European Index Higher; MAN, Scania, Axa Up

Bikram Pandey
15 Nov, 2010
New York City

European markets closed up but not before oscillating in the day as Ireland and EU discuss emergency loan measures. Indexes in the European region gained between 0.4% and 1.3%. Euro zone deficit with the rest of the world increased to

[R]4:30 PM Frankfurt – European markets closed higher but not before oscillating in the day as Ireland and EU discuss emergency loan measures. Indexes in the European region gained between 0.4% and 1.3%. Euro zone deficit with the rest of the world increased to €2.9 billion and the estimate of Greek deficit were revised higher.[/R]

European markets closed higher after trading sideways for the most of the session and sovereign debt yields of Ireland, Portugal and Greece were on the rise.

FTSE 100 index increased 0.3% or 16.17 to 5,813.04 and the DAX index added 48.62 to 6,783.23. CAC 40 index gained 1% and the benchmark index in Spain added 1.3%. Indexes in Greece, Sweden and Russia gained at least 0.8%. Portugal index increased 0.4% and Ireland index added 0.6%.

Though the officials in Ireland continue to deny that there is a “crisis” and the government needs external support, but 123jump.com sources within the EU in Brussels and the IMF in Washington, D.C. indicate an emergency bailout plan of at least 50 billion euros is in the works.

The EU-IMF led coalition is expected to offer as much as 100 billion euros in loans and guarantees as early as this week to calm bond markets. EU ministers and officials and ECB officials are scheduled to meet tomorrow in Brussels to hash out the preliminary plan of the bailout.

Euro-zone September Surplus

First estimate of the Euro zone trade balance in September with rest of the world was €2.9 billion deficit compared to €1.4 billion a year ago month. First estimate for the wider EU27 trade balance in August was €11.7 billion deficit.

Euro Area government deficit to GDP ratio increased from 2.0% in 2008 to 6.3% in 2009 and in the EU27 from 2.3% to 6.8%. Euro area government debt to GDP ratio increased from 69.8% at the end of 2008 to 79.2% at the end of 2009, and in the EU27 from 61.8% to 74.0%.

The statistics office of the region also revised Greece’s budget deficit to 15.4% from 13.6% in the estimate released in April. The debt of the nation was also revised sharply higher to 126.8% of GDP.

After the revisions released by the eurostat today, the Greek Finance Ministry said that debt is expected to soar to 144% of gross domestic product and budget deficit will declined to 9.6% in the current year.

As a part of the emergency loan arranged by EU-IMF, Greece agreed to lower its but deficit to meet the EU requirement of 3% by 2014 and agreed to spending cuts, pension cost and increase government revenue with better tax collection.

Stock Movers

Axa SA increased 2.5% to 13.55 euros after the France based largest insurer and Australian funds manager AMP bid A$13.3 billion for Axa Asia Pacific. The revised bid is higher than the previous joint by the two companies.

Bayer AG increased 3.2% to 55.67 euros after the drug company said its blood thinner product in a study of patients with irregular heart beat prevented strokes without raising the risk of bleeding.

BHP Billiton Ltd increased nearly 1% after the company abandoned its bid to acquire Potash Corp of Saskatchewan Inc and resumed its stock buyback program.

Lonmin Plc gained more than 3% to 1,827 pence after the third largest platinum miner reported annual earnings that exceeded estimates and reinstated its dividend.

MAN SE increased more than 6% to 87.23 euros after Sweden based Scania said that the company is looking to merge with the truck maker. Scania increased 1.2% to SKK147.60 and the parent Volkwagen AG increased 2.5% to 116.80 euros.

Remy Cointreau SA increased 1.4% to 52.40 euros after the company said it retained Credit Agricole-CIB to sell its champagne division.