German Industrial Output Accelerates; Iceland Lowers Key Rate

Arthi Gupta
08 Dec, 2010
New York City

The European indexes declined after German exports fell in October. EU finance ministers urged for stringent bank stress tests. French business sentiment improved in November. Iceland lowered key rate to 4.5%. ABB commenced tender offer to acquire Baldor Electric.

[R]4:00 PM Frankfurt – The European indexes declined after German exports fell in October. EU finance ministers urged for stringent bank stress tests. French business sentiment improved in November. Iceland lowered key rate to 4.5%. ABB commenced tender offer to acquire Baldor Electric.[/R]

Markets in Europe focused on another round of stringent bank test in the region as finance ministers decided to hold the size of the bailout fund for now. European markets traded mixed as the dollar edged up and yields on the U.S. Treasury races to complete $66 billion of bond sale this week.

In Paris CAC 40 Index gained 27.06 or 0.71% to close at 3,837.56 and in Frankfurt DAX Index edged lower 12.56 or 0.18% to close at 6989.35.

EU Ministers Urge Stringent Stress Tests

European Union finance ministers on Tuesday agreed to conduct a new round of stringent stress tests on the banking sector from February next year to assess the health of the region''s banks.

The new test will take account of liquidity pressures and will be even more comprehensive than the last examination in July, EU economics and monetary affairs commissioner Olli Rehn was quoted as saying after a meeting of EU finance ministers in Brussels.

The EU also finalized its aid package for Ireland, with €22.5 billion set to be released under the European Financial Stability Mechanism as part of a total package of €85 billion from the EU and the IMF.

German Exports Drop; Industrial Output Gains

German exports declined 1.1% on a monthly basis to €83.3 billion in October, following a 3% increase in September, according to statistics office Destatis. Imports rose 0.3% to €69.1 billion in October, compared to a 1.2% fall in September.

On a yearly basis, exports increased 19.8%, while imports climbed 21% in October.

German industrial production output rose 2.9% in October on a monthly basis, after a revised 1% decline in September, the Federal Ministry of Economics and Technology said.

Annually, industrial output grew a working day adjusted 11.7% in October, compared to the 7.7% increase in September.

French Business Sentiment Up; Trade Deficit Narrows

French industrial sentiment index rose to 107 in November from a revised 104 in October, according to survey data from the Bank of France released today. Confidence improved in the services sector with the indicator rising to 98 in November from 96 in October.

French trade deficit contracted to €3.4 billion in October from €4.4 billion in September, the country''s customs office said.

Exports totaled €32.4 billion in October compared to €32.8 billion in September. Imports were valued at €35.8 billion in October, as against €37.14 billion worth purchases in September.

The French budget balance showed a shortfall of €133.1 billion in October, compared to the €134.6 billion shortfall recorded in the same period of last year, data from the Budget Ministry showed.

Iceland Lowers Interest Rates

Iceland''s central bank lowered its benchmark interest by a one percentage point to 4.5% on Wednesday. The deposit rate was also cut to 3.5% from 4%, while the overnight lending rate was slashed to 5.5% from 7%.

Greek CPI Eases

Greek consumer price inflation eased to 4.9% in November from 5.2% in October, the National Statistics Service of Greece said. On a monthly basis, consumer prices rose 0.2% in November, unchanged from October.

ABB Commences Tender Offer for Baldor Electric

ABB Ltd. said that its subsidiary, Brock Acquisition Corp. commenced the previously announced cash tender offer for Baldor Electric Co.

The tender offer is at a price of $63.50 per share net to the holder in cash, without interest and less any required withholding taxes. The offer is pursuant to the merger agreement entered into between the companies as of November 29, 2010.

Apax Partners LLP is in direct talks with ISS Holding A/S for as much as €6.4 billion. The talks confirmed by two London based bankers were first reported by Bloomberg News and the company has indicated that it has been looking for strategic alternatives including a public offering.

Gainers & Losers

Aegon N.V. gained 0.56% to €4.50 after the Dutch insurance company reported the reorganization of its loss making Asian businesses and the progress in execution of strategy in its core businesses, such as life insurance, pensions and asset management. The company would combine its Asian businesses with Hong Kong and looks ahead for an organic growth.

ArcelorMittal S.A. rose 0.76% to $35.71 after the steel major said the company is now ready to launch the spin-off. The shares of the new business are to be listed on Euronext and will be issued to shareholders in first-quarter 2011 at a ratio of one stainless steel business share for twenty ArcelorMittal shares held on the record date.

Elekta AB surged 6.75% to SEK 256.30 after the Sweden-based medical-technology group reported second quarter net sales rose 11% to SEK 1,879 million from SEK 1,691 million last year. Net income in the quarter increased 29% to SEK 202 million from SEK 156 million in the prior year. Earnings per share amounted to SEK 2.15 versus earnings of SEK 1.70 per share year ago.

LM Ericsson Telephone Co. fell 0.28% to $10.59.

Vodafone Group Plc declined 0.45% to 164.40 pence after the UK-based mobile communications company said that it formed a strategic alliance with Anglo-Dutch consumer products maker Unilever plc by which Unilever selected Vodafone Global Enterprise to manage its mobility services globally.