European Indexes Climb; Current Account Deficit Rises

Arthi Gupta
18 Nov, 2010
New York City

The European indexes rose on optimism of a successful bailout plan for Ireland. Euro area current account deficit rose in September. German employment climbed in the third quarter. Dutch unemployment rate fell in October but consumer confidence improved in November. Portugal PPI rose in October.

[R]4:40 PM Frankfurt – The European indexes rose on optimism of a successful bailout plan for Ireland. Euro area current account deficit rose in September. German employment climbed in the third quarter. Dutch unemployment rate fell in October but consumer confidence improved in November. Portugal PPI rose in October.[/R]

U.S. and Asian markets traded higher on hopes for a resolution to the Irish debt crisis and expectations that China would use other measures to stem inflation and tighten home lending.

Swiss trade surplus climbed in October. Swedish unemployment rate fell in October.

In Paris CAC 40 Index increased 54.39 or 1.43% to close at 3,846.74 and in Frankfurt DAX Index edged higher 92.00 or 1.37% to close at 6,792.07.

Ireland Bailout Plan Talks

The Irish government is due to begin high level talks with representatives from the European Union, the European Central Bank, and the International Monetary Fund in Dublin today towards resolving the Republic''s fiscal crisis.

Reports suggest the government will try to prevent any increase in the €6 billion worth of savings and spending cuts proposed for the 2011 budget and the €15 billion target set for the next four years.

The Irish Republic is expecting a loan of ""tens of billions"" of euros to be offered by the European Union and the International Monetary Fund as talks begin in Dublin, the country''s central bank Governor Patrick Honohan stated on Thursday.

The euro-zone will withstand the current economic crisis in Ireland, Finland Prime Minister Mari Kiviniemi told broadcaster YLE on Thursday.

The premier said, ""EU nations are united in their support for Ireland and all indicators show that the euro area will prevail.""

Euro-zone Current Account Deficit Rises

The euro-zone''s current account deficit rose sharply in September on the back of larger shortfalls in the income and current transfers accounts, according to latest figures released today.

The European Central Bank said the seasonally adjusted current account deficit rose to €13.1 billion in September from €6.9 billion in August. The income account deficit surged to €5.5 billion in September from €1.3 billion in August and the current transfers account shortfall rose to €11.3 billion n September from €7.6 billion in August.

German Employment Rises; Bundesbank Confident on Deficit Target

German employment increased in the third quarter from the previous year, according to official data released today. The number of persons in employment whose place of employment was in Germany totaled 40.65 million in the third quarter, which was an increase of 307,000 persons or 0.8% over a year ago, the Federal Statistics Office said. In the second quarter, employment rose 0.4%.

Compared to the second quarter, the number of persons in employment rose 290,000 persons or 0.7% in the third quarter.

The Bundesbank said on Thursday that Germany would meet the EU-allowed budget deficit limit of 3% of gross domestic product in 2011. The Bundesbank bank further said banks are not holding back Germany''s recovery.

Dutch Unemployment Falls; Consumer Confidence Improves

Dutch seasonally adjusted unemployment fell to 5.2% in October from 5.3% in September, the Central Bureau of Statistics said on Thursday. The number of unemployed totaled 410,000 in October, as against the 412,000 persons unemployed in September.

Dutch consumer confidence index increased to minus 7 in November from minus 10 in October, according to a report by the Central Bureau of Statistics released today. Consumer''s willingness to buy index rose to minus 8 in November from minus 9 in October.

Portugal PPI Rises

Portuguese annual producer price inflation increased in October, the Statistics Portugal said today. The producer price index rose 4.6% annually in October, compared to a 4.4% growth in September. On a monthly basis, producer prices fell 0.2% in October, in contrast to a 0.2% rise in September.

Swiss Trade Surplus Up; Economic Sentiment Weakens

Switzerland''s trade surplus unexpectedly increased in October as exports rose sharply, official data showed on Thursday. According to the country''s Federal Customs Administration, the trade surplus was Sfr2.1 billion in October, from Sfr1.68 billion in September.

Exports rose 6.2% on a monthly basis in October, as against a 3.1% decline in September. On an annual basis, working day adjusted exports grew 12.9% in October following September''s 8.4% increase.

Swiss economic expectations weakened in November, according to a survey by the Center for European Economic Research published today.

The Credit Suisse - ZEW economic sentiment indicator dropped 3.4 points to minus 30.9. The indicator for the assessment of the current economic situation in Switzerland, however, edged up 5 points to the 50 point threshold, continuing an optimistic trend.

Swedish Unemployment Rate Declines

Sweden''s unemployment rate fell more than expected last month, according to official figures released on Thursday. On a seasonally adjusted basis, the unemployment rate was 8.1%, with 404,000 people registered as jobless.

Statistics Sweden said 7.5% of the registered workforce were unemployed in October, as against 7.8% in September. The unemployment rate among men was 7.4%, while among females it was 7.6%.

In a speech at the Swedish Association of Local Authorities and Regions, Riksbank Deputy Governor Karolina Ekholm said that lower inflationary pressures arose from strengthening of krona, which in turn is derived from lower expected interest rates aboard.

Gainers & Losers

Air France gained 5.8% to €13.9 after the French carrier reported second quarter net income of €290 million compared to €147 million loss a year ago.

Investec plc rose 1.30% to 506.50 pence after the specialist bank and asset manager reported first-half earnings surged 38.3% to £246.99 million from prior year''s £178.53 million. Earnings per share rose to 27.9 pence from 21.2 pence a year ago.

Koninklijke Ahold N.V. slumped 3.1% to €9.61 after the Dutch supermarket chain operator reported third quarter net sales rose 10.8% to €6.69 billion, from €6.04 billion in the comparable period of fiscal 2009. Net income in the quarter declined 8.6% to €223 million from €244 million last year, hurt by a charge from asset divestments and higher taxes.

QinetiQ Group plc surged 11.7% to 110.60 pence after the aerospace and defense technical advice provider reported first-half revenue grew 7% to £864.9 million from £806.3 million, helped by robust sales of survivability products as well as a weaker U.S dollar. Loss for the period was £42.1 million or 6.4 pence per share compared with a profit of £0.8 million or 0.1 pence per share in the previous year.

Rexel SA surged 4.59% to €14.81 after the electrical equipment distributor was initiated with a “buy” rating coverage by UBS.