European Finance Ministers Meet Today; Fitch Lowers Greece Ratings

Arthi Gupta
17 Jan, 2011
New York City

The European indexes traded sideways ahead of the European finance ministers meeting in Brussels. Fitch lowered Greece ratings to junk. OPEC lifted global oil demand growth forecast for 2011. VimpelCom Board approved deal with Wind Telecom.

[R]3:00 PM Frankfurt – The European indexes traded sideways ahead of the European finance ministers meeting in Brussels. Fitch lowered Greece ratings to junk. OPEC lifted global oil demand growth forecast for 2011. VimpelCom Board approved deal with Wind Telecom.[/R]

Asian markets traded lower on speculation that China may further monetary policy tightening and the U.S. markets are closed today in observance of Martin Luther King Jr. Day.

European finance ministers are to meet in Brussels today to discuss measures to stabilize the euro and expand the lending capacity of the euro zone rescue fund to help debt-ridden countries.

Inflation can hardly be the main factor in determining the exchange rate policy, Chinese President Hu Jintao told two U.S. newspapers ahead of his visit to Washington this week.

According to written answers to questions from the Wall Street Journal and the Washington Post, Hu said China adopted various measures to tame inflation, including interest rate adjustment.

Euro-zone governments are considering an increase in the size of a rescue fund designed to help member nations when in trouble, French Economy Minister Christine Lagarde reportedly said on Friday.

Lagarde said euro-zone ministers are also thinking of using the European Financial Stability Facility to buy sovereign debt on the secondary market.

German Finance Minister Wolfgang Schaeuble reportedly said on Monday that European Commission President Jose Manuel Barroso''s proposal to boost euro-zone rescue fund will make the situation complicated.

Talking to German radio Deutschlandfunk ahead of euro-zone finance ministers meeting, he said such ""isolated"" moves do not make the situation any easier, but create more complications.

Reaffirming Germany''s stand, Schaeuble said he does not see an immediate need to raise the European Financial Stability Facility.

In Paris CAC 40 Index declined 9.78 or 0.25% to close at 3,973.50 and in Frankfurt DAX Index edged lower 0.94 or 0.01% to close at 7,074.76.

Fitch Lowers Greece Credit Ratings

Fitch Ratings agency cut Greece''s debt to junk status on Friday with a negative outlook. The agency said it slashed its rating for Greece by one notch to BB+ from BBB and the negative outlook reflects the view ""that public debt sustainability is still very fragile and renewed access to market financing uncertain.""

OPEC Lifts Global Oil Demand Growth Forecast

The Organization of the Petroleum Exporting Countries revised up its estimate for global oil demand growth in 2011 by 50,000 barrels a day from its last report to 1.23 million barrels a day to 87.3 million barrel a day. The organization noted that the increase in demand is driven by global economic growth and ""continued pace of global economic recovery will have a considerable impact on demand.""

The cartel also said world oil demand grew by 1.6 million barrels a day in 2010, up 130,000 barrels a day from its prior estimate.

Finnish Producer Prices Up

Finland''s producer prices increased 7.8% annually in December, data from Statistics Finland showed today. On a monthly basis, the PPI rose 1.5% during December.

The statistics office also reported that wholesale prices surged 10.5% annually in December. On a monthly basis, wholesale prices grew 2% in December.

Czech Export Prices Rise, PPI Surges

Czech export prices rose 0.8% on a monthly basis in November, reversing a 0.7% fall in October, the Czech Statistics Office said on Monday. The rebound was mainly due to a 0.9% increase in the price of machinery and transport equipment.

Import prices rose 1.1% in November, following a 0.9% drop in October.

On a yearly basis, Czech export prices increased 0.8% in November, while import prices rose 4.3%.

Czech producer price inflation accelerated to 3.6% in December from 2.7% in November, data from the Czech Statistics Office showed.

Danish Producer Prices Increase

Denmark''s producer prices for domestic supply increased 1.1% on a monthly basis in December, Statistics Denmark said on Monday. On an annual basis, the producer price index climbed 7.7%.

Norway Records Trade Surplus

Norway recorded a balance of trade surplus of 35.6 billion krones in December, the largest in two years, Statistics Norway said today. That compares to a trade surplus of 30.3 billion krones in the same month a year ago.

In 2010, exports rose 5.4% and imports increased 5.6%. A trade surplus of 341.5 billion krones was recorded for the year.

Sweden Home Prices Unchanged

Swedish home prices were unchanged between October and December compared to three months earlier, Statistics Sweden said on Monday.

On a yearly basis, home prices increased 4% in the December quarter. The average price for a one or two dwelling building in Sweden was around 2 million kronas during the final quarter of 2010.

Sweden''s unemployment rate was 4.4% in December, according to a report from the Public Employment Service released today. A year ago, 5.5% of the workforce was unemployed.

Around 216,000 people were unemployed at the end of December.

VimpelCom Board Approves Deal with Wind Telecom S.p.A.

VimpelCom Ltd. said its Supervisory Board gave its final approval for the proposed combination of VimpelCom and Wind Telecom S.p.A., with six of nine directors, including all three independent directors and the three Altimo-nominated directors, voting in favor of the transaction.

When the deal comes through, VimpelCom will own, through Wind Telecom, 51.7% of Orascom Telecom Holding S.A.E and 100% of Wind Telecomunicazioni S.p.A., or Wind Italy. The combination of VimpelCom and Wind Telecom will create the world’s sixth largest mobile telecommunications carrier by subscribers.

However, Telenor ASA, the Norway-based telecommunication company, a key shareholder in VimpelCom that opposes the deal, has said it would try to stop the acquisition from being completed and the three Telenor-nominated directors voted against the transaction.

Gainers & Losers

ArcelorMittal S.A. surged 3.81% to $36.52 after the steel giant said it joined Nunavut Iron Ore Acquisition Inc. to provide shareholders with an improved offer of C$1.50 in cash for 100% of Canada-based Baffinland Iron Mines Corp.''s outstanding common shares.

BP plc soared 3.60% to $49.52 pence after the oil and gas explorer and Russia’s state owned major Rosneft agreed to explore and develop three license blocks - EPNZ 1,2,3 - on the Russian Arctic continental shelf. These licenses were awarded to Rosneft in 2010 and cover approximately 125,000 square kilometers in a highly prospective area of the South Kara Sea.

Under the terms of the deal, Rosneft will hold 5% of BP’s shares and BP will receive a 9.5% stake in Rosneft.

Chemring Group plc gained 0.68% to 3,246.00 pence after the company engaged in the design, manufacture and sale of energetic material products and countermeasures said that it signed a new £230 million unsecured bank facility, provided by a syndicate of five lending banks, which matures in April 2015.

Karelian Diamond Resources Plc increased 2.60% to 4.75 pence after the company focused on the discovery of diamond deposits in Finland said it received its first tranche of confidential information from Rio Tinto Mining and Exploration Ltd. in accordance with its confidentiality agreement with Rio Tinto, as announced on July 22, 2010, relating to samples taken across Finland.

Kontron AG plunged 5.34% to €8.77 after the Germany-based provider of embedded computer technology said that it expects consolidated revenue of more than €500 million for the full year 2010.

Roche Holding AG climbed 1.97% to Sfr 140.10 after the Swiss healthcare and biotechnology firm stated that Alan Hippe, currently chief financial officer and an executive board member of German industrial giant ThyssenKrupp AG would become the chief financial officer of the company, succeeding Erich Hunziker.

SAP AG declined 1.80% to $53.60.