European Indexes Slump; Greece Attracts

Arthi Gupta
23 Nov, 2010
New York City

The European indexes fell on rising tensions between the Koreas and speculation of contagion fears in the region. Euro area consumer confidence and PMI rose in November. German economy expanded in the third quarter. French business confidence waned but private sector growth increased in November.

[R]4:00 PM Frankfurt – The European indexes fell on rising tensions between the Koreas and speculation of contagion fears in the region. Euro area consumer confidence and PMI rose in November. German economy expanded in the third quarter. French business confidence waned but private sector growth increased in November.[/R]

World markets declined after debt problems in Ireland raised worries of a contagion effect to Portugal and Spain and tensions ran high following exchange of fire between the North and the South Korea troops.

German private sector growth improved in November. PTTEP and Statoil joined to form partnership in Canadian oil sands.

In Paris CAC 40 Index slumped 77.17 or 2.02% to close at 3,741.72 and in Frankfurt DAX Index edged lower 90.99 or 1.33% to close at 6,731.06.

Greece Economic Program on Track

The International Monetary Fund, European Commission and the European Central Bank said in a joint statement at the end of a nine-day visit in Athens for the second review that Greece''s economic program remains broadly on track and the economy is expected to begin turning around next year.

They said approval of the conclusion of the second review will allow the disbursement of €9 billion to Greece. That comprises €6.5 billion from euro area member states and €2.5 billion from the IMF.

Euro Area Consumer Confidence; PMI Rise

Euro-zone''s consumer confidence indicator increased to minus 9.5 in November from a revised reading of minus 10.9 in October, according to a flash estimate from the European Commission.

The consumer confidence index for the EU nations also improved to minus 11.1 in November from minus 11.5 in October, the agency said.

Euro-zone PMI rose to 55.4 in November from 53.8 in October, a flash report from Markit Economics showed today. The manufacturing PMI climbed to 55.5 in November from 54.6 in October and the services PMI logged 55.2 in November versus 53.3 in October.

The International Monetary Fund said in its staff position note that improving access to the labor market should be high on the priority list for all European nations, though different circumstances call for different approaches across countries.

German Economy Expands; Private Sector Improves

The German economy expanded a seasonally adjusted 0.7% sequentially in the third quarter following the 2.3% growth in the second quarter, according to a second release from the Federal Statistics Office today.

Exports rose 2.3% sequentially following the 7.9% increase in the previous quarter. Import growth slowed to 1.9% in the third quarter from 7.8% in the second quarter.

A flash report by the Markit Economics released today stated that the German private sector growth improved in November led by both manufacturing and services sector. The manufacturing PMI increased to a four-month high of 58.9 in November from 56.6 in October and the services activity index rose to 58.6 in November from 56 in October.

In another report, market research group GfK''s forward-looking consumer sentiment indicator, based on a survey of about 2,000 Germans, rose to 5.5 points for December from a revised 5.1 points recorded for November.

French Business Confidence Wanes; Private Sector Growth Accelerates

The French business confidence index decreased to 100 in November from 102 in October, according to a report released by the statistics office Insee today.

French private sector expanded at a quicker pace in November with the headline composite output index rising to a two-month high of 56.8 in November from 54.9 in October, according to a flash report from Markit Economics published today.

The flash manufacturing purchasing managers'' index climbed to its highest level in ten years, rising to 57.5 in November from 55.2 in October.

Statoil and PTTEP Partners in Canadian Oil Sands

Statoil ASA, the Norwegian energy company agreed to sell 40% of its interest in Alberta, Canada-based Kai Kos Dehseh oil sands project to Thailand''s PTT exploration for about $2.28 billion. Statoil will retain 60% ownership and act as the managing partner and operator of the project.

K+S Aktiengesellschaft to Takeover Potash One

K+S Aktiengesellschaft and Potash One Inc. agreed to acquire all of the outstanding common shares of Potash One at a price of C$4.50 per share in cash for approximately C$434 million.

K+S has production capacity of up to 2.7 million tons of potassium chloride per year. The realization of this production capacity would represent an approximately $2.5 billion capital investment into Saskatchewan and create up to 300 jobs.

European fertilizer giant K+S Group is one of the world''s leading suppliers of standard and specialty fertilizers, and the world''s leading producer in the salt business.

Gainers & Losers

Deutsche Post AG slumped 3.26% to €13.21 after the logistics group announced earnings before interest and tax at its DHL unit are forecast to grow by average of 13% to 15% in the years up to and including 2015.

Eni SpA fell 1.61% to €15.93 after the Italian oil giant completed a $17 billion deal with Venezuela to build a refinery and develop crude oil fields. The Italian company will work with state-owned oil company Petroleos de Venezuela to develop a major oil field in the Orinoco river basin.

Espírito Santo Financial Group S.A. dipped 0.07% to €14.20 after the Luxembourg based holding company said its nine-month consolidated net income declined 15.5% to €85.6 million from €101.3 million in the year earlier period. Pre-tax profit for the period grew 9.2% to €516.53 million from €473.09 million in the prior year.

Laird Plc surged 9.48% to 152.50 pence after the UK-based electronics and technology business announced the acquisition of Cattron Group International, Inc., a U.S. provider of wireless control and automation products and systems, for $90 million or £56.5 million in cash on a debt and cash free basis.

Severn Trent plc gained 0.41% to 1,465.00 pence after the supplier of water and waste water treatment solutions first-half group turnover improved 1.9% to £867.9 million from £852.1 million in the comparable period last year. Profit in the period slumped 44% to £103.8 million or 43.8 pence per share from £149.7 million or 63.4 pence per share in the prior-year period.