European Indexes Gain; French GDP Growth Slows

Arthi Gupta
28 Dec, 2010
New York City

The European indexes climbed after French GDP rose 0.3% in the third quarter. German industry group lifted industrial sector growth forecast for 2011. Swiss UBS consumption fell and Swedish retail sales slackened in November. Alcatel-Lucent agreed to pay $137 million to settle U.S. bribery cases.

[R]4:00 PM Frankfurt – The European indexes climbed after French GDP rose 0.3% in the third quarter. German industry group lifted industrial sector growth forecast for 2011. Swiss UBS consumption fell and Swedish retail sales slackened in November. Alcatel-Lucent agreed to pay $137 million to settle U.S. bribery cases.[/R]

U.S. stocks gained and Asian markets traded mixed.

The Basel Committee on Banking Supervision on Monday proposed that bankers’ remuneration should be more transparent.

In a statement, the watchdog said the objective of this proposal is to support effective market discipline and to allow market participants to assess the quality of the compensation practices.

In Paris CAC 40 Index gained 10.71 or 0.28% to close at 3,872.90 and in Frankfurt DAX Index edged higher 7.93 or 0.11% to close at 6,978.66.

German Industrial Growth Estimate Lifted

German industrial sector will remain the main growth engine of the economy next year by adding 70,000 new jobs; a newspaper reported citing a study by DIHK, the German chamber of industry and commerce.

With an estimated growth of 5%, the industrial sector will grow twice as fast as the overall economy, Frankfurter Allgemeine Zeitung quoted DIHK President Hans Heinrich Driftmann as saying on Monday. However, production growth in 2011 may not be as strong as this year, Driftmann said.

French GDP Growth Slows, Public Debt Falls

The French gross domestic product rose 0.3% sequentially during the July to September period, according to a report from statistics office Insee. This represented a downward revision from the 0.4% growth reported on November 12.

Household consumption expenditure increased 0.5% in the third quarter, compared to the 0.3% rise in the second quarter.

French public debt declined to 81.5% of gross domestic product in the third quarter, from 82.9% at the end of the second quarter.

In terms of euro, the public debt was €1.57 trillion in the third quarter versus €1.59 trillion in the second quarter.

The number of houses approved for construction in France fell 1.2% on a monthly basis in November, following a 1.1% drop in October, figures from the housing ministry showed on Tuesday.

In contrast, homes on which construction was started rose 1% in November, following a 1.3% increase in October.

On a quarterly basis, housing approvals fell 2.7%, while housing starts climbed 3.8% in November.

Swiss UBS Consumption Indicator Falls

Switzerland''s UBS consumption indicator fell 0.08 points to 1.63 in November. The fall is primarily attributable to the deterioration of business activity in the traditionally volatile retail sector.

Swedish Retail Sales Up

Swedish retail sales increased 0.1% on a monthly basis in November after adjusting to seasonal variations, as against the 0.6% growth recorded in October, Statistics Sweden said.

Annually, sales grew 5.3% in November at constant prices on a working day adjusted basis, compared to the 4.8% growth in October. Sales of consumer durables increased 1.5% annually, while that of durables rose 8.5% in November.

Household lending in Sweden rose 8.4% annually in November, following an 8.6% increase in October, according to a latest report from the Statistics Sweden.

Housing loans declined to 8.8% on an annual basis in November, versus the 9.1% growth in October.

Furthermore, the statistics office said the narrow monetary aggregate M1 rose 4.7% annually in November following 6.8% increase in October. The broad monetary aggregate M3 increased 4.8% in November, unchanged from October.

Alcatel-Lucent Settles U.S. Bribery Cases

Alcatel-Lucent, the French telecommunications company reached settlements with the U.S. Securities and Exchange Commission and the U.S. Department of Justice in connection with their investigations of violations of the Foreign Corrupt Practices Act.

Under the settlement agreements, the company will pay more than $45 million to resolve the SEC''s charges, and pay an additional $92 million to settle criminal charges announced by the DOJ. The settlements that totaled over $137 million will be submitted to the U.S. Federal Court early next year for formal approval.

Gainers & Losers

ArcelorMittal S.A. fell 0.48% to €28.26 after the global steel producer announced that, following the reopening of its share buy-back program for up to 6% of its issued share capital, it acquired on December 18 U.S. dollar-denominated call options on 26.5 million of its own shares with a strike price of $30.15 per share.

Banco Comercial Portugues, S.A. gained 0.33% to €0.60 after the Portugal-based bank said it completed the sale of a 95% stake in its Turkey-based Millennium Bank AS, for an adjusted price of €58.9 million.

International Brachytherapy SA rose 1.47% to €2.76 after the Belgium-based company involved in the active implantable medical devices segment of the health care sector said that it acquired Bavarian SonoTech GmbH, a minor software developer which specialized in the planning of radiation therapy.

Lafarge SA climbed 0.64% to €47.25 after the French builder sold some of its concrete and aggregates businesses in France, Portugal and Switzerland for €120 million as part of the Group''s divestment plan.

Nutreco Holding N.V. edged higher 0.09% to €56.49 after the Netherlands-based animal nutrition and fish feed company announced that the pension scheme for its Dutch subsidiaries is to be placed with insurer Aegon Levensverzekering NV as of January 1, 2011.

Roth & Rau AG dropped 2.24% to €13.53 after the Germany-based company providing components and plasma process equipment said it expects a negative impact on its profit for the current financial year 2010 on the write-downs related to the discontinuation of trading of it client SpectraWatt Inc. Roth & Rau further said it will be “unable to meet sales and earnings guidance” for the fiscal year.