Spain Comments Lift Indexes in Europe; VimpelCom Merger on Hold

Arthi Gupta
20 Dec, 2010
New York City

The European indexes climbed after euro-zone current account deficit narrowed in October. German producer price index rose. French leading index climbed. The OECD noted that Spain needs to improve government finances and job creation. Hungary unexpectedly hiked key rate.

[R]3:35 PM Frankfurt – The European indexes climbed after euro-zone current account deficit narrowed in October. German producer price index rose. French leading index climbed. The OECD noted that Spain needs to improve government finances and job creation. Hungary unexpectedly hiked key rate.[/R]

U.S. and European markets advanced but Asian markets fell amidst rising tension on the Korean peninsula. European markets were lifted after the OECD report noted that Spain could avoid the need of a bailout if the nation implements stringent budget measures.

The Irish Finance Ministry on Monday said neither the European Central Bank nor any national central bank would be exposed financially by Ireland''s recently announced Credit Institutions Stabilisation Bill.

The ministry was responding to the concerns raised by the ECB over the weekend that Dublin''s new law could interfere with efforts to provide liquidity to the euro area''s financial system.

In Paris CAC 40 Index gained 37.67 or 0.97% to close at 3,905.02 and in Frankfurt DAX Index edged higher 70.58 or 1.01% to close at 7053.03.

Euro Area Current Account Deficit Contracts

Euro-zone unadjusted current account deficit narrowed to €2.3 billion in October from September''s revised €8.5 billion, according to data released by the European Central Bank.

On a seasonally adjusted basis, the current account deficit inched up to €9.8 billion in October from €9.7 billion in September.

German PPI, Public Debt Rise

German producer price index rose 4.4% annually in November, following a 4.3% increase in October, the Federal Statistics Office said.

According to official data, annual inflation rose for the third consecutive month in November after easing in August.

On a monthly basis, the PPI climbed 0.2% in November after rising 0.4% in October.

Germany''s public debts totaled nearly €1.8 trillion at the end of September, up €100 billion or 5.9% on December last year, statistics office Destatis said on Monday.

French Leading Index Improves

A leading indicator of the French economy rose moderately in October, following three consecutive strong monthly increases.

The Conference Board leading index climbed 0.1% in October, following a 0.8% rise in September and a 0.9% increase in August.

Dutch Current Account Surplus Up, Consumer Sentiment Down

Dutch current account surplus rose to €9.5 billion in the third quarter from €5.6 billion in the second quarter, the central bank said.

Dutch consumer confidence indicator dropped to minus 14 in December from minus 7 in November, survey results from the Central Bureau of Statistics showed.

Spain Needs Broad Reforms

Spain is slowly emerging from the deep recession that followed the global financial crisis, but must now enact major reforms to improve government finances and create jobs, according to a new OECD report.

Spain’s government deficit is projected at 9.2% this year, 6.3% in 2011 and 4.4% in 2012, according to forecasts from the November OECD Economic Outlook.

Unemployment, which is expected to hover near 20% this year, will drop slightly in 2011, to 19.1%, and fall further to 17.4% in 2012, according to the report.

Portugal PPI Slackens

Portuguese producer price inflation eased to 4.5% in November from 4.6% in October, Statistics Portugal said. Producer prices increased for a twelfth consecutive month.

On a monthly basis, producer prices rose 0.4% in November.

Hungary Hikes Key Rate

Hungary''s central bank unexpectedly raised its key interest rate for the second straight month. The Magyar Nemzeti Bank hiked the rate to 5.75% from 5.5%.

Gainers & Losers

Mobistar SA fell 1.54% to €45.69 after the Belgium-based mobile-phone company was upgraded to “buy” at Deutsche Bank AG.

Novartis AG dipped 0.20% to $58.74 after the Swiss healthcare giant confirmed its intention to build a new full-scale pharmaceutical manufacturing plant in the city of St. Petersburg in Russia. The company plans to spend $500 million in local infrastructure and collaborative healthcare initiatives planned over a five-year period.

Publicis Groupe S.A. gained 0.65% to €38.06 after the French multinational advertising and communications company said that it acquired Healthcare Consulting, a consulting firm for healthcare and pharmaceutical companies. This new agency will be renamed Publicis Healthcare Consulting,

Sanofi-Aventis S.A. rose 1.32% to €49.29 after the French drugmaker signed a partnership with U.S.-based Avila Therapeutics Inc. to develop targeted covalent drugs for the treatment of different cancer types.

Telenor ASA climbed 1.36% to NOK 93.20 after the telecommunication company and shareholder of VimpelCom decided not to support the proposed combination of VimpelCom and Egyptian Weather Investments S.p.A.

Unilever Plc dropped 0.64% to $31.20 after the Anglo-Dutch consumer products maker confirmed that Alberto Culver Co. shareholders have voted in favor of the proposed $3.7 billion Unilever acquisition, which was announced on September 27.

Separately, Unilever confirmed that it received a second request for information from the United States Department of Justice in the regulatory review process.