Euro-zone Money Supply Grows; SAP Net Rises

Arthi Gupta
27 Oct, 2010
New York City

The European indexes fell after mixed earnings. Euro-zone private sector lending rose in September and French consumer spending increased. German CPI remained flat at 1.3% in October. Norway and Poland left key rate unchanged. Deutsche Bank reported a loss on Postbank charge. SAP AG earnings rose.

[R]4:00 PM Frankfurt – The European indexes fell after mixed earnings. Euro-zone private sector lending rose in September and French consumer spending increased. German CPI remained flat at 1.3% in October. Norway and Poland left key rate unchanged. Deutsche Bank reported a loss on Postbank charge. SAP AG earnings rose.[/R]

U.S. and Asian markets declined.

Deutsche Bank AG reported a third quarter loss on a hefty charge related to Postbank. SAP AG quarterly earnings rose as revenues improved annually, with particular strength witnessed in the U.S. and the emerging markets. The company also reaffirmed its outlook for fiscal year 2010.

In Paris CAC 40 Index decreased 2.02 or 0.05% to close at 3,850.64 and in Frankfurt DAX Index edged lower 7.41 or 0.11% to close at 6,606.39.

The European Financial Stability Facility Chief Executive Klaus Regling said in a conference in Brussels that Europe has overcome the worst crisis.

""Europe has taken decisive action to tackle sovereign debt issues in the euro zone and has shown it is serious about the protection of the euro,"" media quoted Regling as saying.

The European Central Bank''s Executive Board member Juergen Stark said that current monetary policy is appropriate from today''s perspective, but maintaining low interest rate for a long term poses risks.

According to text of a speech published on the ECB''s Web site, Stark said euro-zone policy makers do not see neither inflation nor deflation risks over the medium term. However, he said this assessment would change as the ECB make adjustments to its monetary policy.

Moody''s Investors Service said today that the outlook for Italy''s banking system remains negative, reflecting the banks'' weak near-term profitability prospects and their sustained difficult operating environment.

""In addition to weak profitability, the outlook reflects the banking system''s limited capital and reserves to cope with growing asset-quality challenges, which Moody''s considers as the key risks that Italian banks face,"" said Carlo Gori, Moody''s Vice President.

The Bank of Greece said in its interim report that Greece needs to focus on cost reduction for the effective fiscal adjustment, as increasing tax burden would only aggravate the recession. The central bank said raising taxpayers'' burden would bring opposite result and result in a decrease in revenue rather than an increase. Instead, the bank urged government to curb tax evasion and other expenditure.

Denmark''s Economic Council, headed by four independent economists raised the economy''s growth forecast for this year to 2.2% from 1.7% predicted in its spring estimate. The expansion will be largely driven by exports, the council said in a report on Tuesday.

The euro-zone''s leading economic indicator climbed 0.3% in October compared to September, the Conference Board said today. This followed a 0.7% increase in August and a 0.9% rise in July.

Loans to the euro area private sector continued to rise in September, official figures showed Wednesday. At the same time, broad money supply growth in the economy slowed slightly after accelerating sharply in August.

Annual growth in private sector lending in September was 1.2%, the same rate as in August, the European Central Bank said. Loans to non-financial corporations fell 0.6% in September, following a 1.1% drop in August.

Euro-zone M3 money supply growth slowed to 1% in September from the previous year, the European Central Bank reported today. The three-month average of the annual rates of change of M3 over the period July to September rose to 0.8% from 0.5% in the period June to August.

Germany''s annual consumer price inflation was 1.3% in October, same as in September, according to a report by the Federal Statistics Office released today. The latest growth was mainly driven by rising prices of heating oil, motor fuels and for fruit and vegetables, the Destatis said.

On a monthly basis, the consumer price index rose 0.1% in October, as against a 0.1% decline in September.

The credit hurdle for German businesses reduced for the eighth successive month in October, according to latest figures. The Ifo Institute said 27.6% of the surveyed firms assessed bank lending policies as restrictive in October, down from 29% in September.

The number of people registered as jobseekers in France rose 4,600 in September compared to the 15,900 increase in August, according to government data released today. The number of registered jobseekers under the age of 25 fell 1.1% in September compared to August.

The recovery in French consumer spending was stronger than expected in September, as car purchases recorded double-digit growth, reversing the decline in August. According to data from the statistics office Insee published today, French consumer spending in September increased 1.5% on a monthly basis after falling 1.6% in August. On an annual basis, consumption expenditures in manufactured goods climbed 1.1% in September.

Greece''s producer price index rose 5.8% annually in September following a 4.6% increase in August and 6.1% gain in July. The PPI for the domestic market rose 5.3% annually, while that for non-domestic market climbed 7.8% in September.

On a monthly basis, the PPI grew 0.3% in September, unchanged from August. Producer prices rose for a second straight month. Domestic producer prices grew 0.4%, while non-domestic producer prices gained 0.3% in September.

Statistics office INE said retail sales in Spain fell 2.9% in September compared to a year ago, more than twice as fast as the 1.3% decrease in August. On a calendar adjusted basis, sales were down the same 2.9%. The fall in retail sales suggests the government''s July hiking of the VAT rate to 18% from 16%, is curbing spending.

Norway''s central bank on Wednesday decided to leave the key policy rate unchanged at 2% for a fourth straight meeting.

And, the Polish central bank on Wednesday decided to keep the key policy rate unchanged at 3.5% for a sixteenth consecutive rate-setting session. However, the monetary council decided to increase the reserve ratio by 0.50 points to 3.50%.

Finnish manufacturing confidence indicator rose to 4 in October from 2 in September, the Confederation of Finnish Industries EK said today. However, the construction confidence indicator weakened to minus 17 points in October versus minus 10 in September.

EDF S.A. and Constellation Energy Group Inc. announced that they reached comprehensive agreement regarding full ownership of UniStar Nuclear Energy. Under deal terms, EDF will acquire Constellation''s 50% ownership in UniStar for $140 million. Upon completion, EDF will be the sole owner of UniStar.

EDF will transfer to Constellation 3.5 million shares that it owns in Constellation and relinquish its seat on Constellation board.

ACE Ltd., the property and casualty insurer agreed to acquire New York Life Insurance Company''s Hong Kong and Korea life insurance operations for about $425 million in cash.

ACE noted that the transaction will enable the company to expand its life insurance business into these two North Asia markets where it currently has only property and casualty insurance operations. The deal represents about $330 million in incremental life insurance revenues, $2.15 billion in assets and over 2,400 captive agents.

Gainers & Losers

Air France-KLM SA gained 2.25% to €13.41 after the airline said it would raise full-year earnings forecast based on its revenue performance of recent months along with its current level of forward bookings.

ASSA ABLOY AB fell 1.98% to SEK 167.90 after the Swedish lock manufacturer reported third quarter sales increased 13% to SEK 9.47 billion from SEK 8.40 billion last year. Net income in the quarter rose 23% to SEK 1.09 billion or SEK 2.93 per share, compared to net income of SEK 888 million or SEK 2.36 per share in the prior year.

Coca-Cola Hellenic Bottling Company S.A. dropped 1.55% to €19.00 after the company engaged in the production and distribution of non-alcoholic beverages stated third quarter net sales revenue improved 6% to €1.99 billion from €1.88 billion in the previous year. On a comparable basis, third quarter net profit rose 3% to €216.1 million or €0.60 per basic share from €210.2 million or €0.58 per basic share last year.

Deutsche Bank AG rose 1.87% to €41.96 after the global investment bank reported third quarter net revenues of €5.0 billion. Net loss in the quarter was €1.21 billion or €1.75 per share, compared to a profit of €1.38 billion or €1.92 per share in the prior-year quarter.

Electrolux AB slumped 3.71% to SEK 163.50 after the producer of household appliances and appliances for personal use reported third quarter net sales declined 4.7% to SEK 26.32 billion from SEK 27.61 billion last year. Net income for the quarter decreased 15.3% to SEK 1.38 billion or SEK 4.85 per share, compared to net income of SEK 1.63 billion or SEK 5.74 per share a year ago.

GlaxoSmithKline Plc declined 1.86% to 1,241.50 pence after the UK-based drug maker finalized a £500 million or $750 million previously-reported settlement related to the investigations by the U.S. government on manufacturing issues at its Cidra facility.

Heineken NV slumped 4.38% to €36.35 after the beer brewer reported 13% rise in third quarter revenue due to net changes in consolidation scope which added €466 million to revenue whilst exchange rate changes added €152 million. Revenue increased to €4,619 million while organically, revenue declined 2.1%.

Norsk Hydro ASA dipped 1.90% to NOK 36.64 after it said third quarter revenue increased 10% to NOK 18.42 billion from NOK 16.79 billion last year. Net loss generated in the quarter was NOK 104 million or NOK 0.07 per share, compared to net income of NOK 1 billion or NOK 0.79 per share last year, reflecting higher expenses and financial expense compared to financial income last year.

SAP AG decreased 2.05% to €37.51 after the software corporation announced its preliminary financial results for the third quarter ended September 30. Total revenue, on IFRS basis, increased 20% to €3.00 billion, from €2.508 billion in the comparable quarter a year earlier. Profit after tax rose 12% to €501 million from €447 million in the year ago quarter. Basic earnings per share were €0.42, versus €0.38 in the last year quarter.

Stora Enso Oyj increased 1.61% to €7.57 after the global paper, packaging and wood products company signed an agreement to acquire 51% of Inpac International, a Chinese packaging company with production operations in China and India, and service operations in Korea.

UniCredit SpA edged higher 0.96% to €1.90 and the Italian lender said it had appointed Deputy Chief Executive Officer Roberto Nicastro to a new position of general manager to lead the commercial banking business.