Euro Area Industrial Orders Surge; Hungary Retains Key Rate

Arthi Gupta
25 Oct, 2010
New York City

The European indexes advanced after finance ministers of the G-20 nations agreed to ease currency tensions. Euro-zone industrial orders surged in August. French economy losses estimated up to

[R]4:00 PM Frankfurt – The European indexes advanced after finance ministers of the G-20 nations agreed to ease currency tensions. Euro-zone industrial orders surged in August. French economy losses estimated up to €400 million a day. Hungarian Central Bank retained key rate at 5.25%.[/R]

World markets climbed after finance leaders at the G-20 meeting agreed to avoid a so-called currency war.

Spanish PPI surged in September. The Czech Republic consumer confidence fell to one-year low. Bombardier and Alstom awarded C$1.2 billion car supply order from Societe de transport.

The Group of 20 financial chiefs vowed to avoid competitive currency devaluations. Financial chiefs from the G-20 advanced and major developing economies agreed on Saturday to ''''refrain from competitive devaluation of currencies'''' and ''''move towards more market determined exchange rate systems,'''' according to a statement issued after their two-day meeting in South Korea.

But the group failed to agree on any concrete plan for reducing global imbalances and prevent growing unilateralism from harming the world economic recovery.

In Paris CAC 40 Index increased 8.31 or 0.21% to close at 3,876.85 and in Frankfurt DAX Index edged higher 36.36 or 0.55% to close at 6,642.20.

The European Central Bank Executive Board member Juergen Stark said today that Europe needs tight fiscal rules to bring budget discipline. According to an opinion piece published in the Financial Times Deutschland, Stark said Europe needs a de-politicized fiscal and macroeconomic supervision together with tougher and stronger binding budgetary rules.

In another statement, the European Central Bank Executive Board member Gertrude Tumpel-Gugerell said today she is confident that the euro area economy is on a good recovery track.

Speaking at the World Retail Congress, Berlin, the policy maker said, ""Recent statistical releases and survey evidence continue to be consistent with the picture of a positive underlying momentum of the recovery in the euro area,"" ""Now is the time to ensure that recovery and to make the growth prospect sustainable for the future.""

New industrial orders received by euro area manufacturers rose a faster than expected pace in August and at, according to official figures released today.

New orders rose 5.3% in August, compared with the 1.8% fall in July. Industrial new orders rose 4.1% in August. Orders for capital goods surged 8.1%, and those for durable goods climbed 5.4% in August.

The figures from Eurostat also showed that new orders across the European Union increased 3.6% on a monthly basis in August after a decline of 1.6% in July. On a yearly basis, EU27 orders edged higher 22.6%.

The French finance minister Christine Lagarde said today that long running strikes and protests by workers against the French government''s controversial pension reforms are costing the economy between €200 million and €400 million a day.

Speaking in an interview on Europe1 radio, Lagarde said the widespread demonstrations had damaged the attractiveness of France as a business destination.

On Friday, the French Senate passed the pension reform bill which proposes to raise the retirement age to 62 from 60 and the full state pension age to 67 from 65 and it could be passed into law as early as Wednesday.

Producer prices in Spain rose 3.4% annually in September, compared to the 2.7% increase in August, according to the statistics office INE. Energy prices grew 9.1% in September, while intermediate goods prices rose 4%. Durable consumer goods prices climbed 1.1% in September.

On a monthly basis, producer prices edged higher 0.2% in September, as against the 0.1% rise in August.

The Hungarian central bank decided to retain the key policy rate at 5.25% for a sixth consecutive rate-setting session.

Confidence among Czech consumers weakened to a twelve-month low in October, while sentiment among businesses remained broadly unchanged, according to data from the Czech Statistics Office released today.

The seasonally adjusted consumer confidence indicator dropped to 88 in October, from 89.2 in September. A year earlier, the indicator was at 87.7.

The confidence indicator for industry rose to 98.7 in October from 97.8 in September, but the indicator for services slipped to 89.4 in October from 90.1 in September.

The Polish Finance Ministry expects the general government deficit to be 7.9% of GDP this year, which is one percentage point lower than the original estimate. The deterioration in the forecast was due to lower-than-expected tax revenues, especially from direct taxes.

Bombardier Inc. CL. A, MV and Alstom Transport signed a contract worth about C$1.2 billion or €864 million with Societe de transport de Montreal for supply of 468 metro cars.

Bombardier''s share of the contract is about C$742 million or $725 million while Alstom''s share is estimated at C$493 million or $482 million. The contract for metro cars or 52 nine-car train sets would replace the MR-63 fleet, which has been in service since 1966.

AerCap Holdings N.V., the aircraft leasing company said it would sell around 29.8 million of its shares to Abu Dhabi-based investment holding company Waha Capital PJSC in a deal worth about $380 million.

The current deal, which would increase AerCap''s presence in the Middle East and North Africa region''s rapidly expanding aviation market, is expected to provide AerCap with a new source of capital with a considerable cash investment upon closing.

Gainers & Losers

Alcon Inc. dropped 0.10% to $167.54 after the Swiss eye care company announced that its board of directors elected Daniel Vasella as Chairman, replacing Cary Rayment. The company said that Rayment will remain on the board and will serve as its Vice-Chairman.

Banco Popolare Societa Cooperativa slumped 4.37% to €4.11 after the Italian lender received board approval to launch a capital raising of up to €2 billion.

Centrica Plc gained 0.03% to 325.60 pence after the energy supplier effectively shelved its £1.5 billion proposal to build two gas storage facilities in the North Sea and Irish Sea, the Telegraph reported, without citing sources.

Novartis AG declined 1.46% to $58.12 after the pharmaceutical company said new Phase III data indicate that Menveo demonstrated robust immunogenicity in infants potentially offering protection against four major serogroups of meningococcal disease.

Satair A/S surged 18.85% to DKK 290.00 after the Denmark-based supplier of aircraft parts and solutions stated B/E Aerospace signed a definitive deal to acquire Satair''s aerospace fastener distribution business, a distributor of consumables to European and Asia Pacific aerospace manufacturers and their suppliers.

TeliaSonera AB increased 1.90% to SEK 56.30 after the Sweden-based provider of telecommunications services reported third quarter net sales decreased 1.1% to SEK 26.75 billion from SEK 27.05 billion last year. Net income attributable to owners of the parent company rose 19% to SEK 5.98 billion from SEK 5.04 billion a year ago. Earnings per share also increased to SEK 1.33 from SEK 1.12 the prior year.

UBS AG declined 0.94% to $17.93.