ECB Holds Rates; BNP, Adidas Net Rises

Arthi Gupta
04 Nov, 2010
New York City

The European indexes soared after the ECB held key rate at 1%. Euro-zone services PMI fell in October but PPI climbed in September. German services PMI rose but French services sector activity growth slackened in October. Adidas profit rose 25% and BNP earnings soared 46%.

[R]4:30 PM Frankfurt – The European indexes soared after the ECB held key rate at 1%. Euro-zone services PMI fell in October but PPI climbed in September. German services PMI rose but French services sector activity growth slackened in October. Adidas profit rose 25% and BNP earnings soared 46%.[/R]

The European Central Bank today left its key interest rate unchanged at a record low of 1% for an eighteenth straight month. The central bank also retained its interest rate on the marginal lending facility at 1.75% and that on the deposit facility at 0.25%.

Swiss inflation eased in October. The Czech central bank retained key rate and the Bank of England also held its rates and not expanded its bond purchase plan.

The U.S. Federal Reserve reported on Wednesday that it intends to expand its asset purchase program by $600 billion. The Fed also decided to leave interest rates unchanged at a record low in an effort to support the sluggish economic recovery.

World markets rallied after the Federal Reserve expanded asset purchases and effectively printing money to revive the economic growth.

In Paris CAC 40 Index surged 73.38 or 1.91% to close at 3,916.32 and in Frankfurt DAX Index edged higher 117.47 or 1.78% to close at 6,735.27.

The euro area service sector recovery continued to lose momentum in October, according to a survey data released by Markit Economics today. The final Markit Eurozone Services Business Activity Index fell to 53.3 in October, from 54.1 in September, the lowest level since February and was little changed from the earlier flash estimate of 53.2.

Euro area producer price inflation accelerated in September after moderating in August, data from Eurostat showed today.

Euro-zone producer price index rose 4.2% annually in September, as against 3.6% in August, according to data released by Eurostat today. Durable consumer goods increased 1.2%, capital goods gained 0.7%, and non-durable consumer goods rose 0.7% in September.

On a monthly basis, the PPI climbed 0.3% in September, after rising 0.1% in August.

German service sector expanded in October, according to a latest report from Markit Economics released today. The services business activity index climbed to 56 in October from September''s 54.9.

French services sector activity growth eased to a seven-month low in October, a report by Markit Economics showed today.

The purchasing managers'' index for services fell to 54.8 in October from 58.2 in September. The composite output index dropped to 54.9 in October from 58.1 in September.

Swiss inflation eased slightly to 0.2% in October from 0.3% in September, the Federal Statistics Office said today. On a monthly basis, consumer prices grew 0.5% in October.

Prices of food and non-alcoholic beverages fell 1.1% annually in October, while prices of clothing and footwear climbed 0.3%.

The Czech central bank decided to keep the benchmark two-week repo rate unchanged at the record low of 0.75% for a fourth consecutive rate-setting session. The Czech National Bank also retained its other interest rates. The discount rate was maintained at 0.25% and the Lombard rate was left unchanged at 1.75%.

SAP AG, the business software maker reportedly agreed to pay $120 million to U.S. rival Oracle Corp. for not seeking punitive damages in the intellectual property lawsuit filed against the German software company. Oracle has not been able to serve subpoena on SAP''s former chief executive Leo Apotheker as he was not available.

On March 22, 2007, Oracle filed suit against SAP and its subsidiary TomorrowNow, which provides third party support for Oracle applications. SAP has admitted that TomorrowNow unlawfully used information from Oracle''s servers. A trial over copyright infringement began this week.

Canada blocked Australian miner BHP Billiton’s $130 per share hostile takeover for Canadian fertilizer maker Potash Corp. of Saskatchewan Inc.

Gainers & Losers

Adidas AG fell 2.6% to €46.65 after the sportswear and sports equipment maker said third quarter net sales rose 20% to €3.47 billion from €2.89 billion in the previous year. Net income in the quarter increased 25% to €266 million or 1.27 euro per share from €213 million or 1.03 euro a share a year ago, helped by higher sales from North America and a resurgence of the company''s business in Greater China.

Alcatel-Lucent S.A. gained 0.85% to $3.55 after the French telecommunications equipment maker reported third quarter revenues grew 10.5% to €4.07 billion from €3.69 billion in the previous year. Net income generated in the quarter was €25 million or 0.01 euro per share, compared to last year''s loss of €182 million or 0.08 euro per share.

The results reflected continuing strong performance in North America and improved sales trend in Asia Pacific and Eastern Europe. Also, the company sees a significant sequential increase in fourth quarter revenues, citing strong momentum of its product portfolio.

BNP Paribas S.A. soared 4.69% to €54.91 after the French banking giant third quarter revenues totaled edged higher 1.8% to €10.9 billion, from the previous year''s revenue of €10.7 billion, reflecting good performance at its Retail Banking and Investment Solutions division. Net income in the quarter surged 46% to €1.91 billion, compared to net income of €1.31 billion in the year-ago quarter, boosted by sharply lower cost of risk together with strong performances at its Retail Banking and Investment Solutions businesses.

Deutsche Telekom AG dropped 2.25% to €10.22 after the German telecom company reported third quarter net revenue, on reported basis, decreased 4.1% to €15.6 billion from €16.26 billion in the same quarter last year.

Net profit for the quarter before elimination of the T-Mobile UK spinoff increased 8.4% to €1.04 billion from €959 million in the previous year.

MorphoSys AG increased 1.27% to €16.73 after the biotechnology companies focusing on fully human antibodies said that its research and diagnostic antibodies unit AbD Serotec inked a license deal with The Institute of Cancer Research, London, which provides AbD Serotec with worldwide exclusive rights to commercialize the prototypic and most popular BrdU antibody clone for research applications.

Swiss Reinsurance Company Limted surged 6.11% to Sfr50.35 after the global reinsurer third quarter total revenues declined 21% to $8.25 billion from $10.4 billion in the prior year. Net income in the quarter soared 97% to $618 million or $1.80 per share, from $314 million or $0.92 per share in the prior-year quarter.

Transocean Ltd. fell 1.29% to $63.33 after the offshore drilling contractor said third quarter revenue fell 18% to $2.31 billion from $2.82 billion in the same quarter last year. Net income in the quarter slumped 48% to $368 million or $1.15 per share, compared to net income of $710 million or $2.19 per share for the year-ago quarter, mainly due to a temporary moratorium on deep-water drilling in the U.S. Gulf of Mexico.

Unilever plc soared 6% to $31.11 after the Anglo-Dutch consumer products maker reported third quarter turnover rose 13.2% to €11.55 billion from €10.2 billion in the year-ago quarter. Net profit in the quarter increased 19% to €1.25 billion or 0.43 euro per share from €1.05 billion or 0.36 euro per share in the prior year quarter.