Resource Stocks Lead European Indexes Higher; Inflation at 2.2%

Arthi Gupta
04 Jan, 2011
New York City

The European indexes edged higher after euro area inflation rose 2.2%, German unemployment increased, and French consumer confidence dampened in December. Spanish unemployment dropped. China expressed confidence and showed a willingness to invest in Spanish debt.

[R]4:00 PM Frankfurt – The European indexes edged higher after euro area inflation rose 2.2%, German unemployment increased, and French consumer confidence dampened in December. Spanish unemployment dropped. China expressed confidence and showed a willingness to invest in Spanish debt.[/R]

European markets indexes traded higher after London soared on the first day of trading in the year and resource stocks led the gainers. Markets in Asia closed higher and U.S. indexes advanced tracking gains in world markets.

In Paris CAC 40 Index gained 29.53 or 0.76% to close at 3,930.39 and in Frankfurt DAX Index edged higher 9.47 or 0.14% to close at 6,999.21.

Euro Area Inflation Rises

Euro-zone annual inflation rose to 2.2% in December from 1.9% in November, flash estimate from the European Union Statistics agency Eurostat showed on Tuesday. December''s inflation rate is the highest since October 2008.

German Unemployment Up

German unemployment rose for the first time since June 2009, as a freezing winter decreased employment in the construction industry, data released by the Federal Labor Agency showed.

The seasonally adjusted number of unemployed rose by 3,000 in December following a revised decline of 8,000 in November. The jobless rate remained at 7.5% for the third straight month.

Germany''s unemployment decreased in November according to the concept of the International Labor Organization, the Federal Statistics Office said on Tuesday.

The number of unemployed totaled seasonally adjusted 2.87 million in November. Compared with the same period of last year, unemployment was below by seasonally adjusted 340,000 persons or 10.7%. Compared with October, the number of unemployed fell 0.2%.

Germany''s gross domestic product may grow 2.2% this year after a 3.7% expansion last year, the DIW economic institute said today.

The institute forecasts a weaker 1.3% expansion for the economy in 2012 as it expects flagging growth in exports resulting from muted demand from advanced economies.

French Consumer Sentiment Falls

French consumer confidence indicator fell to minus 36 in December from a revised minus 33 in November, survey data released by statistics office Insee showed today.

Romania Producer Prices Climb

Romania''s producer prices rose 8.09% annually in November, data from the National Institute of Statistics showed.

Producer prices in mining industry increased 2.78%, while prices in manufacturing sector climbed 9.32% annually in November.

On a monthly basis, producer prices rose 0.83% in November.

Spanish Unemployment Drops

The number of people registered unemployed in Spain decreased by 10,221 or 0.3% in December to 4.1 million, the fastest pace of decline since 2000, official data showed on Tuesday.

Spain''s 2010 budget deficit was ""somewhat better"" than the government''s target, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

In an interview with Onda Cero radio, he said the public deficit was just below 9.3% of the gross domestic product in 2010. He added that it will be lowered to the target 6% of GDP this year.

Italian Inflation Increases

Italian inflation rose to 1.9% in December from 1.7% in November, a preliminary report from the statistics office Istat showed today.

On a monthly basis, overall consumer prices rose 0.4% in December after a flat reading in November.

Italian new car sales fell 21.7% to 130,319 units in December from a year earlier, according to transport ministry data published on Monday.

Gainers & Losers

ASM International N.V. gained 2.51% to $35.89 after the semiconductor capital equipment supplier said it will redeem all of its outstanding convertible subordinated notes due 2011 on February 16 at a redemption price of 100% of the principal amount thereof.

Brewin Dolphin Holdings plc rose 1.89% to 161.80 pence after the company engaged in investment management is holding talks with potential buyers to sell its investment banking arm, the Sunday Telegraph said.

Carrefour SA climbed 2.42% to €32.82 after the French supermarket giant was upgraded to “buy” from “neutral” by Bank of America Merrill Lynch.

Edenred S.A. surged 4.25% to €18.66 after the France-based company engaged in the provision of prepaid service vouchers acquired Euroticket, Romania''s fourth largest provider of meal and gift vouchers.

Fresenius Medical Care AG & Co. KGaA fell 0.72% to €42.72 after the kidney dialysis company said that it signed a purchase agreement to acquire Dutch-based medical services firm Euromedic International''s dialysis service business International Dialysis Centers for a purchase price of €485 million or about $647 million.

The transaction is expected to be accretive to Fresenius Medical''s earnings in the first year after closing of the acquisition.

Imtech N.V. edged higher 0.52% to €28.22 after the Netherlands-based technical services provider said it received new orders from Audi, VW, MAN and Opel valued at €120 million.

LM Ericsson Telephone Co. declined 1.37% to $11.54 after the Swedish telecom equipment maker stated that it completed the sale of 100% of its shares in Ericsson Federal Inc. to private equity firm Tailwind Capital on December 31. The company did not reveal the terms of the transaction.