European Investors Confidence Index Drops; Hungary

Arthi Gupta
06 Dec, 2010
New York City

The European indexes traded sideways after euro area investor confidence fell in December. German construction activity improved in November. Swiss foreign currency reserves rose in November. Hungary debt rating lowered. Russia based X5 Retail agreed to acquire Kopeyka for $1.64 billion.

[R]4:00 PM Frankfurt – The European indexes traded sideways after euro area investor confidence fell in December. German construction activity improved in November. Swiss foreign currency reserves rose in November. Hungary debt rating lowered. Russia based X5 Retail agreed to acquire Kopeyka for $1.64 billion.[/R]

U.S. stocks fell after the Federal Reserve Chairman Ben Bernanke hinted on more stimulus to revive economic growth and Asian markets traded mixed.

Finance ministers from the euro-zone are due to meet in Brussels today to discuss the implementation of European rescue fund that is expected to commence in 2013.

Germany prefers to keep the fund size to €750 billion bailout fund and the introduction of joint European bonds before the revision to the European Treaty among nations.

Didier Reynders, the Belgian finance minister holding the current presidency of the European Union suggested over the weekend that the fund size may be increased now rather than wait till the fund is made permanent after 2013.

In Paris CAC 40 Index decreased 6.78 or 0.18% to close at 3,743.77 and in Frankfurt DAX Index edged higher 5.83 or 0.08% to close at 6,953.55.

Portuguese Banks Face Downgrade

Standard & Poor''s warned five Portuguese banks of a possible downgrade as the rating agency put their ratings on credit watch with negative implications.

Portugal''s macroeconomic challenges and difficult financing conditions will put pressure on the banks'' operating environment, potentially weakening the credit-worthiness of the banks, S&P said.

Hungary Credit Rating Downgraded

Hungary''s credit rating has been downgraded to Baa3 from Baa1 by Moody''s Investors Service on the concerns of high budget deficit. The rating agency also said that the “temporary measures” by the government will not lower the budget deficit in the longer term.

Euro-zone Investor Confidence Dips

An indicator of investor sentiment in the euro-zone fell in December, according to a new survey released today. The Sentix investor sentiment index, an indicator of confidence among over 900 investors, dropped to 9.7 in December from 14.0 in November.

Current situation index plunged to 12.8 in December from 21.8 in November, while the expectations index edged up to 6.8 in December from 6.5 in November.

German Construction Activity Accelerates

Germany''s construction activity increased in November, according to a survey by Markit Economics. The seasonally adjusted construction purchasing managers'' index rose to 53.8 in November from 51.7 in October.

Swiss Foreign Currency Reserves Up

Swiss foreign currency reserves rose to Sfr212.411 billion in November from Sfr211.938 billion in October, the Swiss National Bank said. Total reserves excluding gold holdings rose moderately to Sfr218.648 billion Sfr218.172 billion.

Czech Real Wages Increase

Real wages in the Czech economy grew 0.1% annually in the third quarter, while the average gross monthly nominal wage per employee was 2% higher than a year ago, the Czech Statistics Office said.

X5 Retail Buys Kopeyka

X5 Retail Group N.V., the Russian retailer agreed to acquire discount store operator Kopeyka retail chain for a total enterprise value of 51.5 billion rubles, including debt assumption of up to 16.5 billion rubles.

The acquisition is expected to result in a 75% increase in X5''s discounter store presence in Moscow and the larger metropolitan region based on Kopeyka''s 317 stores plus 422 X5''s discounters as of June 30.

Gainers & Losers

Beowulf Mining Plc gained 0.97% to 26.00 pence after the diversified mineral explorer reported nine-month loss of £320,000 or 0.231 pence per share, compared to £319,000 or 0.35 pence per share last year.

Hochtief Aktiengesellschaft surged 5.29% to €63.30 after the construction related services provider said that Qatar Holding LLC, the investment arm of Qatar Investment Authority, the new major shareholder of Hochtief.

Hochtief will increase its capital stock by around 10% under exclusion of subscription rights of existing shareholders. After acquiring all new shares, Qatar Holding will hold almost 9.1% of the new capital stock.

LM Ericsson Telephone Co. fell 0.18% to $10.94 after the Swedish telecom equipment maker stated that Chairman Michael Treschow plans to resign from his position in 2011 or 2012.

Novartis AG climbed 0.09% to Sfr53.50 after the drugmaker announced its 24-month data showing that Tasigna 150 mg capsules continues to surpass Gleevec tablets in the treatment of adult patients with newly diagnosed Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase. Both Tasigna and Gleevec were generally well tolerated overall.

Turbotec Products Plc rose 2.62% to 28.22 pence after the designer and manufacturer of heat exchangers and flexible connector products reported first-half revenue grew 25% to $12.16 million from $9.73 million in the prior year, mainly driven by shipments increase to major market segments and an approximately 23% increase in unit volumes.

Profit in the period surged 55% to $856,000 or $0.07 per share from $551,000 or $0.04 per share a year ago.

Winterthur Technologies AG, the Swiss company engaged in the abrasive technology sector soared 6.90% to Sfr62.00 after 3M Inc reached an agreement for the acquisition of Winterthur Technologies AG for Sfr62.00 or $63.56 per share by way of a public tender offer. The proposed transaction has an aggregate value of around $448 million.