European Indexes Gain as Ministers Discuss Bailout Alternatives

Arthi Gupta
18 Jan, 2011
New York City

The European indexes gained after finance ministers resolved to strengthen the region''s rescue fund and German economic sentiment index improved in January. Spain industrial orders surged in November. Axel Springer agreed to buy SeLoger.com for

[R]4:00 PM Frankfurt – The European indexes gained after finance ministers resolved to strengthen the region''s rescue fund and German economic sentiment index improved in January. Spain industrial orders surged in November. Axel Springer agreed to buy SeLoger.com for €634 million.[/R]

U.S. indexes declined after mixed earnings reports and Asian markets traded higher.

Euro-zone needs to improve financial backstops so that market forces cannot have the slightest doubt over the capacity to act, European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters after the euro-zone finance ministers meeting. No decision to raise the rescue fund was made during the meeting.

The Council of Economic and Finance Ministers is set to hold its meeting today as yields on the sovereign bonds are on the rise in the region.

Finance ministers of the euro-region have reiterated their resolve to strengthen region''s rescue fund, spurring confidence in a recovery from the sovereign-debt crisis but markets are awaiting concrete steps.

In Paris CAC 40 Index gained 22.32 or 0.56% to close at 3,997.73 and in Frankfurt DAX Index edged higher 51.68 or 0.73% to close at 7,129.74.

Spain Cancels Government Bonds Auctions

Spain canceled government bond auctions scheduled for later this week and will instead look to issue debt through a group of banks, the country''s treasury announced on Monday.

The country had planned to auction 10- and 15-year benchmark obligaciones or long-term bonds on Thursday. This will be replaced by the issue of a 10-year benchmark bond through a syndicate of banks.

Russia may resume buying Spanish debt, lifting a ban imposed in 2010, Spanish newspaper El Pais reported on Tuesday, citing Russia''s Deputy Prime Minister Alexandr Zhukov.

German Economic Sentiment Index Surges

German economic sentiment brightened more than expected in January, results of a key survey showed today.

The Mannheim-based Centre for European Economic Research or ZEW said its economic sentiment indicator for Germany climbed to 15.4 points in January from 4.3 points in December.

Spain Industrial Orders Soar

The number of new orders received by Spanish industries soared 11.1% annually in November, from a 2.2% increase in October, statistics office INE said on Tuesday.

The surge was mainly due a 20.6% spike in orders received by the energy sector, while intermediate goods orders grew 16.6%.

Italy Current Account Deficit Widens

Italy''s current account deficit for November increased to €5 billion from €2.7 billion in the same month last year, according to data released by the Bank of Italy today.

The capital account showed a surplus of €134 million in November versus €108 million a year ago. The financial account balance turned to an excess of €4.4 billion in November from €4.48 billion shortfall in the same month last year.

Axel Springer Revises Offer for SeLoger.com

Axel Springer AG announced on Tuesday that it reached an agreement on a friendly revised takeover offer of €38.05 a share for French property Web site SeLoger.com SA. The terms value Seloger.com at €634 million.

The revised offer represents nearly 12% increase from the initial offer of 34 euros per share filed by Axel Springer on September 28.

Gainers & Losers

Aeroports de Paris SA advanced 1.30% to €60.16 after the France-based airport group reported passenger traffic declined 1.4% to 6.28 million in December.

African Barrick Gold plc fell 1.95% to 553.00 pence after the London-based gold miner reported that fourth quarter gold production declined to 179,730 ounces, from 213,588 ounces in the prior year.

Casino Guichard-Perrachon SA gained 2.40% to €72.83 after the French retailer fourth quarter sales rose 13% from a year earlier to €8.3 billion, helped by strong growth in Latin America and Asia and an improved performance in its home market.

Chocoladefabriken Lindt & Spruengli AG edged higher 2.03% to Sfr29,950 after the Swiss chocolate maker saw full year sales rise 7.3% last year to Sfr2.58 billion.

Daimler AG surged 3.20% to €58.71 after the German car maker’s stock was raised to “overweight” from “underweight” by Morgan Stanley.

Rio Tinto Plc increased 1.54% to 4,452.00 pence after the diversified, British-Australian, multinational mining and resources group announced that its global iron ore operations for the fourth quarter of 2010 reached 50.05 million tons attributable, up 6% from prior-year quarter''s 47.23 million tons.

Wendel S.A. climbed 2.31% to €74.36 after the French investment fund said it would appeal a €1.5 million fine from market regulator AMF for providing insufficient information over its stake buy deal in Saint-Gobain SA.