confidence, yield spread, stock prices and inventory.

On the other hand, the coincident index, which is a measure of current economic activity, increased 0.2% in August, boosted by industrial production and manufacturing sales.

The Ifo Business Climate Index, based on conditions at 7,000 firms across Germany, climbed to 107.6 in October from 106.8 in September, reaching its highest level since May 2007. The expectations index climbed to 105.1 in October from 103.9 in September.

French manufacturers expect global demand for their goods will increase in the fourth quarter after a sluggish third quarter. The indicator for expected total demand rose to 9 in October from minus 2 in July. The expected export demand indicator increased to 12 in October from 3 in July.

Italy's retail sales growth eased more than expected in August, as food sales dropped, according to data released by Istat today. On a seasonally adjusted basis, total retail sales stagnated in August following 0.1% rise in July.

Food sales fell 0.8% annually in August, with both large scale distribution and small and medium scale distribution falling 0.8% each. In July, the growth rate was 2.5%.

Greece's general government deficit totaled €14.2 billion during the period of January to August, according to the Ministry of Finance.

Norway's Finance Ministry announced the appointment of Oeystein Olsen as the Governor of the Norges Bank starting January 1 next year.

Gainers & Losers

Acta S.p.A. soared 7.63% to 67.00 pence after the provider of clean energy products and environmental catalysts said that it received project consent for additional three applications in Italian photovoltaic project pipeline, totaling 2.65 MW for a consent value of €795,000.

Alfa Laval AB plunged 5.5% to SEK 118.60 after the Sweden-based provider of specialty products and engineering solutions third quarter net sales was SEK 5.8 billion. Net income in the quarter rose 7.7% to SEK 758 million or SEK 1.78 per diluted share, compared with net income of SEK 704 million or SEK 1.65 per share in the prior year.

Nestlé S.A. fell 0.47% to Sfr52.80 after the world's largest food maker reported total group sales for the for the nine months of fiscal year 2010 rose 4.1% to Sfr82.77 billion, compared to last year's Sfr79.55 billion. For the period, overall food and beverages sales rose 4.5% annually to Sfr77.02 billion.

LM Ericsson Telephone Co. gained 4.46% to $11.25 after the Swedish telecom equipment maker reported third quarter net sales rose 2% to SEK 47.5 billion, from SEK 46.4 billion in the comparable period a year ago. Net income in the quarter surged 354% to SEK 3.68 billion, or SEK 1.14 per diluted share, compared to net income of SEK 810 million or SEK 0.25 per share in the previous year, driven by higher networks sales, earnings from the Sony Ericsson joint venture and lower restructuring costs.

Sartorius Stedim Biotech SA rose 0.18% to €33.00 after the laboratory and process technology provider reported for the nine-month period from January to September sales revenue rose 8.5% to €482.3 million from €444.7 million last year. Adjusted net profit in the period soared 90% to €26.4 million or €1.55 per diluted share, compared to adjusted net profit of €13.9 million or 81 euro cents a share from a year ago.

Volvo Group fell 0.28% to $14.20 after the Swedish Truck maker reported third quarter net sales grew 32% to SEK 63.97 billion from SEK 48.48 billion in the same quarter last year. Net income attributable to equity holders of the parent company was SEK2.81 billion or SEK 1.38 per diluted share, in comparison with a loss of SEK 2.92 billion or SEK 1.44 per share a year ago.