European Indexes Gain on China Comments; DSM Acquires Martek Biosciences

Arthi Gupta
21 Dec, 2010
New York City

The European indexes gained after China

[R]3:50 PM Frankfurt – The European indexes gained after China’s reassurance to the EU on continued support to overcome the sovereign-debt crisis. Moody’s warned Portugal of possible rating downgrade. Euro area consumer confidence fell in December. Royal DSM agreed to buy U.S.-based Martek Biosciences.[/R]

World markets traded higher on rising optimism of global economic recovery and European indexes gained after positive comments from China and said Portugal has taken “concrete” steps to deal with its debt situation.

China supports the European Union''s measures to combat the debt crisis in the euro area and quell market instability, Vice Premier Wang Qishan was quoted as saying on Tuesday.

Speaking at the opening day of the third EU-China High-level Economic & Trade Dialogue, Wang also said China had taken ""concrete actions"" to help some European countries deal with their sovereign debt crisis.

In an interview with German daily Boersen-Zeitung, the European Central Bank Executive Board member Juergen Stark said each euro-zone government is responsible for its own debts. ""It’s not our job to refinance governments,"" he said.

He further added that financial aid to European Union nations will be granted under strict conditions. He noted that keeping low interest rate for an extended period would create undesirable side effects.

The European Central Bank''s non-standard measures are temporary in nature and are made specifically for the smooth transmission of monetary policy, the bank''s Governing Council member Erkki Liikanen said in an interview published in daily Helsingin Sanomat.

In Paris CAC 40 Index gained 41.11 or 1.06% to close at 3,926.19 and in Frankfurt DAX Index edged higher 63.59 or 0.91% to close at 7082.19.

Moody''s Warns Portugal of Downgrade

Ratings agency Moody''s on Tuesday warned Portugal of a possible downgrade to its A1 credit rating, citing rising fiscal uncertainties.

The agency said Portugal''s ratings could be lowered by a ""notch or two"" if the country''s debt affordability deteriorates or the economic outlook worsens due to austerity measures.

Euro-zone Consumer Confidence Falls

Euro-zone''s consumer confidence indicator fell to minus 11 in December from minus 9.4 in November, a flash estimate from the European Commission showed.

The consumer confidence index for the EU nations dropped to minus 12.1 in December from minus 11 in November, the agency said.

German Consumer Sentiment Dips, Leading Index Rises

Confidence among Germans households is set to fall in January, according to data from market research group GfK.

The forward-looking consumer sentiment indicator, based on a survey of about 2,000 Germans, dropped to 5.4 in January from 5.5 in December.

A leading indicator of the German economy climbed at a faster pace in October than in the previous month, pointing to continued robust growth in the coming months.

The coincident index, a measure of current economic activity, climbed 0.3% in October, reversing a 0.2% fall in September.

Swiss Watch Exports Up

Swiss watch exports soared 29.7% compared to the same month a year earlier to 1.8 billion francs in November, the country''s watch industry federation FH said on Tuesday. Exports of expensive watches surged more than 40% in November.

Dutch Consumer Spending Rises

Dutch consumer spending rose 1.1% annually in October, compared to a 1.7% increase in September, the Central Bureau of Statistics said on Tuesday.

Sweden’s Growth Outlook Revised to 5.6%

Sweden''s economy may expand 5.6% this year with rising domestic demand boosting output and employment, the National Institute of Economic Research said. The growth forecast was lifted from 4.3% estimated in September.

The growth outlook for next year was raised to 3.8% from 3.4% projected previously. In 2012, the economy is forecast to grow 2.9%.

The economy is growing strongly and at a much higher rate than in many other OECD countries with domestic demand playing an exceptionally important role in recovery, the think tank said.

Koninklijke DSM Buys Martek Biosciences

Martek Biosciences Corp., the nutritional products company announced an agreement to be acquired by Royal DSM N.V., the Netherlands-based life sciences and materials sciences company, for $31.50 a share in cash. The total consideration would be $1.09 billion or about €829 million.

Gainers & Losers

ASSA ABLOY AB gained 2.45% to SEK 196.80 after the lockmaker said that it agreed to acquire LaserCard Corp., a California-based provider of secure ID solutions to governments and commercial clients around the world.

The offered price amounts to about $80 million with an offered share price of $6.25 per share, net to the seller in cash without interest, representing a premium of around 42% over LaserCard''s average closing share price during the past 20 trading days ended December 17.

Bilfinger Berger AG rose 0.38% to €62.81 after the Germany-based construction and services group agreed to sell its subsidiary Valemus Australia for A$1.06 billion to Lend Lease, an Australian construction and real-estate group.

HSBC Holdings PLC climbed 1.19% to 664.60 pence after the banking and financial services company said, through its wholly owned subsidiary, HSBC Specialist Investments Limited, it agreed to sell 80.1% of its UK-based global real estate and infrastructure private equity fund management business to the unit''s senior management team.

Neste Oil Corporation declined 0.58% to €12.00 after the Finland-based company active within the oil and gas industry signed a new €1.5 billion multi-currency revolving credit facility with a syndicate of 19-core relationship banks.

Novartis AG edged higher 0.05% to $58.77 after the Swiss drugmaker said that a pivotal Phase 3 trial of the investigational Janus kinase inhibitor INC424 met its primary endpoint of significantly reducing spleen volume in patients with myelofibrosis.

Proximagen Group plc advanced 1.84% to 154.80 pence after the biopharmaceutical company announced the signing of an exclusive agreement with UK-based health care company GlaxoSmithKline Plc to acquire the global rights for two drug development programs targeting diseases of the central nervous system. The company did not reveal specific financial terms of the deal.