European Current Account Deficit Widens; German Inflation Up

Arthi Gupta
10 Dec, 2010
New York City

The European indexes traded sideways after German inflation rose in November and French manufacturing slumped in October. Hungarian inflation remained flat in November and Swedish industrial production rose less than anticipated in October.

[R]4:00 PM Frankfurt – The European indexes traded sideways after German inflation rose in November and French manufacturing slumped in October. Hungarian inflation remained flat in November and Swedish industrial production rose less than anticipated in October.[/R]

U.S. stocks gained after trade deficit narrowed to its lowest level since January. Asian and European markets advanced after China exports data.

Greece industrial production declined but Dutch industrial output surged in October.

Official data released today showed that Chinese exports surged 34.9% annually in November from October increase of 22.9%, while imports climbed 37.7% to $22.9 billion for November from $27.2 billion in October.

China''s central bank on Friday raised commercial banks'' reserve requirement ratio by another 50 points. That was the sixth such rate hike this year and follows two increases in November. The previous reserve rate increase intended to curb inflationary pressures from commodity and property prices have not be successful.

The large scale purchases of government bonds by the European Central Bank could threaten the independence of the bank, ECB''s Governing Council member Mario Draghi said in an interview with the Financial Times.

In Paris CAC 40 Index gained 1.87 or 0.05% to close at 3,859.92 and in Frankfurt DAX Index edged higher 38.81 or 0.56% to close at 7002.97. For the week, the CAC 40 Index surged 2.96%.

EU27 Current Account Deficit Widens

EU27 external current account recorded a deficit of €25.5 billion in the third quarter of 2010, compared with a deficit of €19.3 billion in the third quarter of 2009 and a deficit of €37.1 billion in the second quarter of 2010.

German Inflation Up

Germany''s annual wholesale price index rose 7.8% in November, as against a 7.7% rise in October, a report by the Federal Statistics Office showed on Friday. The highest annual wholesale inflation rate since July 2008. A year earlier, wholesale prices fell 3.2%.

Wholesale prices of particular cereals, seeds and animal feed grew 58.7% annually in November, while prices of fruits, vegetables and potatoes rose 16.8%.

On a monthly basis, the index of wholesale prices rose 0.7% in November, compared to a 0.3% fall in October.

French Manufacturing Slumps

French manufacturing output volume fell 0.8% in October, following a 0.1% drop in September, according to figures released by the statistics office INSEE today.

The reason was a 56.5% slump in the production of manufacture of coke and refined petroleum products after the 4.6% gain in September.

On a yearly basis, manufacturing rose 4.7% in October.

Hungary Inflation Static

Hungary''s annual consumer price inflation was 4.2% in November, same as in the previous month, the Hungarian Statistics Office said on Friday.

Food prices increased 5.9% in November from a year earlier, faster than a 5.3% growth in October.

On a monthly basis, consumer prices rose 0.3% in November, as against a 0.4% rise in October. Food prices increased 1.1% in November.

Sweden Industrial Output Wanes

Sweden industrial production increased 0.2% on a monthly basis in October, compared to a revised 2.6% increase in September, Statistics Sweden said on Friday.

Industrial orders increased 3% in October from September, reflecting a 1.2% increase in the domestic market and a 4.3% rise in the export market.

The total volume of new orders advanced 11.4% in October from the previous year. The increase in the domestic market was 5.3%, while the increase in the export market was 16.4%.

Dutch Industrial Output Soars

Dutch industrial production rose 5% annually in October, versus a 3.6% growth in September, the Central Bureau of Statistics said on Friday.

Production growth was the strongest in transport industry with a 44% annual increase in output, the statistics office said. Industrial turnover rose 11% annually in October, compared to a 14.9% rise in September.

The Dutch economy contracted unexpectedly in the third quarter, marking the first decline in more than a year. Gross domestic product fell 0.1% sequentially in the third quarter, reversing a strong 0.9% expansion in the prior quarter.

Greece Industrial Production Drops

Greece industrial production recorded an annual fall of 4.2% in October, Hellenic Statistics Authority said on Friday. In October 2009, production had declined 9.6%. On a monthly basis, output decreased 2.4% in October 2010.

Mining and quarrying output fell 13% annually in October.

Gainers & Losers

Areva SA gained 0.07% to €351.3 after the nuclear reactor supplier is seeking to raise €900 million through a share sale that will be supported by the Kuwaiti Investment Authority. The KIA is offering to subscribe for €600 million of new shares or 4.8% stake in the French firm.

BASF SE gained 0.12% to €60.46 after the chemical company said that it completed the acquisition of Cognis Holding GmbH from Cognis Holding Luxembourg Sàrl controlled by Permira Funds, GS Capital Partners and SV Life Sciences. The equity purchase price was €700 million. Including net financial debt and pension obligations, the enterprise value of the transaction is €3.1 billion.

Elster Group SE declined 0.36% to $16.38 after the water, gas and electricity meters maker said that it has been awarded a contract from Anglian Water for the supply of volumetric polymer hybrid Smart Meters.

Infineon Technologies AG surged 4.76% to €7.30 after the chip maker said yesterday that the firm’s sales target for the current fiscal year may be on the cautious side, judging by the current order book.

HeidelbergCement AG slumped 3.70% to €44.97 after Germany’s cement and concrete maker is under investigation by the European Commission along with seven other cement producers, for possible monopolistic practices.