Greek Parliament to Approve Austerity Measures; German Import Prices Rise

Arthi Gupta
22 Dec, 2010
New York City

The European indexes traded mixed after Greece received downgrade warning as lawmakers haggle to approve austerity measures. German import prices climbed in November and Italian retail sales rose in October. Denmark economy expanded in the third quarter. The Czech central bank held interest rates.

[R]4:30 PM Frankfurt – The European indexes traded mixed after Greece received downgrade warning as lawmakers haggle to approve austerity measures. German import prices climbed in November and Italian retail sales rose in October. Denmark economy expanded in the third quarter. The Czech central bank held interest rates.[/R]

The European Union on Tuesday announced plans to raise funds to provide financial support to Ireland, which accepted an €85 billion rescue package in November. Greek lawmakers were set to approve the austerity measures as requested by the bailout and unions called for one day strike today.

The EU will issue bonds under the European Financial Stability Mechanism emergency lending facility.

The first bond from the EU will be launched at the beginning of January, with European Financial Stability Facility expected to follow with its first bond issue towards the end of the month.

Fitch Ratings placed Greece''s BBB- rating on Rating Watch Negative, meaning a downgrade to ""junk"" status is likely.

The review ""will focus on an assessment of Greece''s fiscal sustainability in the wake of the measures that the authorities have taken this year under the EU-IMF program,"" Fitch said.

In Paris CAC 40 Index gained 1.82 or 0.05% to close at 3,929.31 and in Frankfurt DAX Index edged lower 0.96 or 0.01% to close at 7077.03.

German Import Prices Climb

German import prices rose 10% annually in November, as against the 9.2% increase in October, statistics office Destatis said on Wednesday.

The sharp increase was mainly due to higher prices for energy, raw materials and metals, Destatis said.

On a monthly basis, import prices rose 1.2% in November, compared to 0.2% fall in October.

Czech Central Bank Maintains Key Rates

The Czech central bank maintained the benchmark two-week repo rate unchanged at the record low of 0.75% for a fifth consecutive meeting on Wednesday.

The Czech National Bank also retained its other interest rates. The discount rate was kept at 0.25% and the Lombard rate was left unchanged at 1.75%.

Italian Retail Sales Up

Italy''s retail sales rose a seasonally adjusted 0.3% on a monthly basis in October, compared to the revised September''s decline to 0.3% from 0.2% reported initially, the statistics office ISTAT said.

Annually, retail sales dropped an unadjusted 0.6% in October, following a revised 0.3% fall in September.

Poland Holds Rates

The National Bank of Poland maintained the benchmark reference rate at a record low of 3.5% for an 18th consecutive rate-setting session. The rate was kept unchanged at 5% on an annual basis, while the deposit rate was maintained at 2%. The rediscount rate and discount rate were left unchanged at 3.75% and 4% respectively.

Denmark GDP Expands

Denmark''s economy expanded 1% in the three months through September period, revised up from the previous estimate of 0.7% according to the latest data released today.

On a yearly basis, the Danish economy expanded 3.3%, revised up from 3%.

Gainers & Losers

BAE Systems Plc dropped 0.36% to 333.90 pence after the defense products maker agreed with ETI Holdings ApS and an associated company to buy cyber and intelligence company ETI A/S and certain associated companies for DKK 1.2 billion or around £137 million in cash.

Deutsche Bank AG fell 0.30% to €39.51 after the German lender agreed to pay $553.6 million to settle a U.S. criminal investigation related to its participation in financial transactions involving tax avoidance between 1996 and 2002.

Phoenix Solar AG gained 1.26% to €22.50 after the solar project developer said it is building a solar carport on behalf of a project company held by Solarwatt AG.